SK이노베이션 3Q16 국문 실적발표자료...

2017. 2. 3

4Q 2016 Earnings Release

SK innovation

This presentation contains forward-looking statements with respect

to financial conditions, results of operations and business of SK Innovation,

and plans and objectives of the management of SK Innovation.

Statements that are not historical facts, including statements about

SK Innovation’s beliefs and expectations, are forward-looking statements.

Such forward-looking statements involve known and unknown risks,

uncertainties and other factors which may cause the actual results or

performance of SK Innovation to be materially different from any future results

or performance expressed or implied by such forward-looking statements.

Financial results for 4Q16 are subject to change according to the outside

independent auditors’ review.

Disclaimer

Agenda

4Q 2016 Financial Results

4Q 2016 Business Highlights

2017 Business Outlook (Refining/Petrochemical)

2016 Dividend Plan

Petrochemical M&A

Q&A

Appendix

(Unit: bn KRW) 4Q16 3Q16 QoQ 2016 2015

Sales 10,079.1 9,703.0 +376.1 39,520.5 48,356.3

Operating Profit 849.4 414.9 +434.5 3,228.6 1,979.6

EBITDA 1,120.7 642.4 478.3 4,180.1 2,931.1

Non-Operating

Profit △497.8 15.9 △513.7 △805.0 △325.5

Pre-Tax Income 351.6 430.8 △79.2 2,423.6 1,654.1

3

Sales & Operating Profit

* 2015 financial data reflect reclassified discontinued business operations.

4

Balance Sheet

(Unit: bn KRW) 2016 2015 Change from

FY 2015

Assets 32,581.6 31,359.8 +1,221.8

- Current assets 14,988.1 12,842.1 +2,146.0

Liabilities 14,276.3 14,313.5 △37.2

- Debt

Net Debt

6,569.7

901.3

8,174.8

3,515.2

△1,605.1

△2,613.9

Shareholders’

Equity 18,305.3 17,046.3 +1,259.0

- Paid-in Capital 468.6 468.6 -

Debt/Equity 78% 84% △6%p

Agenda




2016 Dividend Plan

Petrochemical M&A

Q&A

Appendix

6

Refining – Refining Margins

Crude price rose as OPEC and

Non-OPEC agreed on output cut

Refining margin improved on

stronger overall product cracks

Dubai

‘16.3Q: 43.2$/B → ‘16.4Q: 48.3$/B (+5.1$/B)

Gasoline Crack

‘16.3Q: 9.0$/B → ‘16.4Q: 12.0$/B (+3.0$/B)

Diesel Crack

‘16.3Q: 11.0$/B → ‘16.4Q: 12.0$/B (+1.0$/B)

FO Crack

‘16.3Q: △6.2$/B → ‘16.4Q: △3.9$/B (+2.3$/B)

($/Bbl)

Dubai Crude oil

Diesel Crack

Gasoline Crack

($/Bbl)

$22.8 (‘16.1.21)

0

20

40

60

80

100

120

14.01 14.04 14.07 14.10 15.01 15.04 15.07 15.10 16.01 16.04 16.07 16.10

0

5

10

15

20

25

14.01 14.04 14.07 14.10 15.01 15.04 15.07 15.10 16.01 16.04 '16.07 16.10

16.12

16.12

7

(Unit : Bn. KRW)

Operating profit increased on

stronger refining margin and

inventory gains from higher crude

price

Seasonal demands for middle

distillates and rising crude price to

support refining margin in Q1

Refining – Performance Analysis

+395.4

91.9

+237.5 △73.1

651.7

Margin Others 3Q16 OP

4Q16 OP

Inventory Effect

S’GRM

‘16.3Q: 5.1$/B → ‘16.4Q: 6.7$/B (+1.6$/B)

8 8

Olefin spreads showed weakness

Ethylene spreads softened with crackers

returning from T/A and weaker

downstream demands

PE spreads moderately weakened on

reduced T/A schedule

Aromatics weakened moderately

PX spreads weakened on new start-up

schedules

BZ spreads widened on strong SM

demands from China

Petrochemical – Product Spreads

0

200

400

600

800

1,000

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16

Naph Ethylene-Naph PE-Naph

0

200

400

600

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16

BZ-Naph PX-Naph

PE

($/Ton)

PX

Naph

Ethylene

($/Ton)

BZ

9 9

Decrease in operating profit

on planned turnarounds and

one-off expenses

Favorable spreads to continue on

strong downstream demands

Petrochemical – Performance Analysis

(Unit : Bn. KRW)

Margin Others 3Q16

OP

4Q16

OP Volume

+ 3.7

△15.2

△ 27.6 215.4

176.3 Turnaround : September ~ October

Ethylene (670KTA), Propylene (345KTA)

Ethylene : Healthy downstream demands

and turnarounds expected within region

PX : Robust PTA and Polyester demands

Lubricants – Base Oil Spreads

Despite stable supply and demand,

base oil spreads narrowed on

rising crude prices,

0

25

50

75

100

3Q15 4Q15 1Q16 2Q16 3Q16 4Q16

($/Bbl)

150SN

Gas Oil

150SN – Gas Oil

150SN - Gas Oil

‘16.3Q: 25.2$/B → ‘16.4Q: 19.5$/B

Spreads expected to gradually

recover on tight supply and demand

Lubricants – Performance Analysis

Operating profit decreased on

narrowed margin from rising crude

price

OP OP

3Q16 Margin Volume Others 4Q16

(Unit : Bn. KRW)

△44.6

+16.5 △2.5 86.4

117.0

Continue to improve profitability

through maximizing sales and global

optimization

12

E&P Business

3Q16 4Q16

Despite sales increase from higher

crude and gas prices,

Operating profit decreased

slightly due to operating and

depreciation expenses

Impairment loss incurred

non-operating expenses

: 314.1 Bn KRW

Sales 139.7 150.5

Average daily production 61 62

- Peru 88 32 32

- Peru 56 21 21

- Vietnam15-1 5 6

- SK E&P America 3 3

Oil Portion (%) 34% 34%

3Q16

OP Sales Change Cost Effect Others

4Q16

OP

(Unit : Bn KRW, 1000 BOE/D)

Operating Profit (Q-o-Q) (Unit: Bn KRW)

36.6

△16.3

△2.3 28.8

+10.8

13

I/E Materials Business

13

‘16. 4Q Revenue 49.2 billion won

QoQ △25%

‘16. 4Q EBITDA 16.4 billion won

QoQ △48%

Profit decreased on temporary

sales drop

I/E Business to continue its growth

on higher demands from expanding

global EV market

(Unit : Bn. KRW)

262

311 326 341

176

566 598 614

655

492

0

200

400

600

800

4Q15 1Q16 2Q16 3Q16 4Q16

EBIDTA 매출액

(Bn. KRW) 2015 2016 증감

Revenue 208.2 236.0 +13%

EBITDA 83.2 114.2 +37%

Revenue

Agenda




2016 Dividend Plan

Petrochemical M&A

Q&A

Appendix

15

Sound refining margin to continue

on healthy demands and limited

capacity additions

[Unit: Mil. b/d]

Capacity additions vs. Demand growth

0

0.5

1

1.5

2

2.5

2015 2016 2017(E) 2018(E)

Net Capacity Additions Demand Growth

Crack Outlook

5

15

25

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Range('12~'16) '16년 '17년Avg.(E)

5

15

25

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Range('12~'16) '16년 '17년Avg.(E)

Diesel Crack Gasoline Crack

[Unit: $/Bbl]

[Diesel]

Higher regional demands to outweigh

concerns over Chinese exports

[Gasoline]

To remain flat on higher US inventory

level, despite resilient demand growth

(Source : IEA, Company Est.)

2017 Business Outlook – Refining

0

1,000

2,000

2016 2017 2018 2019

Capacity Addition Demand Growth

-

1,000

2,000

3,000

4,000

5,000

2016 2017 2018 2019

Capacity Addition Demand Growth

16

Ethylene spread to show

moderate adjustments on delays

and cancellations of scheduled

capacity additions

Despite start-ups of large facilities,

robust PX spreads to continue on

strong demands

Strong polyester demands (YoY 5%)

Chinese self-sufficiency to stay

below 50%

(Source : IHS)

Possibilities of delays/cancellations

from Chinese CTO/MTO

Full impact from US ECCs in 2018

(Unit : KTA) (Unit : KTA)

PX Supply & Demand (Global / Net)

PX Supply & Demand (China / Net)

Ethylene Supply & Demand (Global / Net)

(Unit : KTA)

0%

50%

100%

150%

200%

2014-01-03 2015-01-03 2016-01-03

Ethane Coal Naphtha

2014 2015 2016

Price Trends of Feedstocks

0

2,000

4,000

6,000

8,000

10,000

2016 2017 2018 2019

Naptha US Ethane

CTO/MTO Demand Growth

2017 Business Outlook – Petrochemical

Agenda




2016 Dividend Plan

Petrochemical M&A

Q&A

Appendix

18

Unit : KRW 2011 2012 2013 2014 2015 2016

Ordinary 2,500 3,200 3,200 - 3,200 4,800

Extra 300 - - - 1,600 1,600

Total DPS 2,800 3,200 3,200 - 4,800 6,400

Total Dividends 261.0 bn 298.3 bn 298.3 bn - 447.4 bn 596.5 bn

2011 2012 2013 2014 2015 2016

Extra

1,600

Extra

300

2,800

3,200

4,800

No

Dividend

3,200

Extra

1,600

6,400

2016 Dividend Plan

Agenda




2016 Dividend Plan

Petrochemical M&A

Q&A

Appendix

Petrochemical M&A – Dow Chemical’s EAA Business

Target : Dow Chemical EAA Business

- EAA production facilities (US Texas, Spain)

- EAA/Ionomer technologies, trademarks, etc.

Acquisition ultra high-pressure and

high acidity technologies

Downstream portfolio expansion 1

2

3 Marketing synergy with existing products

“Acquiring technologies and products to

enter high value-added packaging market ”

Overview

Strategic Direction

EAA (Ethylene Acrylic Acid)

Laminated Tube Aseptic Packaging

- Beverage, Meat - Tooth paste, Cosmetic

EAA Global Market Size

North America

52.2 KTA

Europe

37.6 KTA China

16.0 KTA

Japan

10.7 KTA

Others

26.0 KTA

EAA :

143 KTA (2016)

[Source : CMR, 2016(F)]

Premium packaging adhesive (Adhesive Copolymer)

• Global Market Size

143 KTA (2016)

→ 2~3% annual growth

(7% in China)

• Dow Chemical is one of

the dominant players in

market.

Agenda




2016 Dividend Plan

Petrochemical M&A

Q&A

Appendix

1. Business Performance

2. Utilization Rate – Petroleum/Petrochemical Plants

Appendix

(Unit: Bn KRW) SK

Innovation

SK

Energy*

SK

Global

Chemical

SK

Lubricants

4Q

Total

Sales 222.2 7,256.1 1,939.5 661.3 10,079.1

Operating Profit △65.0 651.7 176.3 86.4 849.4

Non-operating profit △387.5 △142.6 33.1 △0.8 △497.8

Pre-tax Income △452.5 509.1 209.4 85.6 351.6

24

1. Business Performance (excluding intercompany transactions)

* SK Energy (including SKTI and SKIPC quarterly results)

Petrochemical Plant

Petroleum Plant

25

2. Utilization Rate – Petroleum/Petrochemical Plants

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16

CDU 76% 70% 77% 83% 83% 84% 89% 85% 90% 84% 84% 83%

Ulsan 89% 80% 84% 89% 90% 86% 93% 86% 92% 85% 85% 91%

Incheon 37% 39% 60% 66% 67% 78% 77% 81% 83% 81% 81% 58%

HOU 92% 92% 99% 100% 83% 81% 100% 100% 91% 98% 98% 100%

#1 RFCC 100% 54% 81% 100% 100% 100% 100% 100% 100% 100% 100% 100%

#2 RFCC 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 58%

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16

NCC 100% 100% 100% 100% 100% 100% 100% 100% 92% 100% 83% 95%

PE 100% 100% 100% 100% 100% 99% 100% 100% 98% 98% 84% 72%

PP 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 86% 78%

PX 100% 100% 100% 100% 100% 100% 100% 100% 100% 89% 100% 90%

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