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PETKİM PETROKİMYA HOLDİNG A.Ş.
ANALYST PRESENTATION14 August 2009
2
PETROCHEMICAL INDUSTRY & PETKİM
AGENDA
OPERATIONAL ACTIVITIES
GROWTH PLAN
FINANCIAL RESULTS
3
AGENDA
PETROCHEMICAL INDUSTRY & PETKİM
4
World Economy & Petrochemical Industry
RECUPERATION BEGINNING FROM THE SECOND HALF OF 2009. POSITIVE GROWTH IS EXPECTED IN 2010.
DUE TO THE CRISIS GROWTH RATES HAS DECELERATED IN ALMOST EVERY REGION OF THE WORLD.
WORLD PETROCHEMICAL PRODUCTION WAS DRAGGED DOWN TO THE LEVELS OF 15-20 YEARS EARLIER
Daily QNAF-C-NWE, QBRT- 05/09/2007 - 21/08/2009 (GMT)
Line, QNAF-C-NWE, Last Quote(Last)31/07/2009, 598Line, QBRT-, Last Quote(Last)31/07/2009, 529.78
PriceUSDT
.12
2003004005006007008009001,0001,100
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q32007 2008 2009
DUE TO THE SEVERE GLOBAL RECESSION THE OIL AND NAPHTHA PRICES SHARPLY DECLINED IN LINE WITH THE DEMAND CONTRACTION
GDP GROWTH %
THE WORLD PETROCHEMICAL SECTORCAPACITY UTILIZATION RATES ABRUPTLY DECLINED TO THE LEVELS OF 65-70%
THE MOST DRAMATIC FALL HAS BEEN IN THE POLYMER PRODUCTION IN EU COUNTRIES
%
CMAI
Nexant Platts
CEFICCEFIC
5
World Economy-Uncertainty Continues…
Source: CMAI
POSITIVE DEVELOPMENTS NEGATIVE DEVELOPMENTS
• The most severe recession since 1929
• Overborrowed consumers who are resistant towardsspending
• High inventories in automotive and constructionsectors
• The posibility of inflation to become a major problem
• Difficulty of finding loans, highly leveraged financialstatements
• Dwindling developed economies, the others who tryto survive
• Expectation of global growth rate to resume itsnormal trend after 2010
• Adoption of stimulus packages for the restoration of economic growth
• Declining energy prices• Falling food and other product prices• Taken measures against rising unemployment rates• Reduced investment costs; the lowest levels of
interest rates• Resilient services sector especially the health
industry• Improvement in consumer’s sentiment
6
Market Conditions
Sliding crude oil prices to $32 per barrel since January 2009 and resuming their upwards trend in February by reaching upto $70 per barrel in early June
Crude oil prices climbing up to USD 147 per barrel in June.
Ever increasing naphtha prices for the last six consecutivequarters and reaching up to 1,150 $/ton in mid-June.
Negative impact of the rising energy prices on the costsand profit margins.
Tumbling oil and naphtha prices to the five year lows at thesecond half of the year
Suffering producers from the erosion of margins, collapsing profitabilities
Extremely weak demand taking its toll on the operatingrates of the companies and temporarily shutting down of the plants.
Following the rally in crude oil prices naphtha pricessignificanty increasing from $350 to $550
After deteriorating rapidly over the last six month, petrochemical sector demonstrating a stabilization in thesecond quarter of 2009
Strengthening petrochemical product prices
Improving sectoral profitabilities
Low levels of capacity utilization rates all around the world in the second quarter.
2008 2009 H1
Positive impact of falling energy prices on the profitabilities
7
General Overview of Turkey
Source: Investment Supharbour and Promotion Agency
8
Growth Potential in the Domestic Market
PETKİM
Dominant Producer25% Market Share
Market Size$ 6-7 billion
1998-2008 CAGRThermoplasticsDemand 8%GDP 4%
-20,0
-10,0
0,0
10,0
20,0
30,0
40,0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Growth in Thermoplastics Demand GDP Growth
9
10
Company Overview• Established in 1965/Second complex commissioned in 1985• The sole petrochemical producer in Turkey• 25% domestic market share (2008) well positioned in
growing markets• TRY 895 mn net sales (2009 H1)• TRY 87 mn EBITDA (2009 H1)
• 15 main plants, 8 auxiliary units• Located in Aliağa near Izmir• Sits on a land of 19 mn sqm• Harbour, water dam, power generation unit (220 MW)• Adjacent to Tüpraş Aliağa Refinery
PETKİM
FACILITIES
MAIN FEEDSTOCKPRODUCTS
PRODUCTION
• Naphtha, LPG, C4, Condensate• Main product goups: olefins, polyolefins, vinyl
chain, aromatics and other basic chemicals
• 2.9 mn. tons of gross production realized in 2008• 3.2 mn. tons of gross production planned in 2009
11
PA10,3%
Free Float38,7%
SOCAR-TURCAS PETRO
CHEMICAL COMPANY
51,0%
Petkim’s Ownership Structure
Share Information (11 August 2009)
Stock Price Performance
Ownership Profile
Long-running privatization processcompleted in May 2008. SOCAR&TurcasConsortium submitted a bid of $ 2.04 bn
and acquired 51 % stake in Petkim successfully
Closing Price (TRY/Share) 7,40Market Cap ( TRY million) 1.515Market Cap ( $ million) 1.034
Free Float (%) 38,7
Relative Performance
405060708090
100110120
May-08
Jul-0
8Aug-0
8Sep
-08Nov-0
8Dec
-08Ja
n-09
Mar-09
Apr-09
May-09
Jul-0
9Aug-0
9
ISE 100 PETKIM
12
Petkim: The Strong & Tangible Symbol of Economical & Strategical Partnership
TURCAS is the first privately-ownedpetroleum distribution company in Turkey which focus on oil productsdistrubution and energy investmentswith its international strategicalpartnerships
SOCAR one of the world’s oldestpetroleum companies, has majorinvestments in Azerbaijan. SOCAR is a shareholder and major supplier in the 50 million ton capacity BTC crude oilpipeline and the BTE natural gaspipeline, which transports 6,6 million ton cubic meters of natural gas to Turkey
PETKİMA BRIDGE LINKING AEGEAN TO CASPIAN
13
Products and Capacity
PETKIMALIAGA COMPLEX
START-UP 1985
PETKIMPETKIMALIAGA COMPLEXALIAGA COMPLEX
STARTSTART--UP 1985UP 1985
TOTALCapacity 1,916,000 ton/yr
TOTALTOTALCapacity 1,Capacity 1,916916,000 t,000 toon/yrn/yr
Other Products1
Capacity 954,000 ton/yrOther ProductsOther Products11
Capacity 9Capacity 95454,000 t,000 toon/yrn/yr
Fiber Raw MaterialsCapacity 249,000 ton/yrFiberFiber Raw MaterialsRaw Materials
Capacity 249,000 tCapacity 249,000 toon/yrn/yr
ThermoplasticsCapacity 713,000 ton/yr
ThermoplasticsThermoplasticsCapacity 7Capacity 71313,000 t,000 toon/yrn/yr
1 Ethylene (520,000), VCM (152,000), PA (34,000), Chlorine (100,000), Benzene (134,000), MB (10,000), Plastic Products (4,000)
ETHYLENE 520 PROPYLENE 240C4 140 PY-GAS 390AROMATICS 346
BENZENE 160P-X 136O-X 50
CHLORINE 100VCM 152PVC 150LDPE 334 HDPE 96PP 144 MEG 89ACN 90PTA 70PA 34Power (MW) 226
Product Capacities(thousand tons)
PLANT CAPACITIESPLANT CAPACITIES
14
AGENDA
OPERATIONAL ACTIVITIES
15
• Achievement of the capacity utilization rates above than theEuro Area averages (96% CUR in the second quarter of 2009)
• Recruitment of 250 employees in the first six months of 2009
• 27% reduction in total energy costs compared to the last year
• Increase in market share from 24% to 29% due to the domesticdemand contraction
• One of the rare petrochemical companies which haveannounced a net profit
• Reemphasized strategical importance of Petkim
Petkim: Created Efficiencies
16
Petkim: Labor Productivity
Per Capita Marketable Production and Efficiency
Production per capita has increased from 457tons/capita in 200 to 539 tons/capita in H1
2009
Improvement in productivity and efficiency with the capacity increase
and reduced number of employees
Ongoing restructuring at organizational level:
Assessment of personnel efficiency withthe benchmarks (PerformanceManagement System)
Simplifying hierarchic level
Outsourcing of the services other thanthe main activities (maintanance, logistics)
Plant maintenance, power generation, harbourmanagement are currently managed in-
house.
0
100
200
300
400
500
600
2001 2002 2003 2004 2005 2006 2007 2008 2009H1
0
1000
2000
3000
4000
5000
6000
7000Net Sales Per Capita (Left Axis)
Marketable Production Per Capita (Left Axis)
Employees (Right Axis)
17
Petkim Efficiency Increase
Cost Efficiency Power Efficiency
Trading, Sales & Marketing Shell Global SolutionsRisk based HSE management and adoption of HSE
cultureEfficient asset management and the management of
planned shutdowns with the optimization techniques
By establishing Power Management System improvingsite energy efficiency at a sustainable level.
Setting up an advanced “steam cracker” model for theutilization of different feedstocks and the factoryoptimization
• Meeting the total needs of customers
• Trading to be conducted from new logisticcenters that will be established out of Aliağa
• Implication of alternative financial tools in orderto promote sales
• Energy savings program
• Feedstock flexibility in power generation
• Positive impact of power price reductions
• Switching over to LPG as an alternative tonaphtha following the cut in special cosumptiontax
• Efficiencies on production with the cost cuttingefforts and Petkim’s Suggestion and RewardSystem
• Raising capacity utilitization
18
Petkim: Production & Sales
Production Sales
Marketable Production (thousand tons)
Breakdown of Marketable Production 2009 H1
1.383
733 663398 294 369
1.409
0
200
400
600
800
1000
1200
1400
1600
2007 2008 H1 08 H1 09 Q2 08 Q1 09 Q2 09
Net Sales (TRY Mn)
Breakdown of Sales Revenues 2009 H1
2.175 2.320
1251895
520375
681
0
500
1.000
1.500
2.000
2.500
2007 2008 H1 08 H1 09 Q2 08 Q1 09 Q2 09
PVC11% PY-GAS
2%
LDPE28%
C53%
HDPE9%
PP12%
Benzene6%
ACN7%
P - X6%
Others6%
PTA4%
Costik3%
PA3%
PVC11%
PY-GAS4%
LDPE21%
C54%
HDPE6%
PP9%
Benzene10%
ACN7%
PTA4%
P-X6%
Others8%
Costik7%
PA3%
19
Petkim: Export
Breakdown of export revenues by product type 2009 H1
Breakdown of export by region 2009 H1
Export revenues by years (USD mn)
182
410358
523
296
129 153
4584
217
0
100
200
300
400
500
600
2004 2005 2006 2007 2008 H1 08 H1 09 Q2 08 Q1 09 Q2 09
USA8%
Others2%
Mid-East, Africa26%
Asia-Far East24% EU
Countries40%
Benzen25%
PP6%
PVC3%
PTA8%
P-X10%
C46%
Py-Gas10%
Caustic3%
Others9%
HDPE2%
AYPE18%
• Petkim products are exported to nearly 60 different countries
• Benzene, C4, LDPE, Py-Gas and P-X are the mainexport products.
•The third exporter in chemical industry in Turkey in 2008.
20
Petkim: Price Changes & Cost Base
50
100
150
200
Jan-07
Apr-07
Jul-0
7
Oct-07
Jan-08
Apr-08
Jul-0
8
Oct-08
Jan-09
Apr-09
Thermoplastics Naphta
Petkim Thermoplastics and Naphtha Price Changes
Global Basic Chemicals and Integrated EBITRaw Material and Product Prices*
167
87
36 32
54
-5
46
-10
40
90
140
190
2007 2008 H1 2008 H1 2009 Q2 2008 Q1 2009 Q2 2009
Cost Breakdown*
0
250
500
750
1.000
LDPE HDPE PP MEG PVC
Cost of naphthaProduct Prices
Index (January 2007=100)
Petkim EBITDA Performance (TRY Mn)
* As of 2009 H1 Kaynak: CMAI
Labour7,4%
Energy12,2%
Others10,8%
Raw Materials
69,6%
21
AGENDA
FINANCIAL RESULTS
22
2007 2008 1H 08 1H 09 2Q 08 1Q 09 2Q 09
Net Sales 2.175 2.320 1.251 895 681 375 520
Cost of Goods Sold (-) (1.970) (2.355) (1.234) (823) (671) (338) (485)
Gross Profit (Loss) 205 (35) 17 73 10 37 36
Gross Profit (Loss) Margin 9,4% (1,5%) 1,3% 8,1% 1,5% 9,9% 6,9%
Operating Expenses (-) (96) (93) (34) (31) (9) (11) (20)
Other Operating Income/(Expenses),net
(26) (4) 2 1 5 (2) 3
Operating Profit/(Loss) 82 (131) (15) 42 6 23 19
Financial Income/(Expenses), Net (14) (26) (1) 3 (7) (4) 7
Profit/(Loss) Before Taxation 68 (157) (16) 45 (1) 19 25
Deferred Tax (2) 6 (2) (4) (2) (7) 3
Net Profit/(Loss) for the Period 66 (151) (18) 41 (3) 12 28
EBITDA 167 (5) 46 87 36 32 54
EBITDA Margin 7,7% (0,2%) 3,6% 9,7% 5,2% 8,6% 10,5%
Financials
Income Statement (TRY Mn) (UFRS )
23
9883
5428
72 80
31
64
29 3214
28
020406080
100120
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09Cash Bank Debt
Receivables, Inventories and Payables (TRY Mn)
Balance Sheet (TRY Mn) (UFRS)
Financials
Cash&Bank Debt (TRY Mn)31/12/2008 31/03/2009
232
87
174
443
29
1.698
28
9
72
194
247
135
90
1.357
1.698
251
23
536
1.778
32
206
74
312
97
1.369
1.778
Cash&Cash Equivalents
Trade Receivables
Inventories
Other Current Assets
Current Assets
Non-Current Assets
TOTAL ASSETS
Financial Liabilities
Other Payables
Trade Payables
Short-Term Liabilities
Long-Term Liabilities
Shareholders’ Equity
TOTAL LIABILITIES
1.255 1.242
-300
-200
-100
0
100
200
300
400
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
Trade Receivables Inventories Trade Payables
30/06/2009
205
296
24
605
1.832
14
246
76
336
99
1.397
1.227
1.832
80
24
AGENDA
GROWTH PLAN
25
VISION AND MISSION
To become a regional force in petrochemicalsector
To achieve 40% market share in 2018 alongwith the sustainable growth
VISION
MISSION
26
PETKİM 2018
Targetting a “SUPERSITE”
● With the implementation of Refinery-Petrochemical-Power-Logisticsintegration to become a regional power in petrochemical industry
● By reaching a 40% domestic market share
● By producing high value added products, to establish “ClusterModel” with the participation of local and foreign investors
● With one of the largest and most intensive container harbours of Aegean and Mediterranean Region and has logistics support fields
27
PETKİM: Growth Plan & Strategy
Growth Plan
Short Term Growth Plan
Mid to LongTerm Growth Plans
• Capacity expansion/ debottlenecking• Business Transformation Program• Feedstock flexibility• Energy saving/cost reduction• Logistics• Sales and marketing• ERP Project• Trading activities
• Upstream investments(SOCAR&Turcas)
• Downstream investments• Energy-wind turbine• Logistics (harbour, railway)
Petkim’s main strategy is to increase market share and achieve high customer satisfaction
VISION 2018To become a regional
power in petrochemicalsector
40% market share in 2018
28
GROWTH WITH “UPSTREAM” INVESTMENTS REFINERY
ADVANTAGES
• Creating synergy with thevertical integration
• Feedstock security• Competitive advantage• Chance to be a global player
REFINERY• Allocation of 130 ha area to
SOCAR&Turcas Refinery A.S. for therefinery investment
• Additional income generation with therefinery services
• 30% investment cost cut with the currentinfrastructure
• Main customer of the refinery: Petkim
PETKİM: Growth Strategy
29
40% MARKET SHARE TARGET WITH DOWNSTREAM INVESTMENTS
PETKİM: Growth Strategy
ADVANTAGES
• Increasing product diversity• Producing high value added products• Strategical partnerships• The Cluster Model• Chemical Park (Petkim Supersite)• Accessing economies of scale
DOWNSTREAM INVESTMENTS• Sufficient infrastructure for the
investments• Double digit growth rates in the chemical
sector in Turkey• Increasing competitive advantage with
created synergy• New investment opportunities with the
local and foreign companies
30
PETKİM: Growth Strategy
GROWTH WITH ENERGY INVESTMENTS
POWER• Wind power
• Coal and/or natural gas based powerproduction plants with potentialpartners
• More power production
• Supporting national power grid
ADVANTAGES• Lower cost of power production with the
new investments
• Marketing of the redundant powerproduced
31
GROWTH WITH LOGISTICS INVESTMENTS
LOGISTICS• To become one of the key logistics
main terminals in the region
• High capacity of container handlingpotential
• High capacity of liquid and drycargo handling potential
• High capacity of logistics supportunits
ADVANTAGES• Enlarging harbour capacity and
utilization rate
• Storage of various solid, liquid, andcompressed gas chemicals
• Paving the way for potentialinvestments on transportation
• Import and export opportunities forchemicals
PETKİM: GROWTH STRATEGY
32
PETKİM PETROKİMYA HOLDiNG A.Ş.HEAD QUARTERSALİAĞA – İZMİR / TÜRKİYE
Tel: 0-232-6161240 (20 lines)0-232-6163240 (20 lines)
Fax: 0-232-6161248 0-232-6161439 0-232-6162490
Web site : www.petkim.com.tr , E-mail: [email protected]
PETKİM GUZELHISAR DAM PETKİM harbour