Nov 15, 2016
3Q/2016
Leading Integrated Petrochemical Complex in Asia by 2020
Disclaimer
This presentation material has been prepared solely for informational purposes only. IRPC is furnishing it solely for use byprospective investors / analysts in the proposed event. IRPC makes no representations or warranties as to the accuracy orcompleteness of such information. By accepting this material each recipient agrees that IRPC shall not have any liability forany representations (express or implied) contained in, or for any omissions from this presentation.
The information contained herein does not purport to be all-inclusive or to contain all of the information that may be material to the recipient’s decision. Each recipient of the information and data contained herein should perform its own independent investigation and analysis of the transaction and the creditworthiness of IRPC . Reference in this Disclaimer to this shall include references to the Appendices (if any) hereto.
2
3Q/16 Highlight
Operation & Financial Performance
Industry Outlook
Strategic Direction
1
2
3
4
Agenda
3
14.1 13.4 12.5 13.7 13.2
(3.1)
3.8 0.1
(0.1)
0.9
(0.7)(1.4) (1.2)
(0.2)(1.4)
10.3
15.8
11.4 13.4 12.7
48,658 40,471 41,622
154,125 120,343
YoY 14%
QoQ 3%
Highlight: 3Q/16 PerformanceOverview of Business
Net Sales(net excise)
Dubai
Unit: $/bbl
888 3,706
1,307
8,955 8,027
Net income
Unit: MB
Unit: MB
4
3Q/15 3Q/16 9M/16
YoY 47%
QoQ 65%
1. In 3Q/16, average Dubai price remained stable from 2Q/16 at $43.2/bbl, driven by both OPEC and Non-OPEC members discussed to reduce the production level to maintain the crude price stability.
2. Net sales were 41,622 MB in 3Q/16, increasing by 3% from 40,471 MB in 2Q/16 due to an increase of 5% in the sales volume offset by a decrease of 2% in the product prices.
In 9M/16, net sales were 120,343 MB, 22% lower than net sales of 154,125 MB in 9M/15, as the 18% decrease of the average price, plus the sale volume dropped down by 4%.
3. Market GIM in 3Q/16 was $12.5/bbl, declined by $0.9/bbl compared to $13.4/bbl in 2Q/16 as the lower of product spreads but Everest improved the margin. While no stock gain in 3Q/16, consequent to the Accounting GIM of $11.4/bbl, decreased from $15.8/bbl in 2Q/16.
In 9M/16, the Market GIM was $13.2/bbl, decreased from $13.7/bbl in 9M/15 and the Accounting GIM decreased to $12.7/bbl from $13.4/bbl in 9M/15.
4. Net profit was 1,307 MB in 3Q/16, compared to 3,706 MB in 2Q/16. In 9M/16, net profit was 8,027 MB, compared to 8,955 MB in 9M/15.9M/15
YoY 22%
Market GIM
Accounting GIM
Oil hedging
Unit: $/bbl
YoY 10%
QoQ 28%
Stock gain/(loss)+LCM
YoY 5%
38.9
YoY 10%
2Q/16
49.743.18 43.17
54.3
5
Procurement area
Commercial area
Operations area
Corporate area
• Optimize crude selection, product blending and hydrocarbon stock
• Enhance throughput & yield by adjusting production unit parameter
• Maximize energy efficiency and reduce loss in production units
• Improve efficiency and effectiveness of maintenance
• Reduce production unit downtime and minimize operating days lost
• Maximize commercial value generation from refined petroleum and
petrochemical products
• Optimize timing, duration and cost of turnaround
• Spend optimization with key expenditure categories
• Optimize small CAPEX spend for highest value expenditures
• Develop capabilities to sustain both performance and health
• Improve organizational health practices for top quartile outcomes
• Optimize planning and policies to ensure continued productivity enhancement
2,083
549
399
385
557
513
135
63
3,416 1,268Total
Target
Y2016
Actual
9M/16Unit : MB
Highlight: Everest Project
Highlight: 3Q/16 Update
6
IRPC’s Achievement
Certification from Carbon Footprint for Organization : CFO (Sep 9)
The Zero Accident Campaign 2016(Aug 31)
Krungsri e-Payment
Service Agreement(Sep 22)
“Best CEO award”IAA Awards for Listed Companies
2015/2016 (Jul 14)
122 Companies be invited for Corporate Sustainability Assessment
25 Companies are DJSI member listed
Top 5 companies
Oil and Gas Industry
Emerging Market
Highlight: 3Q/16 Project Update
7
Progress: 64% as of Sep 16Start up plan : 3Q/17
PGT Plan : Nov 16PAC Plan : Dec 16
PPE & PPCUHV
3Q/16 Highlight
Operation & Financial Performance
Industry Outlook
Strategic Direction
1
2
3
4
Agenda
8
9
Petroleum Performance
2Q/15 3Q/15 4Q/15 1Q/16 2Q/16 3Q/16 Change QoQ
Dubai 61.3 49.7 40.7 30.4 43.2 43.2 0%
Naphtha Spread -0.5 -1.2 7.1 6.1 0.7 -1.9 -371%
ULG95 Spread 19.8 19.3 18.7 18.8 14.5 11.6 -20%
Gas Oil Spread 13.7 10.8 13.8 9.6 10.5 11.0 5%
Fuel Oil Spread -3.5 -8.1 -6.5 -5.2 -8.7 -4.3 51%
-20
0
20
40
60
80
Dubai Price and Petroleum Spread$/bbl
Dubai
Fuel Oil
ULG95 Spread
Naphtha Spread
Gas Oil Spread
Naphtha spread:
moved down - increasing
supply after the refineries’
maintenance shutdown
and the low LPG price, a
substitute for Naphtha.
ULG95 spread:
moved down – the supply
glut.
Gas Oil spread:
moved up - higher
demand from India,
Vietnam and Malaysia.
Fuel oil spread:
moved up - low supply
from Europe and Persian
Gulf.
Crude oil price: both OPEC and Non-OPEC members discussed to
reduce the production level to maintain the crude price stability.
10
Petroleum Performance
2Q/15 3Q/15 4Q/15 1Q/16 2Q/16 3Q/16 Change QoQ
Fuel Oil 367 265 217 160 219 247 13%
150BS Spread 740 833 815 844 780 725 -7%
500SN Spread 399 514 471 442 418 443 6%
Asphalt Spread 20 83 96 -7 -48 -61 -27%
-200
0
200
400
600
800
1,000
Fuel Oil Price and Lube Base Oil Spread$/MT
Fuel Oil
150BS Spread
500SN Spread
Asphalt Spread
Lube base oil spread:
stable - lower supply after
Formosa, one of the major
refineries in Asia shutdown
for the maintenance support
price.
Asphalt spread:
moved down - the lower
demand in Asia especially
China who cut the new road
constructions budget.
Petroleum Group : Production
3Q/16, the crude intake was 176 KBD (82% utilization), slightly dropped by 6 KBD from 2Q/16 as the product spreads moved down.
RDCC plant (UHV project) is during the process to integrate its plant with whole refinery
Premium over Dubai was $2.58/bbl, lower by $0.53/bblfrom the last quarter
The utilization rate of Lube Base Oil plant in 3Q/16 was 87%, declined by 8% when compared to 2Q/16 due to falling asphalt demand during rainy season.
Remark : Excluding internal use quantity 11
Crude Run (KBD)
Crude Intake
61%49%
63% 59% 53%
30%
23%
23% 31%25%
9%
10%
9% 9%
10%
0%
18%5% 2%
12% Others
Domestic
Far East
Middle East
Premium over Dubai($/bbl)
3Q/15 2Q/16 3Q/16 9M/15 9M/16
82% 85% 82% 85% 84%
177 182 176 183 181
2.69 3.11 2.58 2.31 3.13
0.9 0.8 0.7
2.7 2.5 0.9 0.9 0.8
2.8 2.5
Lube Base oil
1.8 1.7 1.5
Unit : Mbbl
Refinery
LPG & Others
Unit : Mbbl
Naphtha
Gasoline
Diesel
Fuel oil
4.8 4.1
21.9 22.3
4.3 4.7
2.7 1.8 0.6 0.6
1.5 1.6 0.8
7.4 7.6 7.1
1.5 1.6 1.6
0.9 0.5 0.7
0.2 0.1 0.1
11.5 11.4 10.3
34.3 33.55.5 5.0
Asphalt
Lube Base
% Utilization
3Q/15 2Q/16 3Q/16 9M/15 9M/163Q/15 2Q/16 3Q/16 9M/15 9M/16
2.4 1.4
2.1
3.8 2.2
2.4
2.6 2.1
2.1
2.5
4.8
4.0 4.2
5.9
4.7
3Q/15 2Q/16 3Q/16 9M/15 9M/16
Lube Base
Refinery
Market GRM
Sales Volume & Revenue
13.3 12.1 13.1
40.3 38.3 1.8 1.8 1.6
6.2 5.5
15.1 13.9 14.7
46.5 43.8
3Q/15 2Q/16 3Q/16 9M/15 9M/16
Lube Base
Refinery
Unit : Mbbl
16.3 16.6 16.2 50.0 49.7 Crude intake (M.bbl)
Unit : $/bbl
Sales Distribution
Unit : MB
12
29,159 23,354 24,662 94,701 68,996 Refinery
4,818 3,734 3,368 16,523 11,087 Lube Base
33,977 27,088 28,030 111,224 80,083 Petroleum
YoY 6%
Local54%
Export46%
Local55%
Export45%
3Q/162Q/16
Top 5 Export Destination :Singapore, Malaysia, Laos, Cambodia, Japan
3Q/16 : Petroleum sales volume increased by 6% but the average product prices decreased by 3% compared to 2Q/16
The proportion of sales was 54% domestic and 46% export. The domestic sales slightly fell by 1% from 2Q/16.
Market GRM was $4.2/bbl (2,372 MB), raised by$0.23/bbl (45 MB) from 2Q/16 due to the lower of crude premium plus better product yield after UHV project started its operations.
Petroleum Group : Sales & GRM
YoY 3% QoQ 6%
13
Petrochemical Performance
2Q/15 3Q/15 4Q/15 1Q/16 2Q/16 3Q/16 Change QoQ
Naphtha 563 461 445 344 411 389 -5%
PP 1,356 1,126 1,003 944 1,095 1,088 -1%
HDPE 1,454 1,411 1,301 1,251 1,287 1,234 -4%
PP Spread 793 665 558 600 684 699 2%
HDPE Spread 891 950 856 907 876 845 -4%
200
400
600
800
1,000
1,200
1,400
1,600
Polyolefins Price and Spread$/MT
Naphtha
PP Spread
PP
HDPE Spread
HDPE
PP spread:
moved up - tight supply
during Petrochemical
plants’ maintenance
shutdown in Japan and
Taiwan.
HDPE spread:
moved down - the HDPE
price was lower due to
weaker demand in the
rainy season.
Remark : Petrochemical Product Prices calculated based on proportion of sales volume
14
Petrochemical Performance
ABS spread:
moved up - positive
economic outlook
especially in AEC
PS spread:
Stable- both demand
and supply stayed
unchanged.
2Q/15 3Q/15 4Q/15 1Q/16 2Q/16 3Q/16 Change QoQ
Naphtha 563 461 445 344 411 389 -5%
ABS 1,658 1,433 1,202 1,198 1,308 1,373 5%
PS 1,494 1,267 1,098 1,153 1,217 1,199 -1%
ABS Spread 1,095 972 757 854 897 984 10%
PS Spread 931 806 653 809 806 810 0.5%
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Polystyrenics Price and Spread$/MT
Naphtha
PS Spread
PS
ABS Spread
ABS
Remark : Petrochemical Product Prices calculated based on proportion of sales volume
15
Petrochemical Performance
2Q/15 3Q/15 4Q/15 1Q/16 2Q/16 3Q/16 Change QoQ
Naphtha 563 461 445 344 411 389 -5%
Toluene 766 635 624 568 595 564 -5%
MX 785 686 671 598 673 656 -3%
Toluene Spread 203 174 179 224 184 175 -5%
MX Spread 222 225 226 254 262 267 2%
0
200
400
600
800
1,000
Aromatics Price and Spread$/MT
Naphtha
MX Spread
Mixed Xylene
Toluene Spread
Toluene
Toluene spread:
moved down - demand
remained weak and
inventory stayed high.
Mixed Xylene spread:
moved up – stable MX
price, supported by high
PX price while Naphtha
price went down.
Remark : Petrochemical Product Prices calculated based on proportion of sales volume
78 92 96
228 272
9 - -
21
5
73 65 47
191 185
160 157 142
440 462
Styrenics
Aromatics
The utilization rate of Aromatics and Styrenics in 3Q/16 was
80%, decreasing by 10% compared to 2Q/16 due to the
scheduled maintenance shutdown of EBSM in 3Q/16.
Therefore, Polystyrenics group decreased capacity as a result
of lower feedstock from EBSM.
In 3Q/16, the utilization rate of Olefins was 88%, decreased
by 7% from 2Q/16 owing to the maintenance shutdown of
PP and Ethylene plants in 3Q/16.
Aromatics & StyrenicsOlefins
3Q/15 2Q/16 3Q/16 9M/15 9M/16
97% 90% 80% 89% 90% %Utilization
97% 87% 77% 87% 85% Polystyrenics
106% 78% 49% 91% 75% Styrenics
92% 98% 100% 90% 101% Aromatics
3Q/15 2Q/16 3Q/16 9M/15 9M/16
90% 95% 88% 90% 92% %Utilization
78% 91% 89% 82% 89% Polyolefins
101% 99% 87% 97% 95% Olefins
Polystyrenics
67 51 43
174 148
127 138 136
385 408
194 189 179
559 557
Olefins
Polyolefins
Unit : KMTUnit : KMT
Remark : revised Utilization rate calculated based on the main products 16
Petrochemical Group : Production
211 192 111
165 147
322 348
330 296 329
274 281
232 240 248
3Q/15 2Q/16 3Q/16 9M/15 9M/16
Unit : $/MT
Olefins &Polyolefins
Aromatics &Styrenics
2.7 2.4 1.5 2.0 1.9
5.5 5.9
5.6 4.7 5.5
8.2 8.3
7.1 6.7 7.4
3Q/15 2Q/16 3Q/16 9M/15 9M/16
Unit : $/bbl
Olefins &Polyolefins
Aromatics &Styrenics
159 152 163
461 497 206 212 208
608 615
365 364 371
1,069 1,112
3Q/15 2Q/16 3Q/16 9M/15 9M/16
Olefins &Polyolefins
Aromatics &Styrenics
Unit : KMT
Market PTFMarket PTF
Crude intake (Mbbl)
Feed intake (KMT)
276 280 296 806 846 Olefins
211 207 222 602 651 Aromatics
Sales Volume and Revenue
16.3 16.6 16.2 50.0 49.7
Sales DistributionUnit : MB
Remark : Sales include imported intermediate products such as Propylene, Benzene
17
Petrochemical Group : Sales & PTF
8,138 7,497 7,617 23,964 21,895 Olefins
5,780 5,076 5,234 16,580 15,999 Aro & Styrenics
13,918 12,573 12,851 40,544 37,894 Petrochemical
YoY 2%QoQ 2%
YoY 4%
Local58%
Export42%
Local59%
Export41%
3Q/162Q/16
Top 5 Export Destination :Singapore, Japan, Hong Kong, China, Vietnam
Gross Integrated Margin (GIM)
18
• In 9M/16, Market GIM was $13.2/bbl, falling by $0.5/bbl compared to $13.7/bbl in 9M/15.
- Product spreads $1.1/bbl
- Everest project $0.6/bbl
• Net stock gain/(loss) was $-0.5/bbl (-853 MB), increased $-0.2/bbl(-296 MB) compared to net stock gain/(loss) of $-0.3/bbl in 9M/15 (-557 MB)
• Accounting GIM was $12.7/bbl (22,418 MB), lower by $0.7/bbl from $13.4/bbl (22,795 MB) in 9M/15.
9M/16 vs 9M/153Q/16 vs 2Q/16
• In 3Q/16, Market GIM was $12.5/bbl, falling by $0.9/bbl compared to $13.4/bbl in 2Q/16.
- Product spreads $1.0/bbl
- Everest project $0.1/bbl
• Net stock gain/(loss) was $-1.1/bbl (-642 MB), dropped by $3.5/bbl compared to net stock gain/(loss) of $2.4/bbl in 2Q/16 (1,421 MB)
• Accounting GIM was $11.4/bbl (6,437 MB), lower by $4.4/bbl(2,853 MB)from $15.8/bbl (9,290 MB) in 2Q/16.
Accounting GIMMarket GIM
14.1 14.7 13.7 13.4 12.5 13.7 13.2
(3.1) (3.5)(1.2)
3.8 0.1
(0.1)
0.9
(0.7) (1.3)(1.5) (1.4) (1.2) (0.2) (1.4)
10.39.9
11.0
15.8
11.4 13.4 12.7
3Q/15 4Q/15 1Q/16 2Q/16 3Q/16 9M/15 9M/16
Hedging Stk G/(L) & LCM Market GIM
4.8 7.1 6.0
4.0 4.2 5.9 4.7
8.2 6.6
6.7 8.3 7.1
6.7 7.4
1.1 1.0 1.0 1.1
1.2 1.1 1.1
14.1 14.713.7 13.4 12.5
13.7 13.2
3Q/15 4Q/15 1Q/16 2Q/16 3Q/16 9M/15 9M/16
Power & Utility Petrochem Petroleum$/bbl $/bbl
80
Financial Highlight: 3Q/16 VS 2Q/16; 2,399 MB (65%)
• Crude intake of 16.17 M.bbl (176 KBD), decreased from 2Q/16 by 0.41 M.bbl (6 KBD) or 2%
• Market GIM $12.50/bbl, decreased by $0.89/bbl or 7% as the lower product spreads
and THB appreciation from 35.45 THB/$ in 2Q/16 to 35.01 in 3Q/16
• Everest increased from Operation 174 MB, Proc.&Corp. 88 MB but Commercial decreased 104 MB
• Net Stock gain/(loss) was $-1.13/bbl (-642 MB), dropped by $3.55/bbl (-2,063 MB)
• SG&A rose 171 MB mainly from donation and other expenses
• Tax exp. decreased as a recording of net deferred tax assets of 428 MB and
lower income tax exp. of 608 MB
• Others exp. increased: as the higher of financial costs and depreciation expenses from the COD of
UHV Project
Average Dubai price 2Q/16 = $43.18/bbl3Q/16 = $43.17/bbl
19
Net Profit2Q/16
Net Profit3Q/16
Volume Decrease
Margin Decrease
Stock Gain& Hedging
+LCM
OthersEverest Project
FX. Gain Increase
Selling Exp. + OPEX
Tax
Exchange rate (THB/USD)As atMar 31, 16 = 35.41 Jun 30, 16 = 35.34Sep 30, 16 = 34.88 Average2Q/16 = 35.45 3Q/16 = 35.01
Unit: MB
3,706 195665
158 2,063
171 158
1,036 657
1,307
Everest2/16 = 4333/16 = 591
MKT. GIM (Exc. Everest)2/16 = 7,4673/16 = 6,607(Deduct Volume 195)
2/16 = 1,4213/16 = (642)
2/16 = (3,495)3/16 = (3,666)
2/16 = 233/16 = 181
2/16 = (847)3/16 = 189
Fin exp. 249
Depre. 321
Others 87
Crude Production2/16 = 16.583/16 = 16.17
• Crude intake of 49.73 Mbbl (181 KBD) decreased by 0.23 Mbbl (2 KBD) or 0.5%.
• MKT GIM of $13.2/bbl – product spread down by $1.17/bbl but Baht depreciated from
33.87 THB/$ to 35.43 THB/$
• Higher profit from Everest of $0.72/bbl or 1,268 MB: Operation 557 MB, Commercial 514 MB and
Proc.&Corp. 197 MB
• Net Stock gain/(loss) of $-0.49/bbl (-853 MB), increasing by $-0.16/bbl (-296 MB)
• Selling & OPEX rising by 267 MB, especially staff costs, maintenance expense, and consulting fee
• Lower Tax exp. – In 9M/16, IRPC recorded deferred tax asset of 1,449 MB including deferred tax asset of 702 MB from 2015 loss
carry forward, written off RTT liquidation of 200 MB, IRPC Energy liquidation of 547 MB plus lower income tax exp. of 745 MB
• Other exp. increased – because in 9M/15, there was profit from reversal doubtful account of TPI Aromatics 2,823 MB while there
was higher gain from investment 209 MB and lower financial costs 51 MB
Financial Highlight: 9M/16 VS 9M/15; 928 MB (10%)
Exchange rate (THB/USD)As atSep 30,15 = 36.53Dec 31,15 = 36.25 Sep 30,16 = 34.88Average9M/15 = 33.87 9M/16 = 35.43
Average Dubai price 9M/15 = $54.31/bbl9M/16 = $38.92/bbl
Unit: MB
20
Net Profit9M/15
Net Profit9M/16
Volume Decrease
Margin Decrease
Stock Gain& Hedging Loss +LCM
OthersEverest Project
FX. GainSelling Exp.
+ OPEXTax
8,955 107 1,045 1,268 296 267
1,948
2,194 4,623
8,027
9M/15 = 09M/16 = 1,268
9M/15 = (557)9M/16 = (853)
9M/15 = (10,144)9M/16 = (10,411)
9M/15 = (1,405)9M/16 = 543MKT. GIM
(Exc.Everst)9M/15 = 23,3529M/16 = 22,200(Deduct Volume 107)
9M/15 =(2,315)9M/16 = (121)
TPI Aromatic 2,823
Depre. 387
Others 48
Other Rev. 1,365
Crude Production9M/15 = 49.969M/16 = 49.73
1.08
0.80 0.73
3Q/15 2Q/16 3Q/16
21
54,608 56,905 56,009
281 783
8,674 54,889 57,688
64,683
2,496 1,346 2,020
-
10,000
20,000
30,000
40,000
50,000
60,000
3Q/15 2Q/16 3Q/16
L/T Debt S/T Debt Cash
Debt Portfolio
As of Mar 31, 2016
ST Loan13%
LT Loan (USD)
8%
LT Loan31%
Bond (USD)13%
Bond (THB)35%
Debt StructureDebt Profile
Float 52 THB 67
Fixed 48 USD 33
Currency (%) Interest Rate (%)
Net Debt = 62,663 MB Ex. Rate = 34.88 Baht/$
52,393 62,66356,342
Financial Ratios
< 1.0x
Net D/E CA/CL
Unit : MBNet Debt
Maturity of Financing Debt
Unit : MB
3Q/15 2Q/16 3Q/16
Cost of Debt 4.18% 4.08% 4.12%
MB
ST Loan THB 8,674
LT Loan USD 145 5,039
LT Loan THB 20,044
Bond USD 238 8,298
Bond THB 22,628
Total 383 64,683
Debt Currency
USD Bond
THB Bond
USD Loan
THB Loan
As of Sep 30,16
0.70 0.72 0.79
3Q/15 2Q/16 3Q/16
2,740 3,040 2,540 3,740
10,270
698 698 3,313 698
349
-
7,386 5,000
3,364
6,890 8,300
-
3,438
19,424
10,853
7,802
17,509
2016 2017 2018 2019 2020-24
3Q/16 Highlight
Operation & Financial Performance
Industry Outlook
Strategic Direction
1
2
3
4
Agenda
22
Challenging Crude Oil Market: Volatile Crude Oil Price
23
4530 Sep
30
40
50
60
70
80
90
100
110
120
2014 2015 2016 2017 2018
Brent
Barclays
Citigroup
Credit Suisse
Deutsche Bank
Goldman Sachs
JBC
$40-50
$52-57
$63-77
24
Oil Price Forecast
World oil Supply / Demand balance
Source: Reuters , Nov 4
$/bblBrent
Source: PIRA World oil forecast, Oct 24
Demand growth for 2015 - 2017 continues to be very
strong at 1.7, 1.9, 1.6 MMB/D
Non-OPEC Supply is forecast to decline 0.6 MMB/D in 2016, down
from strong growth that occurred in 2015 of 1.7 MMB/D, but then
begins to grow again in 2017, estimated to rise 0.2 MMB/D.
Stock surplus will remain high through 2016 before returning to normal during 2017
Global Commercial Stock Surplus Crude Oil Price Forecast
Source: PIRA World oil forecast, Oct 24Source: PIRA World oil forecast, Oct 24
Short-Term Crude Oil and Petroleum Products Outlook
Driving Determinants
25
KeyProducts
Price(Q3/16)
Spread(Q3/16)
Q4/16vs.
Q3/16
Q1/17vs.
Q4/16
Refinery ($/bbl) ($/bbl) Outlook Outlook
Dubai 43.2 -
ULG95 54.7 11.6
GAS OIL0.05%S
54.1 11.0
FO 38.9 (4.3)
Lube Base Oil ($/T) ($/T) Outlook Outlook
500 SN 690 443
150 BS 972 725
• Lube Base Oil Price trend down in Q4/16 due to weak Regional demand and end user try to lean inventory
• 150BS demand drop in Q4/16, China switch to use lighter product due to cold weather.
• Global oil markets are moving close to balance as demand growth will accelerate more than supply growth amid potential recovery of ME oil supply disruption.
• Shale Oil Supply will become the market’s focus in 2017 and this will require higher oil prices, with Brent above $60/bblby Q3/17
• Gasoline cracks will be supported from strong demand around the World amid Chinese export quotas still at high level.
• Diesel cracks were boosted by pre-stocking demand ahead of winter season. Global high inventory may push downward pressure from destocking activity before summer
• Higher demand from the power sector in winter (Q4/16)
• In Q1/17, Fuel oil will be pressured by the arbitrage from Europe amid strong utility’s demand due to colder weather in NEA and refineries in the West will return from turnarounds.
• Q4/16 : Healthy Ethylene inflow from ME and return supply from NEA after turnaround
• Q4/16 : more Propylene supply from ME and SEA, plus new PDH plants (Ningbo Fuji 600 KTA + Haiwei 500 KTA) in China
• Q1/17 : lower supply in Asia and high propane price may effect PDH running rate
• The complex, SADARA especially downstream business has delayed at least half a year.
• The India producer will approach production shutdown (2 million tons/year PP plant is expected to remain offline for 25 days)
• Some Chinese end-users intend to build up stock ahead of the 2017
Short-Term Petrochemical Products Outlook
26
KeyProducts
Price(Q3/16)
Spread(Q3/16)
Q4/16vs.
Q3/16
Q1/17vs.
Q4/16
Olefins ($/T) ($/T) Outlook Outlook
Ethylene 1,057 668
Propylene 728 339
HDPE 1,234 845
PP 1,088 699
Styrenics ($/T) ($/T) Outlook Outlook
PS 1,199 810
ABS 1,373 984
Driving Determinants
• Elevated feedstock (SM) prices could drive demand for a
short period.
• Demand is expected to improve due to the start of Chinese
New Year preparations.
3Q/16 Highlight
Operation & Financial Performance
Industry Outlook
Strategic Direction
1
2
3
4
Agenda
27
28
IRPC Strategic Roadmap to 2020
2010
2014
20162017
Operational Efficiency Improvement
Asset Utilization Enhancement
Product and Service Improvement
Capacity and Products ExpansionProject Completion
• CHP I: Electricity +220 MW, Steam +420 T/hr
• PRP: Propylene +100 KTA
• EURO IV: Gasoline 15 KBD, Diesel 10 KBD, Jet
15 KBD
• TDAE +28 KTA, 150BS +25 KTA
• EBSM +60 KTA, ABS/SAN +60 KTA
• Lube Blending +60 M.Ltrs./year
Margin Improvement
• Operational Excellence
• Commercial Excellence
• Procurement & HR
Excellence
Benefit +134 MUSD
Incremental Margin
Organization Health
• Capability Building• Owner mindset &
Performance Orientation
• Cultural Changes
• PX
• AA/SAP
Fully Integrated PP
• PP Expansion +160 KTA
• PP Compounding +140 KTA
New investments through JV
INDIVIDUAL OWNERSHIP
SYNERGY
PERFORMANCE EXCELLENCE
INNOVATION
RESPONSIBILITY FOR SOCIETY
INTEGRITY & ETHICS
TRUST & RESPECT
UHV Propylene +320 KTA
BIG
Revenue Growth of 5%
EBITDA Growth of 10%
1st Quartile ROIC in
Petroleum and
Petrochemical Industry
STRONG LONG
Member of DJSI
Emerging Markets
Universe
29 29
Everest Height
29,029
ft.
2020
2016
2017
2018
2019
ROIC 14%1st Quartile ROIC in Petroleum &
Petrochemical Industry
EBITDA
29,029
MTHB
Credit : Guinness record
Basecamp (17,500 ft)
Camp l (19,500 ft)
Camp 2 (21,000 ft)
Camp 3 (23,500 ft)
Camp 4 (26,300 ft)
=
29
30
Increase High Value Added and Specialty Products Volume Ratio
16%
22%
31%
34%35%
39%
42%
45%
55%
57%
60%
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Sale Volume (MT)
ABS Powder
PE-Pipe
AMSAN
Anti-Dripping
Green ABS
EPS
Superadsorbent
Wire & Cable
Conductive
UHMW-PE
PP Alloy & PP Composite
Natural ColorCompound
• PPE
• PPC
160 KTA
140 KTA
Start up 3Q, 2017
• UHVPropylene +320 KTA
COD: Jul 16,2016
• PolyolIRPC Polyol 50%
PPC Rokita 50%
• IRPC A&L
IRPC 60%
Nippon A&L 37%
Sumithai 3%
Joint Venture
Wood Composite
Nano
31
R&D Roadmap
Improve Rate of New Product Introduction
• 30 new products from roadmap
• >20% CM
• Contribute 20% revenue
Increase Investment on R&D Resource
• Increase manpower from 81 to 169
• Invest in pilot scale facilities
• Setup research excellence centers
• Hire specialists for novel / niche research areas
Imbibe Culture of Innovation &
Change
• Consider autonomizingR&D function
• Simplify process enabling innovation
• Standardize definitions of novelty / specialty product
• Link new product KPIs to all functions
• Strengthen IP management
Transformation IRPC R&D to be EXCELLENT and be CHAMPION of Advanced Materials
Spend < 0.2% of revenueon R&D
0.27 resource / product
5% PhDs in R&D
Few Patents
<10% sales from new product
Ave CM for new product is 10-15%
2015
Source: F&S Benchmarking
Spend 2-3% of revenuein R&D
4-5 R&D personnel per new product
Hire 30-50% PhDs in R&D team
File >10 patents per million USD spend
Get 15-25% of salesfrom New Products
At a 20-25% margin (10-15% premium)
2025
Thank You
Investor Relations Contact: [email protected]
Tel. 02-649-7380, Fax. 02-649-7379
Presentation is available at
www.irpc.co.th
Click “Presentations”
This presentation material has been prepared solely for informational purposes only. IRPC is furnishing it solely for use by prospective investors / analysts in
the proposed event. IRPC makes no representations or warranties as to the accuracy or completeness of such information. By accepting this material each
recipient agrees that IRPC shall not have any liability for any representations (express or implied) contained in, or for any omissions from this presentation.
The information contained herein does not purport to be all-inclusive or to contain all of the Information that may be material to the recipient’s decision. Each
recipient of the information and data contained herein should perform its own independent investigation and analysis of the transaction and the creditworthiness of IRPC . Reference in this Disclaimer to this shall include references to the Appendices (if any) hereto.
34
3Q/16 3Q/15 2Q/16 YoY QoQ
Net sales 41,622 48,658 40,471 (14)% 3%
Market GIM 7,079 8,161 7,869 (13)% (10)%
Stock Gain/(Loss) 40 (1,597) 2,248 103% (98)%
LCM 4 (191) (6) 102% 167%
Oil Hedging Gain/(Loss) (686) (407) (821) (69)% 16%
Accounting GIM 6,437 5,966 9,290 8% (31)%
OPEX & Selling Exp. (3,666) (3,375) (3,495) (9)% (5)%
Other Incomes 328 1,190 312 (72)% 5%
EBITDA 3,098 3,781 6,107 (18)% (49)%
Cost of Finance (471) (202) (222) (133)% (112)%
FX Gain/(Loss) 181 (1,064) 23 117% 687%
Impairment Gain/(Loss) - 2 - (100)% -
Investment Gain/(Loss) 60 (29) 55 307% 9%
Other Expenses (40) - (20) - (100)%
Income Tax 189 (209) (847) 190% 122%
Net Profit 1,307 888 3,706 47% (65)%
Quarter %ChangeUnit : MB Remark
Net SalesYoY: 14% (price 12%, volume 2%)QoQ: 3% (price 2%, volume 5%)--------------------------------------------------------------------------------
Market GIMYoY: $1.63 /bbl (Prod. spread $2.46/bbl , Everest $0.83/bbl)
QoQ: $0.89/bbl (Prod. spread $1.04/bbl , Everest $0.15/bbl)
--------------------------------------------------------------------------------
Net Stock Gain/ (Loss) YoY: 1,553 MB
QoQ: 2,063 MB
------------------------------------------------------------------------------------------
Oil Hedging3Q/16 Hedging 10% of production volume (3Q/15 = 16%, 2Q/16 = 10%)--------------------------------------------------------------------------------
OPEX & Selling Exp.YoY: increased by donation, consultant and maintenance expenses --------------------------------------------------------------------------------
Other IncomeYoY: decreased by insurance compensation of VGOHT in 3Q/15--------------------------------------------------------------------------------
Cost of FinanceYoY, QoQ: increased by the increase of the interest expense after the COD of UHV project.--------------------------------------------------------------------------------
FX Gain/(Loss)Ex.rate Sep 30, 16 = 34.88 THB/USD
Jun 30, 16 = 35.34 THB/USD --------------------------------------------------------------------------------
Investment: higher of dividend received and share of gain
in associates--------------------------------------------------------------------------------
Financial Highlight: Quarterly Results
35
%Change
2016 2015 YoY
Net sales 120,343 154,125 (22)%
Market GIM 23,271 23,352 (0)%
Stock Gain/(Loss) 1,286 (3,223) 140%
LCM 288 3,068 (91)%
Oil Hedging Gain/(Loss) (2,427) (402) (504)%
Accounting GIM 22,418 22,795 (2)%
OPEX & Selling Exp. (10,411) (10,144) (3)%
Other Income 951 2,316 (59)%
EBITDA 12,957 14,967 (13)%
Cost of Finance (890) (941) 5%
FX Gain/(Loss) 543 (1,405) 139%
Impairment Gain/(Loss) - 27 (100)%
Investment Gain/(Loss) 82 (127) 165%
Other Expense (66) 2,830 (102)%
Income Tax (121) (2,315) 95%
Net Profit 8,027 8,955 (10)%
Unit : MB9M
Financial Highlight: 9 Months Results
Remark
Net Sales 22% (price 18%, volume 4%)-----------------------------------------------------------------------------------------------
Market GIM $0.56/bbl
(avg. fx 9M/16 = 35.43 THB/USD, 9M/15 = 33.87 THB/USD) Decreased in spread products $1.17/bblGain from Everest project $0.61/bbl
------------------------------------------------------------------------------------Net Stock Gain/(Loss) 296 MB or $0.16/bbl-----------------------------------------------------------------------------------------------
Oil HedgingIn 9M/16 hedging 14% of production volume (9M/15 = 14%)------------------------------------------------------------------------------------Other IncomeDecreased by insurance compensation of VGOHT in 9M/15------------------------------------------------------------------------------------Cost of FinanceDecreased by capitalizing interest exp. to the asset under construction increasingly and higher gain from CCS. ------------------------------------------------------------------------------------FX Gain/(Loss)Ex.rate Sep 30, 16 = 34.88 THB/USD, Dec 31, 15 = 36.25 THB/USD
------------------------------------------------------------------------------------Investment: increased by the higher of dividend received
---------------------------------------------------------------------------------------------Reversal of doubful debtIn 9M/15, reversing doubtful account of TPI Aromatics Plc.---------------------------------------------------------------------------------------------Income TaxDecreased by recorded of deferred tax assets
36
Statement of Financial Position
Assets : Inventory 1,837 MB- quantity rose from 8.93 Mbbl to 9.65 Mbbl
PP&E 3,840 MB - from UHV Project and PPE+PPC Project offset with Depreciation
Liabilities & Equity
IBD 10,978 MB – higher short-term loan of 8,470 MB and long-term loan drawdown 6,000 MB offset with
the repayment of the loan maturity 2,873 MB
Equity 3,589 MB – Net profit 8,027 MB, dividend paid 4,490 MB
Unit: MB
PP&E
Other Non-C/A
Other C/A
Cash on hand and at Bank
163,174
CurrentLiabilities
L/T Liabilities
Shareholders’Equity
30 Sep 16
167,014
31 Dec 15
115,997 119,836
11,192 11,129
32,408 34,029
3,576 2,020
75,878 79,467
51,086 38,467
36,210 49,080
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