Investor Presentation - Microsoft · Investor Presentation Taking a Look at 2019… 11 January February March April May June July August September October November December Weak Crack

Investor Presentation

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Hizmete Özel / ConfidentialHizmete Özel / Confidential

Investor Presentation November 2019


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Hizmete Özel / ConfidentialHizmete 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


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59.2

30

40

50

60

70

80

90Brent

Brent Crude Oil Prices ($/bbl)

CONS

• Increase in shale production in US

• Inventory Levels

• Impact of trade disputes

• Weak PMI in Europe and China

PROS

• OPEC+ supply cut

• Political instabilities in Middle East, Africa

and Latin America

• Impact of sanctions

REFINING INDUSTRY5

Source : Platts

As of October 31st


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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

12.911.4

14.1

16.216.6

17.9

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

14.8

16.417.0 17.4

0

5

10

15

20


Diesel Jet Fuel

REFINING INDUSTRY

Source : Platts

As of October 31st


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18.6

11.913.5

9.7

10.210.6

12.0

12.1

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

14.7

12.0

10.6 11.0

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

-6.9

-13.4

-17.0

-22.5

-25

-20

-15

-10

-5

0


Gasoline High Sulphur Fuel Oil

REFINING INDUSTRY

Source : Platts

As of October 31st


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

9

Compared to Q3 2018, Mid-distillate cracks performed stronger in Q3 while HSFO cracks were depressed due to

preparations for IMO regulation change.

12.3

13.9

14.6

16.815.4

12.2

15.6

Q1 Q2 Q3 Q4

Diesel

2019 2019-2015 Min - Max2019

Early signs of shift in demand for IMO 2020

Higher global refinery outages / maintenances

10.9

12.7 12.6

4.74.5

10.5

12.5

Q1 Q2 Q3 Q4

Gasoline

Lighter shale gas processing leading to increase in gasoline yields globally

Unexpected refinery outages

13.3

13.8

13.4

15.9

13.8

10.8

16.0

Q1 Q2 Q3 Q4

Jet

Strong seasonal demand

Decrease in jet cargos to Europe

Increasing IMO 2020 pressure

Elevated stock levels-12.6 -12.4

-10.0 -7.2

-5.8

-9.9

-12.3

Q1 Q2 Q3 Q4

High Sulphur Fuel Oil


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Crude Price Differentials to Brent ($/bbl)

10

Compared to Q3 2018, differentials were narrower mainly due to lower heavy crude availability in Q3 2019.

-12

-10

-8

-6

-4

-2

0

2

Q1

201

6

Q2

201

6

Q3

201

6

Q4

201

6

Q1

201

7

Q2

201

7

Q3

201

7

Q4

201

7

Q1

201

8

Q2

201

8

Q3

201

8

Q4

201

8

Q1

201

9

Q2

201

9

Q3

201

9

Arab Heavy

Basrah Heavy

Kirkuk

Kuwait

Ural

Average*

0

*Simple average of listed differentials

•Iran Sanctions

•Venezuela Sanctions

•OPEC+ Cut decision in 2018 andover-compliance

•Drone attack to Saudi fields

Supply Shocks on Heavy Crude

A total of ~4 mbd is missing from heavy crude pool since December

2018, leading to price increases and narrowing differentials


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Taking a Look at 2019…

11

January February March April May June July August September October November December

Weak Crack Margin Environment in 1HDiesel +5% Jet -9% Gasoline -36% HSFO -37% IMO Impact on Cracks

Elevated Concerns on Global Slowdown

Sanctions on Iran crude

OPEC Supply Cut <100% Compliance

Venezuela Crude Exports

Drone Attack to Aramco Oil Fields

Druzba Pipeline Contamination

OPEC Supply Cut >%120 Compliance

All waivers expiredon Iran

IMO Impact on Differentials

Cra

cks

Dif

fere

nti

als

OPEC Supply Cut 100-120% Compliance

TURKISH

MARKET


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4.99

4.52

4.40

4.58

2018

2017

2016

2015

Turkish Consumption 2015-2018 (Million tons)

13

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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1.63

1.61

0 1 1 2 2 3 3

8M 2019

8M 2018

3.50

3.38

0 1 2 3 4 5 6

8M 2019

8M 2018

0.26

0.24

0 1 1 2

8M 2019

8M 2018

Turkish Market, 8M 2019 (Million tons)

14

Contraction in diesel demand is softening following weak 1H. Aviation driven jet demand remains healthy.

* Transit flight consumption included

** Bunker excluded

16.05

16.92

0 5 10 15 20

8M 2019

8M 2018

Diesel

+3.4%

Jet Fuel*

Fuel Oil**Gasoline

-5.1%

+1.5%+5.3%


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

15

-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


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16%

84%

Tüpraş Shareholder Structure

17

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

18

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


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Nelson Complexity of Refining Companies


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Tüpraş Subsidiaries

3 Crude Oil Tanker: 479,765 DWT

1 Crude Oil - Product Tanker: 51,532 DWT

9 Product Tanker: 155,478 DWT“

1,640 stations as of 30 September 2019

As of August 2019 Market share: 18.9% in white products; 31.7% in black

products

OPET, Distribution, Tüpraş Share: 40%

Körfez Ulaştırma, Railway Transport, Tüpraş Share: 100%

~7% share in Turkish rail freight market

~1.4 mn ton of product and semi-product carried in 9M 2019.

Operates with 10 diesel locomotives and over 600 cistern wagons

DİTAŞ, Marine Transport, Tüpraş Share: 79.98%

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

* Tüpraş Trading UK is a direct branch of Tüpraş.20

Trading Office in London will be an important step into wider integration with the

global energy landscape by allowing to:o Closely monitor international market opportunities

o Support import and export operations

o Create additional value from supply chain and sales activities


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Crude Suppliers of Tüpraş

22

6 610

2 2 33 3 1 0

12 13 1310 10 10

2

1715

1114 14

7

14

6567

63

71

7679

81

0

10

20

30

40

50

60

70

80

90

2012 2013 2014 2015 2016 2017 2018

Crude oil imports by region (%)

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

Main crude suppliers in 2018


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Q3 Product Yields

23

2018 2019

White Products 75.8%

Production 7.7 mn tons

API 30.7

White Products 79.5%

Production 7.5 mn tons

API 31.49

LPG4%

Gasoline19%

Naphtha1%

Jet19%

Gasoil32%

Other2%

Kok3%

Fuel Oil7%

Asphalt13%

LPG Gasoline Naphtha Jet Gasoil

Other Kok Fuel Oil Asphalt

Light Distil.21%

Mid. Distil.51%

Other white4%

Black Prod.24%

LPG4%

Gasoline19%

Naphtha1%

Jet18%

Gasoil37%

Other2%

Kok3%

Fuel Oil7%

Asphalt9%

LPG Gasoline Naphtha Jet Gasoil

Other Kok Fuel Oil Asphalt

Light Distil.20%

Mid. Distil.55%

Other White 4%

Black Prod.20%


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Capacity Utilization and Quarterly Production Volume

24

Capacity utilization returned to peak levels after completion of RUP Maintenance.

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

Quarterly Production (Million Tons) Capacity Utilization* (%)

5.2

6.2

7.7

6.66.7

6.9

7.5

Q1 Q2 Q3 Q4

Quarterly Production (Million Tons)

2015 2016 2017 2018 2019

98

10

1

10

1

87

67

85

10

7

89 89 91 96

4 4 7

9

11

7

7

9 4 59

103 105 108

96

78

92

115

9994 97

105

2015 2016 2017 2018 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19

Capacity Utilization (%)

Crude Oil Semi Product Feedstock Total


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Sales (Million Tons)

25

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

2.9

-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)

27

Tüpraş’ 3.7 $/bbl Net Refining Margin in 9M 2019 was higher than 2.9 $/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

9.0

2.53.2

6.56.0

8.1

9.3

3.7

1.7 1.9

4.84.0

5.34.6

2.9

0

2

4

6

8

10

12

14

16

2013 2014 2015 2016 2017 2018 9M 2019

Tüpraş Gross Margin Tüpraş Net Margin Mediterranean

KEY FINANCIALS


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Income Statement (Million TL)

28

Tüpraş generated 956 mn TL EBITDA in Q3 2019.

* 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

Million TLQ3 Q3

%9M 9M

%2019 2018 2019 2018

Net Sales 23,309 30,247 -23 67,970 63,749 7

COGS -22,152 -26,337 -16 -64,150 -56,549 13

Gross Profit 1,157 3,910 -70 3,820 7,200 -47

Operating Expenses -451 -324 39 -1,244 -870 43

Income/Loss from other operations -98 -2,783 -407 -3,771

Operating Profit 608 802 -24 2,169 2,559 -15

Income/Loss from equity investment 63 47 34 172 185 -7

Operating Profit Before Fin. Income/Loss 671 849 -21 2,341 2,743 -15

Financial Income /Expense -817 -171 -2,214 -668

Profit Before Tax -146 678 127 2,075

Net Profit (excluding minority interest) -155 542 340 1,947

EBITDA *(mn.TL) 956 3,778 -75 3,301 7,021 -53

Inventory Gain/Loss -692 1,667 283 2,950 -90

EBITDA* (mn. TL) CCS 1,648 2,111 -22 3,018 4,071 -26


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Financial Highlights

29

Tüpraş recorded 3,301 MTL EBITDA in 9M 2019.

367 3351,575 1,033 851

1,080 688

1,542 2,2101,4951,144

867

1,528

3,778

9561,2081,505

1,237

1,887

2015 2016 2017 2018 2019

EBITDA (mn TL)

Q1 Q2 Q3 Q4

3,799 3,301

275 79869

378-375

710331

1,457

1,027870

750

581

992

542

-155

815

803

493

1,766

2015 2016 2017 2018 2019

Net Income¹ (mn TL)

Q1 Q2 Q3 Q4

1.8 1.8

1.1

1.3

1.7

1.01.1 1.2

1.3

1.1

2015 2016 2017 2018 Sep. 2019

Current Ratio & Net Debt / R. EBITDA

Net Debt / R. EBITDA Current Ratio

35%

22%

41%37%

21%

2015 2016 2017 2018 Sep. 2019

Return on Average Equity²

1) Excluding minority interest 2) Calculation based on roll ing net income

3,396

5,882

8,908

2,550

1,793

3,8123,713

340

1) Excluding minority interest 2) Calculation based on rolling net income


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Balance Sheet Analysis

30

Strong balance sheet maintained.

3.9

6.8

1.5 1.50.9

4.2

1 year 1-2 years 2-3 years 3-4 years 4-5 years Over 5 years

Redemption Schedule (Billion TL)

Loan Eurobond TL bond Total

0.8

-0.2

2.1

4.7

1.6

-0.7

-2.3

Dec-15 Dec-16 Dec-17 Dec-18 Mar-19 Jun-19 Sep-19

Working Capital Requirement (Billion TL)

6.96.1 6.2

12.010.6 10.1

8.7

Dec-15 Dec-16 Dec-17 Dec-18 Mar-19 Jun-19 Sep-19

Net Debt (Billion TL)

Proactive Financial Management

• Delevering continues despite operational headwinds

• Dynamic liquidity management ensures optimal cash and receivables management


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Q3 Profit Before Tax Bridge (2018-2019)

31

Decline in profit before tax was driven by narrow differentials and natural gas price hikes.

Million TL

Million TL

FX

Inventory

+2,473

-2,384


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2018 Profit Before Tax Bridge

32

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)

33

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


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Investments (Million $)

34

• 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

112

2019 9M


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9M 2019 Results

35KEY FINANCIALS

3.7

2.9

0 1 2 3 4 5 6

9M

Refining Margins ($/bbl)

Med Margin Tüpraş Net Margin

3.7 $/bbl net refining margin in 9M 2019

Med FY Exp

Tüpraş FY Target

98.3% total capacity utilization in 9M 2019

21.2 22.228 30

Production Sales

Operationals9M 2019 Target

22.2 mn tons of sales and 21.2 m tons of production in 9M 2019

112150

9M 2019 Target

Capex (mn $)

112 mn$ refining CAPEX in 9M 2019

98.3

0 20 40 60 80 100

9M

Capacity Utilization (%)


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Tüpraş Balance Sheet

36

30.09.2019 31.12.2018 Diff. Diff. (%)

Current Assets 28,945 20,962 7,983 38

Cash & C. Equivalents 10,106 5,983 4,123 69

Trade Receivables 6,063 5,429 635 12

Derivatives 350 176 174 99

Inventories 9,489 6,765 2,724 40

Pre-paid expenses 231 109 122 113

Other Current Assets 2,707 2,502 205 8

Long Term Assets 26,735 19,074 7,662 40

Financial Assets & Subsidiaries 1,368 1,271 97 8

Fixed Assets 20,290 12,397 7,893 64

Derivatives 122 168 -46 -28

Pre-paid expenses 349 378 -29 -8

Deferred Tax 3,114 3,566 -452 -13

Other Long Term Assets 1,492 1,293 199 15

Total Assets 55,681 40,036 15,645 39

Short Term Liabilities 27,358 15,950 11,408 72Financial Loans 3,860 4,113 -253 -6Trade Payables 17,834 7,496 10,337 138


Provisions 201 80 120 150

Other ST Liabilities 5,175 4,024 1,152 29

Long Term Liabilities 15,323 14,140 4,237 8

Financial Loans 14,990 13,836 1,154 8

Payables & Provisions 278 257 21 8


Other LT Liabilities 8 5 4 84

Total equity attributable to equity holders of the parent 12,839 9,825 3,014 31

Minority Interests 161 121 40 33

Total Liabilities & Equity 55,681 40,036 15,645 39


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Creating Competitive & Sustainable Shareholder Value

37

63%

33%

4%

Buy

Hold

Sell

Foreign Currency

Long Term

Tüpraş BB- (Neg.) B1 (Negative)

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

Koç Holding B1 (Negative) BB- (Stable)

Analyst Recommendations

92.6

99.5

95.3

95.5

95.0

0 25 50 75 100

Board

Stakeholders

Transparency

Shareholders

Overall

Tüpraş has one of the highest Corporate Governance Ratings.

KEY FINANCIALS


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Financial Policy

38

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:


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FX Exposure Management (30 September 2019)

39

* Cash flow hedge accounting : 864 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.

Cash

342

Forward & CFH2,463

Stock1,682

Receivables & Other Assets

98

Payables2,252

ST Financial Loans533

• RUP: 191• Other: 342

LT Financial Loans1,789

• RUP: 707• Eurobond: 700• Other Loans: 382

Consolidated Hard Currency Assets

Consolidated Hard Currency Liabilities

Million $

+11 mn $


www.tupras.com.tr

Growing

Tüpraş: Growing, Resilient, Profitable

40

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


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2019 Refinery Maintenance Schedule

42

Unit QuarterDuration(weeks)

Reason Status

İzmir

Plt 100 CDU Q4 2-3 Periodic

Plt-8200 Hydrocracker Q4 2-3 Periodic

Plt-8100 Vacuum Q4 2 Periodic

Plt 9200 CCR Q1 3 Completed

İzmit

RUP Q1&Q2 11 Completed

Plt 2 Crude Oil & Vacuum Q4 7-8 Periodic

Plt 7 FCC Q4 5-6 Periodic

Kırıkkale

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


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2019 Expectations

43

Med Complex margin expectation in 2019 is 2.75 – 3.25 $/bbl.

Net Tüpraş refinery margin expectation in 2019 is 4.0 – 4.5 $/bbl.

• Capacity utilization target is 95-100%.

• Production: ~28 million tons

• Total sales: ~30 million tons

Refining investments expectation in 2019 is ~150 Million $.

Med Complex

Margin

Tüpraş

Net Margin

Operations

Investment


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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 44


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Competition # 2 (Regional Competition)

45

• 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


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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

46

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 ~2K after Jan

1st, 2020 (some ports started bans on open-loop scrubbers thus this projection might change)

• As of 01/11/19, ~2.8K vessels are either fitted or scheduled to be fitted and

~0.6K vessels are on order book to be delivered with scrubbers

3.5

0.6

0.5

1.1

1.3

Current

HSFO

HSFO

Scrubbers

HSFO

Non-complianceULSFO MGO

Source : Market Reports

Appendix


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RUP feedstock and production (000 Tons)

48

Natural Gas 246

Vacuum Resid

1,214

Atm. Resid

3,036

Total Feed 4,496

Total Production

4,250

Raw Materials Products

APPENDİX


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Tüpraş Production Flow and Yield Breakdown

49

• Increased

conversion capacity

• Strong

integration among

refineries

APPENDİX


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European Pump Price Comparison

50

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


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Tüpraş - ESG

ESG

92.6

99.5

95.3

95.5

95.0

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 2019) 51


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Koç Holding

52

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 · Investor Presentation Taking a Look at 2019… 11 January February March April May June July August September October November December Weak Crack