Investor Presentation - Microsoft...Investor Presentation Turkish Consumption 2015-2017 (Million tons) 12 Diesel-4% Jet Fuel 0.49 0.58 0.60 0 0 0 0 1 1 2017 2016 2015 Gasoline Fuel

Investor Presentation

www.tupras.com.tr

Hizmete Özel / Confidential

Investor Presentation February 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.


www.tupras.com.tr

Content

3

• Refining Market Slides 4-10

• Turkish Market Slides 12-15

• Company Overview Slides 16-24

• Operations Slides 26-31

• Key Financials Slides 33-44

• Outlook Slides 46-50

• Appendix Slides 52-56

CONTENT

REFINING

MARKET


www.tupras.com.tr

65.8

0

10

20

30

40

50

60

70

80

90

100Brent

Brent Crude Oil Prices ($/bbl)

5

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

36.5

REFINING INDUSTRY

Source : Platts

As of February 15th.


www.tupras.com.tr

Refinery Capacity Change

6

530 526

0 0302

-5

-775-546

520

0

400120

390

-140

305

-352

270

0

510

0

198

-443

63

-189

244

300

417

150

40

-130

364

-57

70

0

156

-220

76

-143

105

-268

420

120

-116

244

46

-91

0

200

36

330

200

343

160

200

-2750

-1600

-450

700

1850

3000

China India Middle East Other Asia Other Japan North America Europe

2018 2017 2016 2015 2014 2013 2012

1.7 1.8

1.01.3

0.30.6

1.51.3

0.6

1.8

1.1

1.5

0.0

0.5

0.9

1.4

1.8

2.3

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Thousand Barrels/Day

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

Net Capacity Additions (mb/d)

REFINING INDUSTRY


www.tupras.com.tr

Middle Distillate Cracks ($/bbl)

7

7.2

10.0

10.4

11.5

12.1 12.212.6

13.614.3

13.7 13.6

15.9

14.1

15.5

19.5

15.014.915.9*

0

4

8

12

16

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

14.4

13.714.4

13.913.2 13.3

14.4

12.5

14.3

18.1

15.214.4

13.7*

0

4

8

12

16

20


Diesel Jet Fuel

REFINING INDUSTRY

Source : Platts



www.tupras.com.tr

18.6

11.913.5

9.710.210.6

12.0 12.1

13.0 13.1 13.4

14.4

9.6

5.55.0

3.51.7 1.6*

0

6

12

18

24


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

-4.8*

-20

-17

-14

-10

-7

-4


Gasoline High Sulphur Fuel Oil

REFINING INDUSTRY

Source : Platts



www.tupras.com.tr

Quarterly Product Crack Margins ($/bbl)

9REFINING INDUSTRY

Compared to Q4 2017, healthy mid-distillate environment continued in Q4 (Diesel:+34%, Jet: +33%)

supporting cracks, HSFO remained strong (+29%), while Gasoline cracks were weaker (-57%).

13

19 19

1415

15

11

1313

14

15

1110.9

12.7

12.5

4.7

4

6

8

10

12

14

16

18

20

Q1 Q2 Q3 Q4

Gasoline

16 1515

11

8

9 9

1111

11 13

1212.3

13.914.5

16.7

6

8

10

12

14

16

18

Q1 Q2 Q3 Q4

Diesel 2015 2016 2017 2018

14

1111

9

7 8 8

1010 10

1212

13.3

13.813.4

15.9

6

8

10

12

14

16

Q1 Q2 Q3 Q4

Jet Fuel

-12 -12

-13 -16

-13 -15

-11-9

-9

-7 -7

-10

-12.6 -12.4

-10.0

-7.1

-20

-16

-12

-8

-4

Q1 Q2 Q3 Q4

High Sulphur Fuel Oil


www.tupras.com.tr

Crude Price Differentials ($/bbl)

10

Heavy Crude differentials narrowed in Q4 with Iran sanctions, OPEC+ cut decision and higher interest

for fuel oil.

Heavy Crude Price Differentials

-10

-8

-6

-4

-2

0

15

Q1

15

Q2

15

Q3

15

Q4

16

Q1

16

Q2

16

Q3

16

Q4

17

Q1

17

Q2

17

Q3

17

Q4

18

Q1

18

Q2

18

Q3

18

Q4

Iran Heavy Kirkuk Kuwait Basra Heavy Arab Heavy Ural

Brent

Source : Platts

As of february 15th.

Opec Cut

DecisionOpec Cut

Decision

Iran

Sanctions

REFINING INDUSTRY

TURKISH

MARKET


www.tupras.com.tr

Turkish Consumption 2015-2017 (Million tons)

12

Diesel

-4%

Jet Fuel

0.49

0.58

0.60

0 0 0 0 1 1

2017

2016

2015

Fuel Oil*Gasoline

+6.5%-3.5%

24.17

22.31

20.56

10 14 17 21 24

2017

2016

2015+8.5%

+8.3%+2.7%

+3.1%-15.7%

REFINING INDUSTRY

2.30

2.23

2.10

2017

2016

2015

4.52

4.40

4.58

2017

2016

2015

*Bunker excluded.

Source: EMRA


www.tupras.com.tr

Strong Turkish Market, 11M 2018 (Million tons)

13REFINING INDUSTRY

• Tüpraş is well positioned in a growing, short market.

• Diesel and jet fuel consumption in Turkey grew in the first 11 months of 2018 with infrastructure projects and

aviation growth.

*Bunker excluded.

Source: EMRA

4.61

4.22

4 4 5 5

2018

2017

Diesel

+9,0%

Jet Fuel

0.34

0.44

0 0 0 0 0 0 0

2018

2017

Fuel Oil*

2.16

2.12

2018

2017

Gasoline

+4,2%

+1,7% -21.2%

23.13

22.20

6 9 12 14 17 20 23

2018

2017


www.tupras.com.tr

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

14

-3.1

2.4

-12.0

1.0

0.0

-3

3

-13

10

-16

-12

-8

-4

0

4

LPG Gasoline Diesel Fuel Oil Jet

2013 2014 2015 2016 2017

Import

Export

REFINING INDUSTRY

Source: EMRA

COMPANY

OVERVIEW


www.tupras.com.tr

14%

86%

Tüpraş Shareholder Structure

16

Energy Investments Inc. (SPV)

Free Float

*Distribution of Domestic/

Foreign Ownership of Tüpraş

Shares

*As of February 15th, 2019.

Foreign

Ownership

Domestic

Ownership

COMPANY OVERVIEW


www.tupras.com.tr

Tüpraş Refining Assets & Distribution Network

17

Turkey Storage

Capacity

Tüpraş : 58%

Opet : 9%

Other Companies : 33%

İzmit

• 11.0 MT Capacity

• NC: 14.5

• Storage Capacity: 3.03 mn m3

İzmir

• 11.0 MT Capacity

• NC: 7.66

• Storage Capacity:2.51 mn m3

• Base oil 400 k tons

Kırıkkale

• 5.0 MT Capacity

• NC: 6.32

• Storage Capacity: 1.41 mn m3

Batman

• 1.1 MT Capacity

• NC: 1.83

• Storage Capacity:0.25 mn m3

Total Capacity : 28.1 mn ton

Nelson Complexity : 9.5

Tüpraş Storage Cap. : 7.2 mn m3

OPET Storage Cap. : 1.1 mn m3

COMPANY OVERVIEW


www.tupras.com.tr 18COMPANY OVERVIEW

Nelson Complexity of Refining Companies


www.tupras.com.tr

Crude Suppliers of TÜPRAŞ (Million Tons)

19

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.

COMPANY OVERVIEW


www.tupras.com.tr 20

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

Total : 29.8 mn tons Distributors : 14.8 mn tons

COMPANY OVERVIEW

Sales By Customer (2018)


www.tupras.com.tr

OPET

21

830 885 915 938 966 1,009 1,073 1,126 1,152

394394

410 418 427435

431434

463

1,2791,325

1,325 1,3561,393

1,4441,504

1,5601,615

0

200

400

600

800

1000

1200

1400

1600

1800

2010 2011 2012 2013 2014 2015 2016 2017 2018

Opet Sunpet

Opet expanded its retail footprint from 1,560 stations in December 2017 to 1,615 stations in

December 2018.

Market share as of

November 2018

White

Product

36.18%

Black

Product

17.78%

COMPANY OVERVIEW


www.tupras.com.tr 22

• One of the biggest Turkish marine transportation companies of crude oil and petroleum products.

• Carries mainly Tüpraş’ crude oil purchases and makes the transfer operations of product and semi-products.

19.3

14.8

6.44.8

6.6

9.3

17.0

11.8

2.6

3.1

3.13.5

5.2

5.9

6.3

6.8

0

5

10

15

20

25

2011 2012 2013 2014 2015 2016 2017 2018

Product Crude Oil

11 tugboats

7 mooring boats

2 service boats

1 pilot boat

213.5 mn $Net Sales

69.1 mn $Op. Profit

3 Crude Oil Tanker: 479,765 DWT

1 Crude Oil - Product Tanker: 51,532 DWT

7 Product Tanker: 90,534 DWT

COMPANY OVERVIEW

DİTAŞ, Marine Transport -Tüpraş Share 79.98%


www.tupras.com.tr

Körfez Ulaştırma A.Ş.- Tüpraş Share 100%

23

Körfez Ulaştırma A.Ş.

On 16/06/2018, Freight Train Operator Certificate.

On 20/09/2018, Safety Management Certificate received.

Operates with 491 cistern wagons and 5 diesel

locomotives.

Ordered 5 locomotives to be delivered for Q2-2019.

Turkey's First

Private Railway Operator

COMPANY OVERVIEW

(*) including TCDD.

– 2018 Körfez Rail Transport = 0.5 mn tons

– 2018 Total Rail Transport = 1.7 mn tons (*)

– 2019 Total Rail Transport > 2 mn tons(*)

~7% Market Share in

Turkish Rail Freight Market


www.tupras.com.tr

Enhancing our Trading Capabilities

24

๏ 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.

COMPANY OVERVIEW


www.tupras.com.tr

Capacity Utilization and Quarterly Production Volume

99% Capacity Utilization in Q4 2018 (95% in Q4 2017), 96% for the whole year.

*Nameplate capacity calculated by standard 330 days of operations.

Quarterly Production (Million Tons)

4.5 4.6

5.4 5.5

5.6

6.9

7.37.4

6.66.7

7.27.4

7.1

7.87.7

6.3

5.2

6.2

7.7

6.6

4

5

6

7

8

9

Q1 Q2 Q3 Q4

2014 2015 2016 2017 2018

Capacity Utilization* (%)

71.3

98.1 100.9 101.4

90.0

67.3

85.4

107.2

89.03.6

4.4 4.4 6.7

5.0

10.7

7.1

7.3

9.0

75

103 105 108

95

78

93

115

99

2014 2015 2016 2017 Q42017

Q12018

Q22018

Q32018

Q42018

Crude Oil Semi Product Feedstock

12M 2018 CUR: 96%

OPERATIONS28


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Q4 2018 Product Yields

27

White Products %73.74

Production 6.3 mn tons

API 30.0



API 31.1

2017

LPG3%

Gasoline21%

Naphtha1%

Jet16%

ULSD31%

Other3%

Coke3%

Fuel Oil6%

Bitumen16%

Light Distil.24.9%

Mid. Distil.47.0%

Other 2.9%

Black Prod.25.2%

LPG3%

Gasoline19%

Naphtha3%

Jet17%

ULSD35%

Other1%

Coke3%

Fuel Oil9%

Bitumen9%

Light Distil.24.7%

Mid. Distil.52.8%

Other 1.5%

Black Prod.21.0%

2018

OPERATIONS


www.tupras.com.tr

LPG4%

Gasoline20%

Naphtha1%

Jet17%

ULSD33%

Other2%

Coke3%

Fuel Oil7%

Bitumen12%

2018 Product Yields

28



API 30.3



API 30.99

2017

Light Distil.25.0%

Mid. Distil.50.3%

Other 2.1%

Black Prod.22.6%

LPG4%

Gasoline20%

Naphtha1%

Jet19%

ULSD33%

Other2%

Coke3%

Fuel Oil7%

Bitumen12%

Light Distil.24.6%

Mid. Distil.52.2%

Other 1.7%

Black Prod.21.5%

2018

OPERATIONS


www.tupras.com.tr

Domestic Sales (Million Tons)

29

We 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

22.2

24.825.7 25.6

5.3

6.5

5.55.8

4.2

22.2

28.730.3

31.529.8

-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

4.8

4.5 4.54.9

1.8

2.02.2 2.2

2.2

1.9

2.9

3.43.5 2.9

14.3

18.9

20.921.6 21.9

2014 2015 2016 2017 2018

Diesel Jet Fuel Gasoline Bitumen

Total Sales Domestic Sales of Key Products

OPERATIONS


www.tupras.com.tr

Investments (Million $)

30

• 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 bn USD investments since privatization

Ongoing Projects

Avg. 247 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

OPERATIONS


www.tupras.com.tr

2018 Results

31

Refining Margins ($/bbl)

9.3

4.6

0

2

4

6

8

10

Tüpraş Net Margin Med Margin

99

104

113

96

2015

2016

2017

2018

Axis Title

Capacity Utilisation (%)

25.7

29.8

5 9 13 17 21 25 29 33

Production

Sales

2018 Operational (mn ton)

Capex (mn $)

213.0

185.0

138.0

2016

2017

9M 2018

• 96% Total Capacity

Utilization in 2018

• 29.8 mn tons of sales and

25.7 mn tons of production

in 2018

• 138 mn $ CAPEX in 2018

OPERATIONS


www.tupras.com.tr

-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

Month

Annual

Margin Environment ($/bbl)

33

Tüpraş’ 9.3 $/bbl Net Refining Margin in 2018 was higher than 4.7 $/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

4.56

5.30

3.97 4.83

1.67 1.95

4.21

1.17

2.89

1.95

5.54

9.610.6

11.911.2

12.9

14.7

2.53.2

6.56.0

8.1

9.3

1.7 2.0

4.84.0

5.34.6

0

2

4

6

8

10

12

14

16

2013 2014 2015 2016 2017 2018

Tüpraş Gross Margin Tüpraş Net Margin Mediterranean

KEY FINANCIALS


www.tupras.com.tr

Income Statement

34

Strong EBITDA generation continued in Q4 2018, Net Income supported further with FX and tax

revaluation gains.

Million TL Q4 2018 Q4 2017 % 12M 2018 12M 2017 %

Net Sales 24,803 14,604 70 88,552 53,948 64

COGS -22,778 -13,204 73 -79,328 -47,734 66

Gross Profit 2,025 1,400 45 9,224 6,214 48

Operating Expenses -438 -357 23 -1,307 -1,150 14

Income/Loss from other operations 1,591 -265 -699 -2,181 -206 958

Operating Profit 3,178 778 308 5,736 4,857 18

Income/Loss from equity investment 72 61 18 257 234 9

Operating Profit Before Fin. Income/Loss 3,249 839 287 5,993 5,092 18

Financial Income /Expense -1,600 -85 1.786 -2,268 -618 267

Profit Before Tax 1,649 754 119 3,724 4,474 -17

Net Profit (including minority interest) 1,789 501 257 3,761 3,841 -2

EBITDA (*) 1,887 1,237 53 8,908 5,882 51

Inventory Gain/Loss -212 341 -162 2,741 612 348

EBITDA CCS (*) 2,100 896 134 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


www.tupras.com.tr

Financial Highlights (Million TL)

35

Current Ratio & Net Debt/ EBITDA

EBITDA

Tüpraş achieved 1,887 MTL EBITDA in Q4 2018 with high capacity utilization and inventory gain.

Net Income

Return of Average Equity

24% 26%35%

22%

42%37%

0

0

0

0

0

1

1

2013 2014 2015 2016 2017 2018

130 513 278 83 876 387138

361 713

335

1,464

1,035819

379751

586

1,000

551

112217

822

809

501

1,789

1,1991,470

2,564

1,813

3,841 3,761

0

1,000

2,000

3,000

4,000

5,000

2013 2014 2015 2016 2017 2018

*Rolling EBITDA is calculated with dollar terms.

124

-77

367 335 1,575 1,033283-66

1,080 688

1,542 2,210

878489

1,144

867

1,528

3,778

1,066

340

1,2081,505

1,237

1,887

2,351

685

3,7993,396

5,882

8,908

0

2,500

5,000

7,500

10,000

2013 2014 2015 2016 2017 2018

4th Q

3rd Q

2nd Q

1st Q

1.22

5.63

1.81 1.79

1.061.34

0.940.82

0.991.08

1.15

1.31

0.0

0.4

0.7

1.1

1.4

0.00.61.21.82.43.03.64.24.85.46.0

2013 2014 2015 2016 2017 2018

Net Debt/EBITDA

Current Ratio

KEY FINANCIALS


www.tupras.com.tr

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

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

Balance Sheet Analysis (Billion TL)

36

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

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

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

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

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-15

Jun-1

5

Sep-1

5

De

c-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

ST Loans LT Loans

Strict financial management policies improved current ratio to 1.3x.

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

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

KEY FINANCIALS


www.tupras.com.tr

Q4 Profit Before Tax Bridge (2017-2018)

37

Q4 PBT growth driven by strong FX gain, higher white product yield and better crack margins.

Million TL

KEY FINANCIALS

754

1.649271

426846

31

553

126

Q4 2017 Crack Margin Production Inventory Loss Crude OilDifferential

FX Other Q4 2018

,


www.tupras.com.tr

2018 Profit Before Tax Bridge

38

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

,

,

,

,


www.tupras.com.tr

Dividend (TL)

39

1.73

3.24 2.94

4.96

5.83

4.78

0.00

10.18

7.16

15.22

2.31 2.502.98

3.93 3.85

1.580.00

6.50 6.20

13.60

0

1000

2000

3000

4000

0

2

4

6

8

10

12

14

16

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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

Tüpraş Balance Sheet

40

Million TL 31/12/2018 31/12/2017 Difference % Difference

Current Assets 20,962 20,366 596 3

Cash & C. Equivalents 5,983 8,802 -2,819 -32

Receivables 5,429 5,027 402 8

Derivatives 176 347 -171 -49

Inventories 6,765 5,291 1,474 28

Pre-paid expenses 109 62 46 74

Other Current Assets 2,502 837 1,665 199

Long Term Assets 19,074 17,797 1,277 7

Financial Assets & Subsidiaries 1,271 1,148 123 11

Fixed Assets 12,397 12,369 29 0

Derivatives 168 101 68 67

Pre-paid expenses 378 99 279 281

Deferred Tax 3,566 3,068 498 16

Other Long Term Assets 1,293 1,013 280 28

Total Assets 40,036 38,163 1,873 5

Short Term Liabilities 15,950 17,676 -1,726 -10

Financial Loans 4,113 5,274 -1,160 -22

Payables 7,663 8,370 -707 -8

Derivatives 236 177 59 33

Deferred Incomes 5 20 -16 -76

Provisions 80 90 -10 -11

Other ST Liabilities 3,852 3,745 107 3

Long Term Liabilities 24,086 20,487 3,599 18

Financial Loans 13,836 9,777 4,059 42

Payables & Provisions 257 224 34 15

Derivatives 42 3 39 1,156

Other LT Liabilities 5 5 -1 -13

Equity 9,825 10,373 -549 -5

Minority Interests 121 104 17 16

Total Liabilities 40,036 38,163 1,873 5

KEY FINANCIALS


www.tupras.com.tr

Creating Competitive & Sustainable Shareholder Value

41

71%

29%

Buy Hold

Foreign Currency

Long Term

Tüpraş BB+(Neg.) Ba2 (Negative)

Türkiye BB (Neg.) Ba3 (Negative) B+ (Stable)

Koç Holding Ba2 (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

42

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

interest 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.

• 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 December 2018)

43

* Cash flow hedge accounting : 874 mn $

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.

KEY FINANCIALS

Consolidated

Assets

Consolidated

Liabilities

Cash

955

Receivables &

other assets

136

Stock

1,201

Forward & CFH

1,500

Payables

1,189

ST Financial

598• RUP : 182

• Other: 416

LT Financial

1,994• RUP : 780

• Eurobond 700• Other Loans : 514

+11 mn $

Million $


www.tupras.com.tr

Tüpraş: Growing, Resilient, Profitable

44

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.

Growing Resilient Profitable

KEY FINANCIALS

OUTLOOK


www.tupras.com.tr

2019 Refinery Maintenance Schedule

46

RUP Maintenance to start on February 26, 2019.

Unit QuarterDuration

(weeks)Reason

İzmir

Plt 100 Crude Oil Q4 2-3 Periodic Maintenance

Plt 9200 CCR Q1 2-3 Periodic Maintenance

İzmit

RUP Q1&Q2 12-13 Detailed Maintenance

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

Plt 7 FCC Q4 5-6 Periodic Maintenance

Kırıkkale - - - -

Batman Plt 1100 Crude Oil & Vacuum Unit Q1&Q2 *3-4 Periodic Maintenance

* Total duration allocated among quarters

RUP Maintenance

Preparation and

planning phase: 2018

Maintenance Start: Feb 26

• Catalyst changes

• Checks on distillation columns, heat

exchangers and furnaces

• Detailed planned maintenance

Completion:

planned as late May 2019

OUTLOOK


www.tupras.com.tr

2019 Expectations

47

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

OUTLOOK


www.tupras.com.tr

Competition # 1 (SOCAR-STAR Refinery)

48

• 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 operational as of 2019.

Credit : 3.3 Billion $

Equity : 2.4 Billion $

Total

Investment: 5.7 Billion $

OUTLOOK


www.tupras.com.tr

Competition # 2 (Regional Competition)

49

• 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

Marine Bunker Specification Changes and Its Effects

50

IMO, at the meeting held in October 2016, lowered the sulphur emission cap from marine bunkers

from 3.5% to 0.5% (5000ppm): Effective from 1 January 2020.

• Use of lower sulphur blend stocks like ULSD (Diesel)

• Low Sulfur Fuel Oil production with light crudes

• Sulphur Fuel Reduction Systems (Scrubber)

• LNG

Requirements of spec change can be achieved through; • 80% of global trade is done via

marine transportation.

• 50.000 vessels are in operation.

Bunker fuels account for;• ~5% of global oil demand

• 40% of oil related sulphur emissions.

2016

%74

Buy Low Sulphur Fuel

%19

Install Scrubber

%5 switch

to LNG

%2

Other

Ship Owners Intention Survey2020 2022

OUTLOOK

. .

Appendix


www.tupras.com.tr

High Complexity (Resid Upgrading Units Production-(Thousand Tons)

52

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

Flexibility & Reliability; Multiple routes to maksimum capacity

53

• Increased

conversion capacity

• Strong

integration among

refineries

APPENDİX


www.tupras.com.tr

Competition (European Pump Price Comparison)

54

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 HSE KPI: Loss Time Incident Frequency and Severity Frequency Ratios

55

loss time incident freaquency rate =number of incident *1000000/man hours

loss severity frequency rate = loss time*1000000/man hours

APPENDİX


www.tupras.com.tr

Koç Holding

56

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 Turkish Consumption 2015-2017 (Million tons) 12 Diesel-4% Jet Fuel 0.49 0.58 0.60 0 0 0 0 1 1 2017 2016 2015 Gasoline Fuel