Investor Presentation - Microsoft · 2019-07-18 · Investor Presentation 54.5 66.0 0 10 20 30 40 50 60 70 80 90 100 Brent Brent Crude Oil Prices ($/bbl) CONS •Increase in number

Investor Presentation

www.tupras.com.tr

Hizmete Özel / Confidential

Investor Presentation July 2019


www.tupras.com.tr

Hizmete Özel / Confidential

Disclaimer

This presentation contains forward-looking statements that reflect the Company management’s

current views with respect to certain future events. Although it is believed that the expectations

reflected in these statements are reasonable, they may be affected by a variety of variables and

changes in underlying assumptions that could cause actual results to differ materially.

Neither Tüpraş nor any of its directors, managers or employees nor any other person shall have

any liability whatsoever for any loss arising from use of this presentation.

2


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Content

3CONTENT

• Refining Market Slides

• Turkish Market Slides

• Company Overview Slides

• Operations Slides

• Key Financials Slides

• Outlook Slides

• Appendix Slides

4-10

11-14

15-19

20-24

25-39

40-45

46-51

REFINING

MARKET


www.tupras.com.tr

54.5

66.0

0

10

20

30

40

50

60

70

80

90

100Brent

Brent Crude Oil Prices ($/bbl)

CONS

• Increase in number of rigs & shale

production in US

• Inventory Levels

• Impact of trade tariff negotiations

• Weak PMI in Europe and China

PROS

• OPEC+ supply cut through 2018 – 1H 2019

• Political instabilities in Middle East, Africa

and Latin America

• Healthy PMI data in developing countries

• Potential impact of sanctions

REFINING INDUSTRY

Source : Platts

As of July 16th.

5


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Refinery Capacity Change (mb/d)

6

2.7

0.5

1.9 2.0

1.5

0.5

2019 2020 2021 2022 2023 2024

Asia & Middle East Other

Source:, Reuters, International Energy Agency, Tüpraş, sector reports and news.

2019-2024 Net Capacity Additions

REFINING INDUSTRY

2.1

1.0

1.7

0.5

1.3

-1.0

0.2

-1.4

China

India

Middle East

Other Asia

Other

Japan

N. America

Europe

2012-2018 Net Capacity Additions by Region

1.2

1.1

0.6

1.1

0.8

-0.1

0.9 0.91.0

0.9

0.6

0.4

2019 2020 2021 2022 2023 2024

RefineryThroughput

Refinery Products Demand

2019-2024 Additional Refinery Throughput vs. Demand

Expectations until 2024:

• ~78% of net capacity additions to come from Asia & Middle East

• Global utilization rate to decline from 82% (2018) to 79% (2024)

• Net capacity and demand in Europe to remain roughly unchanged


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Middle Distillate Cracks ($/bbl)

7

7.2

10.0

10.4

11.5

12.1 12.212.6

13.6

14.3

13.7 13.6

15.9

14.1

15.5

19.5

15.014.9

16.2

15.0

12.2

12.9

11.413.0*

0

5

10

15

20

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

2016 2017 2018 2019

6.6

9.19.5

11.411.9

14.413.7

14.413.9

13.2 13.3

14.4

12.5

14.3

18.1

15.214.4

13.813.2

10.310.9

11.2

13.3*

0

5

10

15

20


Diesel Jet Fuel

REFINING INDUSTRY

Source : Platts

*As of July 16th


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18.6

11.913.5

9.7

10.210.6

12.012.1

13.0 13.1

13.4

14.4

9.6

5.55.0

3.5

1.7

2.9

9.0

12.1

10.0

9.4

14.4*

0

5

10

15

20


2016 2017 2018 2019

Gasoline and High Sulphur Fuel Oil Cracks ($/bbl)

8

-12.5

-10.2

-8.7

-12.2

-13.2

-11.9

-12.7

-15.2

-13.0

-9.1

-8.3 -8.5

-13.2

-10.9

-3.7

-6.8

-7.0

-5.0-5.5

-8.6

-11.3

-9.8

-6.7*

-20

-15

-10

-5

0


Gasoline High Sulphur Fuel Oil

REFINING INDUSTRY

Source : Platts

*As of July 16th


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Quarterly Crack Margin Comparison in 2015 – 2019 ($/bbl)

9

Compared to Q1 2018, mid-distillate and HSFO remained strong in Q1 (Diesel:+25%, Jet: +4%, HSFO: +54%) while

Gasoline cracks were weaker (-59%)

13.0

19.4 18.9

13.5

1515

11

1313

14

15

11

11

13

13

54.5

4

6

8

10

12

14

16

18

20

Q1 Q2 Q3 Q4

Gasoline

1615 15

11

8

9 9

1111 11

131212.3

13.914.5

16.7

15.4

6

8

10

12

14

16

18

Q1 Q2 Q3 Q4

Diesel

14

1111

9

78 8

1010

10

12 12

13.3 13.813.4

15.9

13.8

6

8

10

12

14

16

18

Q1 Q2 Q3 Q4

Jet Fuel

-12

-12-13

-16

-13

-15

-11-9

-9

-7 -7

-10

-12.6 -12.4

-10.2

-7.1-5.8

-20

-16

-12

-8

-4

Q1 Q2 Q3 Q4

High Sulphur Fuel Oil

2015 2016 2017 2018 2019

Low stock levels

Strong demand

growth in both

developed and

emerging markets

Shale oil boosted

light product

production

High stock levels &

low demand in US

Limited heavy crude

availability post Iran

sanctions with OPEC+

production cut curbing HSFO

supply

New fuel oil conversion units

starting in Asia & Middle East

Low stock levels

Strong demand

growth in Asia


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Crude Price Differentials ($/bbl)

10

Heavy Crude differentials continued narrowing in Q1 with lower availability mainly due to OPEC+ cuts,

Iran sanctions and limitations on Venezuelan supply.

-10

-8

-6

-4

-2

0

2

1Q

20

14

2Q

20

14

3Q

20

14

4Q

20

14

1Q

20

15

2Q

20

15

3Q

20

15

4Q

20

15

1Q

20

16

2Q

20

16

3Q

20

16

4Q

20

16

1Q

20

17

2Q

20

17

3Q

20

17

4Q

20

17

1Q

20

18

2Q

20

18

3Q

20

18

4Q

201

8

Q1 2

01

9

Brent

Heavy Crude Price Differentials

İran Heavy

Ural

Kirkuk

Arab Heavy

Kuwait

Basra HeavyOPEC

Cut Decision

Iran

Sanctions

OPEC

Cut Decision

TURKISH

MARKET


www.tupras.com.tr

4.99

4.52

4.40

4.58

2018

2017

2016

2015

Turkish Consumption 2015-2018 (Million tons)

12

Diesel

-3.9%

Jet Fuel

0.39

0.49

0.58

0.60

0 0 0 0 1 1

2018

2017

2016

2015

Fuel Oil*Gasoline

+6.5% -3.5%

23.58

24.17

22.31

20.56

0 4 7 11 14 18 21 25

2018

2017

2016

2015+8.5%

+8.3% +2.7%

+3.1%

-20.1%

REFINING INDUSTRY

2.34

2.30

2.23

2.10

2018

2017

2016

2015

*Bunker excluded.

-2.4% +10.4%

+1.8%

-15.7%


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1.35

1.38

0 1 1 2 2 3 3

2019 4M

2018 4M

0.18

0.16

0 0 0 1 1 1

2019 4M

2018 4M

Turkish Market, 4M 2019 (Million tons)

13

Diesel & Jet Fuel consumption contracted in first 4M of 2019.

*Bunker excluded

7.18

7.77

0 2 4 6 8 10

2019 4M

2018 4M

0.71

0.71

0 1 1 2

2019 4M

2018 4M

Diesel

-2.1%

Jet Fuel

Fuel Oil*Gasoline

-7.5%

+0.6% +12.1%


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Turkey’s Import / Export Balance (Net) (Million Tons)

14

-3.1

2.4

-12.0

1.0

0.0

-3.2

2.4

-13.6

1.4

-0.4

-16

-12

-8

-4

0

4

LPG Gasoline Diesel Fuel Oil Jet

2013 2014 2015 2016 2017 2018

Import

Export

REFINING INDUSTRY

COMPANY

OVERVIEW


www.tupras.com.tr

16%

84%

Tüpraş Shareholder Structure

16

Energy Investments Inc. (SPV)

Free Float

*Distribution of Domestic/

Foreign Ownership of Tüpraş

Shares

*As of December 31st, 2018.

Foreign

Ownership

Domestic

Ownership

COMPANY OVERVIEW


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Tüpraş Refining Assets & Distribution Network

17

Turkey Storage

Capacity

Tüpraş : 50%

Opet : 7%

Other Companies : 43%

İzmit

• 11.3 MT Capacity

• NC: 14.5

• Storage Capacity: 2.99 mn m3

İzmir

• 11.9 MT Capacity

• NC: 7.66

• Storage Capacity:2.51 mn m3

• Base oil 400 k tons

Kırıkkale

• 5.4 MT Capacity

• NC: 6.32

• Storage Capacity: 1.27 mn m3

Batman

• 1.4 MT Capacity

• NC: 1.83

• Storage Capacity:0.27 mn m3

Total Capacity : 30.0 mn ton

Nelson Complexity : 9.5

Tüpraş Storage Cap. : 7.0 mn m3

OPET Storage Cap. : 1.0 mn m3

COMPANY OVERVIEW


www.tupras.com.tr 18COMPANY OVERVIEW

Nelson Complexity of Refining Companies


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Tüpraş Subsidiaries

3 Crude Oil Tanker: 480,859 DWT

1 Crude Oil - Product Tanker: 51,532 DWT

9 Product Tanker: 155,535 DWT“

1,634 stations as of 31 March 2019

As of February 2019 Market share: 18.3% in white products; 32.5% in black

products

OPET, Distribution, Tüpraş Share: 40%

Körfez Ulaştırma, Railway Transport, Tüpraş Share: 100%

~7% share in Turkish rail freight market

Operates with 491 cistern wagons and 5 diesel locomotives.

Ordered 5 locomotives to be delivered for Q2-2019.

DİTAŞ, Marine Transport, Tüpraş Share: 79.98%

๏ We have opened a trading office in London to:

๏ Trading office will be an important step in Tüpraş’s integration to global energy market.

Closely monitor

international market

opportunities,

Support import and

export operations,

Create additional value

from supply chain and sales

activities.

Tüpraş Trading UK, Trading, Tüpraş Share: 100%*

* Tüpraş Trading UK is a direct branch of Tüpraş19


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Crude Suppliers of Tüpraş (Million Tons)

21

6 610

2 2 33 3 1 0

12 13 1310 10 10

2

1715

1114 14

7

14

65 6763

7176

7981

0

10

20

30

40

50

60

70

80

90

2012 2013 2014 2015 2016 2017 2018

Africa America Europe CIS Middle East

In 2018, Tüpraş purchased 20 different types of crude oil from 12 countries, with gravities ranging between

19-47 API.

OPERATIONS


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Q1 Product Yields

22

2018

LPG4%

Gasoline22%

Naphtha0%

Jet19%ULSD

34%

Other0%

Coke4%

Fuel Oil7%

Bitumen10%

Light Distil.26.0%

Mid. Distil.53.6%

Other 0.0%

Black Prod.20.4%

LPG4%

Gasoline21%

Naphtha2%

Jet17%

ULSD33%

Other2%

Coke2%

Fuel Oil15%

Bitumen5%

Light Distil.25.8%

Mid. Distil.50.9%

Other 1.7%

Black Prod.21.6%

2019

White Products 78.5%

Production 5.2 mn tons

API 31.33

White Products 77.4%

Production 6.7 mn tons

API 32.36


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Capacity Utilization and Quarterly Production Volume

23

Tüpraş achieved 94% Capacity Utilization in Q1 2019 (78% in Q1 2018).

*Capacity utilization calculation is based on 30 mn tons for Q1 2019 and onwards.

Quarterly Production (Million Tons)

6

7

7 7

7 7

77

78

8

6

5

6

8

77

4

5

6

7

8

9

Q1 Q2 Q3 Q4

2015 2016 2017 2018 2019

Capacity Utilization* (%)

71

98101 101

90

67

85

107

89 89

4

44 7

5

11

7

7

9 4

75

103 105 108

95

78

93

115

9994

2014 2015 2016 2017 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19

Crude Oil Semi Product Feedstock


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Sales (Million Tons)

24

Tüpraş generated 29.8 million tons of total sales 2018. Jet fuel and diesel sales increased by 7.4% and

5.3% compared to 2017, respectively.

16.9

22.224.8 25.7 25.6

5.3

6.55.5 5.8 4.2

22.2

28.730.3 31.5 29.8

-1

5.25

11.5

17.75

24

30.25

2014 2015 2016 2017 2018

Domestic Sales

Export

6.79.2 10.8 11.3 11.9

3.9

4.84.5 4.5 4.9

1.8

2.02.2 2.2 2.2

1.9

2.93.4 3.5 2.9

14.3

18.920.9 21.6 21.9

2014 2015 2016 2017 2018

Diesel

Jet Fuel

Gasoline

Bitumen

Total Sales

Domestic Sales of

Key Products

OPERATIONS

Dist.; 50%

THY Opet; 10%

Jet; 6%

LPG; 3%

Other; 6%

Export; 14%

Bitumen; 10% Military;

1%

POAŞ27%

OPET30%

SHELL17%

BP13%

TP1%

AKPET4%

OTHER8%

Customer

Groups

Sales to

Distributors

29.8 mn tonnes

14.8 mn tonnes


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5.5

2.02.9

1.2

4.2

1.7 2.0

4.84.0

5.44.6

3.2

-2

0

2

4

6

8

10

12

Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19

Month

Annual

Margin Environment ($/bbl)

26

Tüpraş’ 4,2 $/bbl Net Refining Margin in Q1 2019 was higher than 3,6 $/bbl Med Complex margin.

Premium to the benchmark Mediterranean

peers’ refining margin due to:

• Refined products deficit characteristic to

the Turkish market

• Access to cheaper sources of crude oil

• Ability to use heavier and sour crudes

• Proximity to major suppliers

• Reduces transport costs

• Implemented cost reduction measures

• Energy efficiency programs

• Capacity to produce higher value added range

of refined products

• Direct pipeline connections with domestic clients

• High export capability

Med Complex

9.610.6

11.911.2

12.9

14.7

11.0

2.53.2

6.56.0

8.1

9.3

4.2

1.7 2.0

4.84.0

5.34.6

3.6

0

2

4

6

8

10

12

14

16

2013 2014 2015 2016 2017 2018 Q1 2019

Tüpraş Gross Margin Tüpraş Net Margin Mediterranean

KEY FINANCIALS


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Income Statement (Million TL)

27

Narrowing differentials and RUP maintenance led to the 18% decline in EBITDA in Q1 2019 compared to Q1 2018.

Million TL Q1 2019 Q1 2018 % 12M 2018 12M 2017 %

Net Sales 20,708 13,421 54 88,552 53,948 64

COGS -19,717 -12,352 60 -79,328 -47,734 66

Gross Profit 991 1,069 -7 9,224 6,214 48

Operating Expenses -372 -268 39 -1,307 -1,150 14

Income/Loss from other operations -390 -111 251 -2,181 -206 958

Operating Profit 228 690 -67 5,736 4,857 18

Income/Loss from equity investment 63 52 21 257 234 9

Operating Profit Before Fin. Income/Loss 291 742 -61 5,993 5,092 18

Financial Income /Expense -601 -271 122 -2,268 -618 267

Profit Before Tax -310 472 -166 3,724 4,474 -17

Net Profit (including minority interest) -375 378 -199 3,761 3,841 -2

EBITDA (*) 851 1,033 -18 8,908 5,882 51

Inventory Gain/Loss 301 267 13 2,741 612 348

EBITDA CCS (*) 550 766 -28 6,167 5,270 17

* On CMB reports, EBIT includes extra items such as FX impacts of trade receivables and payables. In our EBITDA calculation, FX related items are excluded from EBIT as customary in international practices.

KEY FINANCIALS


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Financial Highlights (Million TL)

28

Current Ratio & Net Debt/ R.EBITDA

EBITDA

Tüpraş generated 851 MTL EBITDA in Q1 2019.

Net Income

Return of Average Equity*

26%35%

22%

41% 37%46%

0

0

0

0

0

1

1

2014 2015 2016 2017 2018 2019

513 278 83

876387

-375

361 713

335

1,464

1,035379

751

586

1,000

551217

822

809

501

1,789

1,470

2,564

1,813

3,841 3,761

2014 2015 2016 2017 2018 2019

*Rolling net income

-77 367 3351,575 1,033 851-66

1,080 688

1,542 2,210

489

1,144867

1,528

3,778

340

1,2081,505

1,237

1,887

685

3,7993,396

5,882

8,908

2014 2015 2016 2017 2018 2019

4th Q

3rd Q

2nd Q

1st Q

1.2

5.6

1.8 1.8

1.1 1.0 1.2

0.90.8

1.01.1

1.2

1.3

1.1

0.0

0.3

0.6

0.9

1.2

1.5

0

1

2

3

4

5

6

2013 2014 2015 2016 2017 2018 1Q 2019

Net Debt/R.EBITDA Current Ratio


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Balance Sheet Analysis (Billion TL)

29

1.1 1.2

0.2 0.5

1.8

3.32.6

2.02.6

2.2

3.24.0 4.0

5.65.1

5.7

6.9

9.4

5.5

6.5

0.0

2.0

4.0

6.0

8.0

10.0

Jun

-14

Se

p-1

4

De

c-1

4

Ma

r-1

5

Jun

-15

Se

p-1

5

De

c-1

5

Ma

r-1

6

Jun

-16

Se

p-1

6

De

c-1

6

Ma

r-1

7

Jun

-17

Se

p-1

7

De

c-1

7

Ma

r-1

8

Jun

-18

Se

p-1

8

De

c-1

8

Ma

r-1

9

7 6.95.7

4.5 4.6 4.84 3.5

4.95.9

7.1

9.5

7.7

9.68.4

10.5

12.6

16.7

7.7

13.3

0

5

9

14

18

Jun

-14

Se

p-1

4

Dec-1

4

Ma

r-15

Jun

-15

Se

p-1

5

Dec-1

5

Ma

r-16

Jun

-16

Se

p-1

6

Dec-1

6

Ma

r-17

Jun

-17

Se

p-1

7

Dec-1

7

Ma

r-18

Jun

-18

Se

p-1

8

Dec-1

8

Ma

r-1

9

0.6 0.7 0.7 1.0 1.3 1.8 1.7 2.9 3.5 3.3 2.1 2.3

7.4 7.59.8 9.7

11.214.2 13.8

16.4

6.2 6.6 7.0 8.6 8.3 9.1 8.18.3 8.1 9.3

10.2 10.7

4.0 4.6

5.3 6.53.6

5.4 4.1

5.6

6.8 7.3 7.79.7 9.7

11.09.9

11.2 11.612.6 12.4 13.0

11.4 12.2

15.116.1

14.8

19.617.9

-2.9

0.0

2.9

5.7

8.6

11.4

14.3

17.1

20.0

Jun-1

4

Sep-1

4

Dec-1

4

Ma

r-1

5

Jun-1

5

Sep-1

5

Dec-1

5

Ma

r-16

Jun-1

6

Sep-1

6

Dec-1

6

Ma

r-17

Jun-1

7

Sep-1

7

Dec-1

7

Ma

r-18

Jun-1

8

Sep-1

8

Dec-1

8

Ma

r-19

ST Loans LT Loans

Working capital improved in Q1 with tight balance sheet discipline and payables management.

Cash & Cash Equivalents Receivables

PayablesFinancial Loans

2.83.7 3.9

3.22.8 2.5

3.0

4.7 4.6

7.3

6.1

7.4

5.5

7.8

8.8

6.85.9

10.0

6.0

11.3

0.0

2.4

4.8

7.2

9.6

12.0

Jun

-14

Se

p-1

4

De

c-1

4

Ma

r-1

5

Jun

-15

Se

p-1

5

De

c-1

5

Ma

r-1

6

Jun

-16

Se

p-1

6

De

c-1

6

Ma

r-1

7

Jun

-17

Se

p-1

7

De

c-1

7

Ma

r-1

8

Jun

-18

Se

p-1

8

De

c-1

8

Ma

r-1

9

22.0


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Q1 Profit Before Tax Bridge (2018-2019)

30

PBT decline driven by narrowing differentials, natural gas price hikes, RUP maintenance, interest

expense and FX loss compared to Q1 2018.

Million TL

472

192

270 -224

-216

-320

-253

-334

102

-310

2018 Q1 PBT Production Crack Margin Differential RUP

MaintenanceNatural Gas Interest

ExpenseFX Loss Other 2019 Q1 PBT


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2018 Profit Before Tax Bridge

31

2018 PBT was lower mainly due to Crude Oil Differential and Crack Margin impacts. With the help of FX

based pricing, FX losses incurred from payables were recovered with Inventory Gains.

Million TL

KEY FINANCIALS

4.474

3.724

2.129

164

311

660

293

1.779

2017 Inventory Gain Crack Margin Crude OilDifferential

Production FX Other 2018

,

,

,

,


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Dividend (TL)

32

1.73

3.24 2.94

4.96

5.83

4.78

0.00

10.18

7.16

15.2214.83

2.31 2.502.98

3.93 3.85

1.580.00

6.50 6.20

13.60

15.15

-500

500

1500

2500

3500

4500

0

2

4

6

8

10

12

14

16

18

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Earings per Share Gross Dividend Total Payout

One of the highest dividend

yield in BIST

2012/2013 EPS includes the tax incentive.

KEY FINANCIALS


www.tupras.com.tr

Investments (Million $)

33

• Revamp of Crude Unit

• FCC Modernization

• New Sulphur Units

• Energy Saving Projects

• Optimization of conversion units

• 9.5 Nelson complexity

• High white product yield

• Process more heavier and sour crudes

• Run all refineries with 100% capacity utilization

• 6.5 bn USD investments since privatization

Ongoing Projects

Avg. 220 mn$

Avg. 943 mn$

Avg. 278 mn$

274

355400

186177

628

974

1,213

959

344

213185 138

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

KEY FINANCIALS

33

2019Q1


www.tupras.com.tr

Q1 2019 Results

34

2018 Refining Margins ($/bbl)

9.3

4.6

0

2

4

6

8

10

Tüpraş Net Margin Med Margin

99

104

113

96

94

2015

2016

2017

2018

Q1 2019

Axis Title

Capacity Utilisation (%)

Q1 2019 Operational (mn ton)

Capex (mn $)

213

185

138

33

2016

2017

2018

Q1 2019

• 94% Total Capacity

Utilization in Q1 2019

• 7.2 mn tons of sales and 6.7 mn

tons of production in Q1 2019

• 33 mn $ CAPEX in Q1 2019

KEY FINANCIALS

6.7

7.2

Production

Sales

Q1 Refining Margins ($/bbl)

4.23.6

0

1

2

3

4

5

6

Tüpraş Net Margin Med Margin


www.tupras.com.tr

Tüpraş Balance Sheet

35

Million TL 31/03/2019 31/12/2018 Difference % Difference

Current Assets 28,062 20,962 7,100 34

Cash & C. Equivalents 11,329 5,983 5,346 89

Receivables 6,429 5,429 1,000 18

Derivatives 329 176 153 87

Inventories 8,410 6,765 1,646 24

Pre-paid expenses 106 109 -3 -3

Other Current Assets 1,459 2,502 -1,043 -42

Long Term Assets 25,544 19,074 6,471 34

Financial Assets & Subsidiaries 1,260 1,271 -11 -1

Fixed Assets 19,298 12,397 6,900 56


Pre-paid expenses 365 378 -13 -4

Deferred Tax 2,789 3,566 -777 -22

Other Long Term Assets 1,934 1,293 642 50

Total Assets 53,606 40,036 13,570 34

Short Term Liabilities 25,145 15,950 9,196 58

Financial Loans 5,555 4,113 1,442 35

Payables 15,214 7,663 7,551 99


Deferred Incomes 7 5 2 41

Provisions 183 80 102 127

Other ST Liabilities 3,915 3,852 63 2

Long Term Liabilities 28,461 24,086 4,375 18

Financial Loans 16,368 13,836 2,532 18

Payables & Provisions 249 257 -9 -3

Derivatives 23 42 -19 -46

Other LT Liabilities 7 5 2 53

Equity 11,688 9,825 1,864 19

Minority Interests 126 121 5 4

Total Liabilities 53,606 40,036 13,570 34


www.tupras.com.tr

Creating Competitive & Sustainable Shareholder Value

36

69%

31%

Buy Hold

Foreign Currency

Long Term

Tüpraş BB+(Neg.) B1 (Negative)

Türkiye BB- (Neg.) B1 (Negative) B+ (Stable)

Koç Holding B1 (Negative) BB- (Stable)

Analyst Recommendations

92.9

99.5

94.0

95.5

94.8

0 25 50 75 100

Board

Stakeholders

Transparency

Shareholders

Overall

Tüpraş has one of the highest Corporate Governance Ratings.

KEY FINANCIALS


www.tupras.com.tr

Financial Policy

37

Financial Discipline: Risk management policies focusing on areas such as leverage, liquidity, counterparty risk, commodity,

interest rate and currency exposure.

KEY FINANCIALS

Leverage

& Liquidity• Net financial debt/EBITDA

• Net financial debt/Equity

Proactive in liquidity risk management & targets/limits for financial ratios:

• Current ratio

• Share of long term debt

Counterparty

Risk Policy

• Credit rating assessment and strong capital base.

• Cap on the maximum deposit allocated to a single bank.

• Threshold for deposits subject to banks shareholders’ equity.

Deposit is kept within bank-based limits

Interest

Rate & Fx

• The fixed/floating profile of financial debt.

• Proactive management of FX risk with derivative instruments

• Zero FX exposure target.

Commodity

Hedging

Policy

• Operational hedge: Optimum stock policy & forward pricing mechanism.

• Financial hedge: Expected inventory exposure for the year end is hedged by using derivatives.

• Hedging ratio increasing throughout the year.

Inventory Hedging Policy:

• Financial hedge: Crack margin (gasoline, diesel, jet fuel, fuel oil) risk mitigation by using derivatives.

• Statistical / mechanical approach: Historical average prices + standard deviations.

• Hedge ratio between %0-%50 with up to 1 year hedge tenor.

Crack Margin Hedging Policy:


www.tupras.com.tr

FX Exposure Management (31 March 2019)

38

* Cash flow hedge accounting : 942 mn $

Tüpraş continues to employ strict FX policies to mitigate currency risks stemming from

volatility.

Tüpraş continues to employ strict FX policies to

mitigate currency risks stemming from volatility.

• A significant portion of the Group's crude oil and refined

product purchases are denominated in US Dollars. In

addition, the Group finances its capital expenditures

mostly through borrowings denominated in US Dollars.

• Natural Hedge: The Group is able to mitigate some of the

impact of volatility in exchange rates through natural

hedges: crude oil and refined product inventories are US

Dollar denominated assets.

• Cash flow Hedge: RUP Facility financing loans

designated as hedging instruments of highly probable

export revenues.

• As a general Koç Holding financial policy, Group

companies are allowed to keep foreign exchange

positions within certain limits.

Consolidated

Assets

Consolidated

Liabilities

Cash

1,689

Receivables &

other assets

148

Stock

1,514

Forward & CFH

1,388

Payables

1,987

ST Financial

643• RUP : 209• Other: 434

LT Financial

1,996• RUP : 764

• Eurobond 700

• Other Loans : 532

+113 mn $

Million $


www.tupras.com.tr

Growing

Tüpraş: Growing, Resilient, Profitable

39

Tüpraş is a compelling investment case with strong sales growth, resilient and profitable operational and

financial structure.

• Operating in a diesel short market (supplies

45% of the market) , along with strong jet

growth

• Well poised to capture future opportunities

including IMO 2020 with its output

complexity

• Continuous investment in logistics,

infrastructure and trading capabilities

•

• Strong balance sheet with no

immediate rollover requirement.

• Secure receivables portfolio, tight

working capital management

• Pricing mechanism in place to address

commodity and FX fluctuations

• Benefits from full system optimization

given high complexity, procurement and

logistics flexibility

• Prudent hedging practices to ensure

stable earnings outlook

• High dividend pay-out ratio annually

Resilient Profitable

OUTLOOK


www.tupras.com.tr

2019 Refinery Maintenance Schedule

41

Unit QuarterDuration

(weeks)Reason

İzmir

Plt 100 CDU Q4 *2-3 Periodic Maintenance

Plt 9200 CCR Q1 3 Maintenance Completed

İzmit

RUP Q1&Q2 11 Maintenance Completed

Plt 2 Crude Oil & Vacuum Unit Q4 7-8 Periodic Maintenance

Plt 7 FCC Q4 5-6 Periodic Maintenance

Kırıkkale - - - -

Batman Plt 100 / 1100 Crude Oil & Vacuum Q1 10 Maintenance Completed

RUP Maintenance

Preparation and

planning phase: 2018

Maintenance Start: Feb 26

• Catalyst changes

• Checks on distillation columns, heat

exchangers and furnaces

• Detailed planned maintenance

Completed as of 13 May 2019


www.tupras.com.tr

2019 Expectations

42

Med Complex margin expectation in 2019 is 3.75 – 4.25 $/bbl.

Net Tüpraş refinery margin expectation in 2019 is 6.0 – 7.0 $/bbl.

• Capacity utilization target is 95-100%.

• Production: ~28 million tons

• Total sales: ~30 million tons

Refining investments expectation is 250 Million $.

Med Complex

Margin

Tüpraş

Net Margin

Operations

Investment


www.tupras.com.tr

Competition # 1 (SOCAR-STAR Refinery)

• Goldman Sachs has acquired a 13% stake in SOCAR Turkey for $1.3 billion.

• Goldman Sachs has the right to resell 10% of its stakes to Socar, and the remaining 3% to

‘Sermaye Investments Limited’ owned by SOCAR within 6 years at the same price.

STAR Refinery (Total Cap. 10 mn ton)

2019

mn ton

Production

Turkish

DemandBalance

Tüpraş Star Total

LPG 1.1 0.3 1.4 4.1 -2.7

Petchem Feeds 0.2 2.6 2.8

Gasoline 6.1 6.1 2.4 3.7

Jet Fuel 5.2 1.6 6.8 5.2 1.6

Diesel 10.7 4.5 15.2 26.5 -11.3

Coke 0.8 0.7 1.5 4.6 -3.1

Fuel Oil 1.8 1.8 1.3 0.5

Bitumen 3.1 3.1 3.1

Star Refinery Production Numbers (k ton)

Fuels

Petrochemical

Feedstock

Diesel 4,500

Jet Fuel 1,600

Sulphur 158

Petrocoke 698

LPG 260

Naptha 1,600

Mixed xylene 460

Reformate 524

• 3.3 billion $ credit agreement. First

4 years grace period total 15-18

years term.

• Project finance is supplied to company

(1.5 Billion $).

• It is expected to be operational as of

2019.

Credit : 3.3 Billion $

Equity : 2.4 Billion $

Total

Investment: 5.7 Billion $

OUTLOOK 43


www.tupras.com.tr

Competition # 2 (Regional Competition)

44

• Tüpraş is competing with 71 refineries in the Mediterranean and Black Sea markets.

• Mediterranean regional product balance is also affected from Middle East, North West Europe and Asia.

Mediterranean Black Sea

54 Refineries

7.8 mn bpd

17 Refineries

1.8 mn bpd

OUTLOOK


www.tupras.com.tr

0

3

6

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Compliant HSFO Non-compliant HSFO ULSFO MGO LNG

Marine Bunker Specification Changes and Its Effects

45

IMO 2020: the sulphur cap for marine bunkers is reduced from 3.5% to 0.5% (5000ppm)

- effective from 1 Jan 2020.

• Marine Gasoil (Diesel)

• Ultra Low Sulphur Fuel Oil (ULSFO)

• Scrubbers

• LNG

Compliance can be met with:

OUTLOOK

HSFO Replacement Expected in 2020, million b/d Gradual Change in Marine Bunker Fuels, thousand b/d

Expectations 2020 and beyond:

• MGO (Diesel) is expected to be the no.1 choice in 2020

• ULSFO/blend becomes more widespread through the years as

availability & compatibility issues get resolved

• Compliant HSFO use grows as scrubber numbers rise from

~2,000 after Jan 1st, 2020 (some ports started bans on open-loop scrubbers

thus this projection might change)

3.5

0.6

0.5

1.1

1.3

Current

HSFO

HSFO

Scrubbers

HSFO

Non-complianceULSFO MGO

Source : Market Reports

Appendix


www.tupras.com.tr

RUP feedstock and production (000 Tons)

47

Natural Gas 246

Vacuum Resid

1,214

Atm. Resid

3,036

Total Feed 4,496

Total Production

4,250

Raw Materials Products

APPENDİX


www.tupras.com.tr

Tüpraş Production Flow and Yield Breakdown

48

• Increased

conversion capacity

• Strong

integration among

refineries

APPENDİX


www.tupras.com.tr

European Pump Price Comparison

49

Not: Prices valid on 11 February 2019.

Gasoline (Krş / Lt)

211

324

210 233292

236294

242

62 65 4764 61

330

409 516 529 528554 595 596

604

733

791 809 820854

889 898

0

100

200

300

400

500

600

700

800

900

1,000

0

250

500

750

1000

TR Spa. Ger UK Eu19 Fra. Gre. Ita.

Pump No Tax Distr. Marg. Tax

Diesel 10 (Krş / Lt)

266

360

263347

395

273 286 275

63 78 69 55 63

272

349 398434

406 504 524 540601

709739

782 801847 865 878

0

100

200

300

400

500

600

700

800

900

1,000

0

100

200

300

400

500

600

700

800

900

1000

TR Spa. Ger. EU19 Gre. Fra. Ita. UK

APPENDİX


www.tupras.com.tr

Tüpraş - ESG

50ESG

92.9

99.5

94.0

95.5

94.8

0 25 50 75 100

Board

Stakeholders

Transparency

Shareholders

Overall

Foreign

Currency

Long Term

Tüpraş BB+ B1

Türkiye BB- B1 B+

Koç

HoldingB1 BB-

One of the highest Corporate

Governance Ratings3

Amount of water recycled:

20.8 mn m3

Water recycle ratio:

69.5%

Amount of solid waste recycled:

28.9 ktons

Solid waste recycle ratio:

88.6%

Energy cost saved:

36 million $

Greenhouse Gas Emission Reduced:

244 ktons CO2e

Environmental Training Provided:

10,391 person-hrs

Gender Equality

HeForShe (Global cooperation with UN Women

and Fenerbahçe Sports Club)

I Support Social Gender Equality for My

Country- (collaboration with Koç Holding)

Father Support Program in Batman Refinery

Education

Operational sponsorship for TEGV’s1 «Firefly

Mobile Learning Units Project» (262,627

students in 10 years)

Scholarship fund for TEV2 : «Our Energy For

Equality Never Ends»

Culture & Sports

Young Musicians on World Stages

Support for the Batman Disabled Sports Club

Association and Batman Tüpraşspor Football

Club

1 Education Volunteers Foundation of Turkey2 Turkish Education Foundation

In 2018

Environmental Responsibility Social Support Governance Excellence

3 Provided by CMB compliant SAHA Corporate Governance and Rating

Services Inc. (October 2018)


www.tupras.com.tr

Koç Holding

51

Turkey’s Leading Investment Holding Company

Turkey’s largest industrial and services group in terms

of revenues, exports, employees, taxes paid

and market capitalization.

Leading positions with clear competitive advantages in

sectors with long-term growth potential such as energy,

automotive, consumer durables and finance.

Pioneer in its Sectors

• The only Turkish company in Fortuna 5001.

• 20% CAGR in consolidated profit2 the last five years.

Notes : Data as of YE18, 2018 GDP reflects the projection of Turkish government’s New Economic Program.

(1) 2018 Report

(2) In TL terms between 2014-18

Turkey’s Leading Investment Holding Company

APPENDİX

Combined Revenues / GDP 8%

Total Exports / Turkey’s Exports 10%

Total MCap on Borsa Istanbul 16%

Documents

Investor Presentation - Microsoft · 2019-07-18 · Investor Presentation 54.5 66.0 0 10 20 30 40 50 60 70 80 90 100 Brent Brent Crude Oil Prices ($/bbl) CONS •Increase in number