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Investor Presentation July 2018
Investor Presentation www.tupras.com.tr
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.
Investor Presentation www.tupras.com.tr
Content
3
• Refining Market Slides 4-10
• Turkish Market Slides 11-15
• Company Overview Slides 16-25
• Operations Slides 26-31
• Key Financials Slides 32-42
• Outlook Slides 43-48
• Appendix Slides 49-56
REFINING MARKET
Investor Presentation www.tupras.com.tr
Brent Crude Oil Prices ($/bbl)
5
25
36
47
58
69
80
4.01
.201
6
1.02
.201
6
29.0
2.20
16
30.0
3.20
16
27.0
4.20
16
26.0
5.20
16
24.0
6.20
16
22.0
7.20
16
19.0
8.20
16
19.0
9.20
16
17.1
0.20
16
14.1
1.20
16
12.1
2.20
16
12.0
1.20
17
9.02
.201
7
9.03
.201
7
6.04
.201
7
4.05
.201
7
23.0
5.20
17
20.0
6.20
17
18.0
7.20
17
15.0
8.20
17
13.0
9.20
17
11.1
0.20
17
8.11
.201
7
6.12
.201
7
8.01
.201
8
5.02
.201
8
5.03
.201
8
4.04
.201
8
2.05
.201
8
30.0
5.20
18
27.0
6.20
18
CONS • Increase in number of rigs & production in US
• Concerns about future of OPEC & non OPEC production cuts - OPEC production increase
• Inventory Levels• High crude exports of OPEC
PROS • OPEC & non OPEC supply cut
• Political instabilities in Middle East
• Future of nuclear agreement
• Healthy PMI data in developing countries
• Expectation of high global GDP
26,0
72,2
REFINING INDUSTRY
Source : Platts As of July 20th
Investor Presentation www.tupras.com.tr
Refinery Capacity Change
6
-3000
-2000
-1000
0
1000
2000
3000
4000
China India Middle East Other Asia Other Japan North America Europe
200
160
343
200
33036
200
-91
46
244
-116
120
420
-268
105
-143
76
-220
156
70
-57
364
-130
40
150
417300
244
-189
63
-443
198510
270
-352
305
-140
390120
400
520
-546
-775-4,7
302
526530
-421
65
-240
18084
181250
160
-266-109-145
40135340
150334
-486-543-25552195160
640810
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
0,0
0,5
0,9
1,4
1,8
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
1,5
1,1
1,8
0,6
1,31,5
0,60,3
1,31
1,81,7
Thousand Barrels/Day
Source:, Reuters, International Energy Agency, Tüpraş, sector reports and news
Net Capacity Additions (mb/d)
REFINING INDUSTRY
Investor Presentation www.tupras.com.tr
Middle Distillate Cracks ($/bbl)
7
0
4
8
12
16
20
Jan Feb Mar Apr May Jun *July Aug Sep Oct Nov Dec
12,1 12,2 12,613,6
14,313,7 13,4
2015 2016 2017 2018
10,4
7,2
14,8
11,5
10,0
7,6
0
4
8
12
16
20
Jan Feb Mar Apr May Jun *July Aug Sep Oct Nov Dec
11,9
14,413,7
14,4 13,913,2 13,1
9,5
6,6
15,1
11,4
9,1
8,0
Diesel Jet Fuel
REFINING INDUSTRY
Source : Platts As of July 20th
Investor Presentation www.tupras.com.tr
Gasoline and High Sulphur Fuel Oil Cracks ($/bbl)
8
-20
-17
-14
-10
-7
-4
Jan Feb Mar Apr May Jun *July Aug Sep Oct Nov Dec
-13,2
-11,9-12,7
-15,2
-13
-9,1 -8,9
0
6
12
18
24
Jan Feb Mar Apr May Jun *July Aug Sep Oct Nov Dec
10,2 10,612,0 12,1
13,0 13,1 12,9
2015 2016 2017 2018
10,4
18,6
9,8 9,7
11,9
15,7
Gasoline High Sulphur Fuel Oil
-8,7
-12,2
-10,2
-12,5
10,9
-16,7
REFINING INDUSTRY
Source : Platts As of July 20th
Investor Presentation www.tupras.com.tr
Quarterly Product Crack Margins ($/bbl)
9
While diesel & jet cracks outperformed in Q1 2018 compared to a year ago, gasoline & fuel oil cracks declined significantly during the same time frame.
Gasoline
10
12
14
16
18
20
Q1 Q2 Q3 Q4
10,912,713,3
14,315,0
10,9
15,214,5
10,9
12,813,0
19,4 18,9
13,5
Diesel
6
8
10
12
14
16
Q1 Q2 Q3 Q4
12,313,9
10,5 10,7
13,112,4
7,99,2 8,9
11,2
15,7 15,2 14,6
10,8
2015 2016 2017 2018 Jet Fuel
6
8
10
12
14
16
Q1 Q2 Q3 Q4
13,3 13,8
9,5 9,9
12,4 12,0
7,3 7,7 8
10,2
14,4
11,210,5
9,4
High Sulphur Fuel Oil
-20
-16
-12
-8
-4
Q1 Q2 Q3 Q4
-12,6 -12,4
-9,1-7,0 -6,9
-10,0
-13,2-15
-10,6-9,4-11,6 -12,1
-13,1-15,5
REFINING INDUSTRY
Investor Presentation www.tupras.com.tr
Crude Price Differentials ($/bbl)
10
Heavy Crude Price Differentials Ural Differentials
-4
-3
-2
-1
0
1
Jan Feb Mar Apr May Jun *Jul Aug Sep Oct Nov Dec
2012-2017 Min. 2015 2016 2017 2018
-0,6
-2,1-2,3 -2,4
-1,7
-0,9
-1,4
-10
-8
-6
-4
-2
0
11Q
111
Q2
11Q
311
Q4
12Q
112
Q2
12Q
312
Q4
13Q
113
Q2
13Q
313
Q4
14Q
114
Q2
14Q
314
Q4
15Q
115
Q2
15Q
315
Q4
16Q
116
Q2
16Q
316
Q4
17Q
117
Q2
17Q
317
Q4
18Q
1*1
8Q2
Iran Heavy Kirkuk Kuwait Basra Heavy Arab Heavy
-0,3
-1,2-1,3
-1,6
Brent Brent
REFINING INDUSTRY
*18Q2: April and May data As of July 20th
TURKISH MARKET
Investor Presentation www.tupras.com.tr
Turkish Economy Strengths
12
78
79
80
81
82
2016 2017 2018 2019 2020
828181
8079
Population (mn)
1.4% growth in last 5 yrs
0-40 yrs >65%
0
2,5
5
7,5
10
2010 2011 2012 2013 2014 2015 2016 2017
9,2 8,8
2,1
4,23,0
4,02,9
7,4
GDP (%)
21
22
23
24
25
26
27
2016 2017 2018 2019 2020
27,726,1
25,124,2
22,3
Diesel Consumption (mn ton)
8.8% average growth in last 5 yrs
4% annual growth
Car ownership per thousand people
0
55
110
165
220
2014 2015 2016 2017
127 134
176
213
2002-2014 4.9%2010-2014 5.4%
Source: EMRA, TSI
67%
REFINING INDUSTRY
Investor Presentation www.tupras.com.tr
Turkish Consumption (Million tons) 2015-2017
13
Diesel
-4%
Jet Fuel
2017
2016
2015
0 0 0 0 1
0,60
0,58
0,49
Fuel Oil*
2017
2016
2015
0 1 2 2 3
2,10
2,23
2,30
Gasoline
+6.5%-3.5%
2017
2016
2015
0 1 2 3 4 5
4,58
4,40
4,522017
2016
2015
10 14 17 21 24
20,56
22,31
24,17
+8.5%
+8.3%+2.7%
+3.1%-15.7%
Kaynak: EMRA*Bunker excluded.
REFINING INDUSTRY
Investor Presentation www.tupras.com.tr
Strong Turkish Market, 4M 2018 (Million tons)
14
Tüpraş is well positioned in a growing, short market. Diesel and jet fuel consumption in Turkey in the first 3 months of 2018 grew significantly driven by infrastructure projects, aviation growth and consumption of heavy duty vehicles.
*Bunker excluded Source: EMRA
2018
2017 1,17
1,38
Diesel
+18.1%
Jet Fuel
2018
2017 0,21
0,16
Fuel Oil*
2018
2017 0,65
0,74
Gasoline
+13.9%
+8% -22.7%
2018
2017
0 2 3 5 6 8
6,82
7,76
REFINING INDUSTRY
Investor Presentation www.tupras.com.tr
Turkey’s Import / Export Balance (Net) (Million Tons)
15
-16
-12
-8
-4
0
4
LPG Gasoline Diesel Fuel Oil Jet
0,30,7
-13,2
3,2
-3,1
0,01,0
-12,0
2,4
-3,1
2013 2014 2015 2016 2017
Source EMRA
Import
Export
REFINING INDUSTRY
COMPANY OVERVIEW
Investor Presentation www.tupras.com.tr
%83
%18
Tüpraş Shareholder Structure
17
%77
%79,98
%40 %49
%100
%20
%51
%3
Energy Investments Inc. (SPV)
Free Float
Publicly Traded
*Distribution of Domestic/ Foreign Ownership of Tüpraş Shares
*As of December 31th, 2017
Foreign Ownership
Domestic Ownership
COMPANY OVERVIEW
Investor Presentation www.tupras.com.tr
Tüpraş Refining Assets & Distribution Network
18
Turkey Storage Capacity
Tüpraş : 58%Opet : 9%Other Companies : 33%
İzmir
İzmit
Ankara
İstanbul
Kırıkkale
Batman
Kirkuk
Baku
Terminal Refinery
OPETGiresun Terminal
OPETMersin Terminal
OPETAntalya Terminal
OPETMarmara Terminal
19,392 m3 240,000 m3
721,000 m343,130 m3
Crude Pipeline
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
Investor Presentation www.tupras.com.tr
High Complexity (Nelson Complexity of Refining Companies)
19
0
5
10
15
İzm
it Re
f.
Vale
ro
Relia
nce
Essa
r
Mar
atho
n O
il
Hol
ly-F
ront
ier
Nes
te BP
Teso
ro
Thai
Oil
IOC
L
Tüpr
aş-2
015
Hel
leni
c
PKN
MO
L
SHEL
L
Petro
m
Gal
p
Sara
s
Petro
bras
Tüpr
aş
Luko
il
HPC
L
CPC
L
BCP
Esso
(Tha
i)
S-O
il
MRP
L
SK E
nerg
y
BPC
L
5,85,85,96,56,87,17,17,17,17,3
8,08,48,78,89,09,29,29,49,59,69,89,9
10,411,0
11,511,611,812,6
13,0
14,5 Tüpraş After RUP
Tüpraş Before RUP
İzmit After RUP14,5
9,5
7,3
COMPANY OVERVIEW
Investor Presentation www.tupras.com.tr
Crude Suppliers of TÜPRAŞ (Million Tons)
20
Crude Type 2017
0
10
20
30
40
50
60
70
80
90
2012 2013 2014 2015 2016 2017
797671
636765
71414
111517
101010131312
133 22
1066
Africa America Europe CIS Middle East
%36
%58,8
%5,3
>34 30> 30 - 40
In 2017, Tüpraş purchased 25 different types of crude oil from 14 countries, with gravities ranging between 18-47 API.
COMPANY OVERVIEW
Investor Presentation www.tupras.com.tr
Sales By Customer (2017)
21
Military%1Bitumen
%11
Export%18
Other%6
Petkim%1LPG
%4 Jet%5 THY Opet
%9
Dist.%45
OTHER%13
LUKOIL%4
TP%3
BP%15
SHELL%15
OPET%25
POAŞ%26
Customer Groups Sales to Distributors
Total : 31.5 mn ton Distributors : 14.3 mn ton
COMPANY OVERVIEW
Investor Presentation www.tupras.com.tr
Competitive Advantages of Tüpraş
22
High Complexity of Tüpraş
Best Fit for the Market with high diesel yield
Presence in all over Turkey through
refineries and terminals
Short on Diesel
High Economic Growth
Import Parity Pricing (Freight advantage of
Tüpraş)
Crude Oil & Feedstock Cost Advantage
Energy Efficient
Economies of Scale
Added Value Created by Tüpraş
Local Market Dynamics
Cost Base of Tüpraş
COMPANY OVERVIEW
Investor Presentation www.tupras.com.tr
OPET -Tüpraş Share 40%
23
Market share as of February 2018
White Product: 18.03% Black Product: 15.31%
Opet expanded its retail footprint from 1.560 stations in December 2017 to 1.581 stations in February 2018.
0
400
800
1200
1600
2010 2011 2012 2013 2014 2015 2016 2017 1Q 2018
441434431
435427418410394394
1.1401.1261.0731.009966938915885830
Opet Sunpet
1.2241.279 1.325 1.356 1.393
1.4441.504
1.560 1.581
COMPANY OVERVIEW
Investor Presentation www.tupras.com.tr
DİTAŞ, Marine Transport -Tüpraş Share 79.98%
24
• 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
0
5
10
15
20
25
30
2011 2012 2013 2014 2015 2016 2017
6
65
43
3
3
17
97
56
15
19
Crude Oil Product
11 tugboats 8 mooring boats 2 service boats
1 pilot boat
253,7 mn $ Net Sales
49,6 mn $ Op. Profit
3 Crude Oil Tanker :479.765 DWT 1 Crude Oil - Product Tanker : 51.532 DWT7 Product Tanker : 90.534 DWT
21,9
18
9,6 8,411,8
15,2
23,3
COMPANY OVERVIEW
Investor Presentation www.tupras.com.tr
Körfez Ulaştırma A.Ş.- Tüpraş Share 100%
25
Körfez Ulaştırma A.Ş.
•On June 16th, Freight Train Operator Certificate,•On September 20th, Safety Management
Certificate received•Operates with 491 cistern wagons and 5 diesel• locomotives
2,5 mn tons/year transport
% 10 Market share
Turkey's First Private Railway Operator
2018 Target
COMPANY OVERVIEW
OPERATIONS
Investor Presentation www.tupras.com.tr
Capacity Utilization* (%)
Lower Capacity Utilization and Quarterly Production Volume
27
*Nameplate capacity calculated by standard 330 days of operations.
Quarterly Production (Million Tons)
0
30
60
90
120
Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018
67,3
99,994,5
80,7
65,1
Crude Oil Other
4
5
6
7
8
9
Q1 Q2 Q3 Q4
5,2
7,1
7,8 7,7
6,36,6 6,7
7,27,4
5,6
6,97,3 7,4
4,5 4,6
5,4 5,5
2014 2015 2016 2017 2018
• Capacity utilization and production decline in Q1 2018 was due to maintenances in İzmir, Kırıkkale and Batman refineries.• Our year-end guidances for capacity utilization and production have not been revized.
68,0
84,1
99,7106,4
78,0
OPERATIONS
Investor Presentation www.tupras.com.tr
Q1 Product Yields
28
White Products %78
Production 7.0 mn tons
API 31.08
White Products %79
Production 5.2 mn tons
API 31.33
2017Bitumen
%5
Fuel Oil%12
Coke%3
Other%2
ULSD%36
Jet%16
Naphtha%1
Gasoline%21
LPG%4
Black Prod.%20,9
Mid. Distil.%51,7
Light Distil.%25,7
Other%1,6
Bitumen%10
Fuel Oil%7
Coke%4
Other%0
ULSD%34
Jet%19
Naphtha%0
Gasoline%22
LPG%4
Black Prod.%20,4
Mid. Distil.%53,7
Light Distil.%25,9
2018
OPERATIONS
Investor Presentation www.tupras.com.tr
Increase in Domestic Sales (Million Tons)
29
Total Sales in Q1 Domestic Sales of Key Products in Q1
We generated 6.2 million tons of total sales in Q1 2018. Domestic diesel sales were 2.5 million tons, 8.6% higher than Q1 2017.
7,2
0
2
4
6
8
1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018
1,02,31,8
1,71,1
5,25,05,1
3,93,6
Domestic Sales Export
4,75,6
6,96,2
0
1
2
3
4
5
1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018
0,3
0,30,4
0,30,2
0,50,4
0,5
0,40,4
1,00,81,0
0,90,8
2,52,32,31,71,5
Diesel Jet Fuel Gasoline Bitumen
2,93,3
4,13,9
4,4
OPERATIONS
Investor Presentation www.tupras.com.tr
Investments (Million $)
30
• Revamp of Crude Unit
• FCC Modernization
• New Sulphur Units
• Energy Saving Projects
• Optimization of conversion units
• 9.5 Nelson complexity• High white product yield• Process more heavier and sour crudes• Run all refineries with 100% capacity utilization
Ongoing Projects
Avg. 247 mn$
Avg. 943 mn$
Avg. 278 mn$
274355 400
186 177
628
974
1.213
959
344213
185 63
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q1 2018
OPERATIONS
Investor Presentation www.tupras.com.tr
Capex (mn $) Margins ($/bbl)
2018 Expectations vs Q1 2018 Results
31
Brent Price ($/bbl)
0
20
40
60
80
100
120
140
15'Q1 16'Q1 17'Q1 18'Q1
78106,499,7
84,1
Capacity Utiliation (%)
• Full Capacity Utilization target for Full Year 2018
• 78% Capacity Utilization in Q1
• Revized Average Brent Price Expectation for Full Year 2018 from 55-60 $/bbl to 65-70 $/bbl
• 66.8 $/bbl Brent Price average in Q1 2018
0
2
4
6
8
10
Q1 2018
4,04,8
Tüpraş Net Margin Med Margin
• 7.5-8 $/bbl Expected Net Refining Margin for Full Year 2018
• 4.8 $/bbl Net Refining Margin in Q1 2018
0
80
160
240
320
400
2016 2017 Q1 2018
63,0
185,0213,0 • 250 mn $ CAPEX for
Full Year 2018 • 63 mn $ CAPEX in Q1
50
60
70
80
J-18 F-18 M-18
65,965,269,2
OPERATIONS
KEY FINANCIALS
Investor Presentation www.tupras.com.tr
-2
0
2
4
6
8
10
J-08 J-08 J-09 J-09 J-10 J-10 J-11 J-11 J-12 J-12 J-13 J-13 J-14 J-14 J-15 J-15 J-16 J-16 J-17 J-17 O 18
MonthAnnual
Margin Environment ($/bbl)
33
Tüpraş’ 4.8 $/bbl Net Refining Margin in Q1 2018 was higher than 4 $/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
4,10 5,30
3,97 4,83
1,67 1,95
4,21
1,17
2,89 1,95
5,54
0
2
4
6
8
10
12
14
2013 2014 2015 2016 2017 Q1 2018
4,05,3
4,04,8
2,01,7
4,8
8,1
6,06,5
3,22,5
11,612,9
11,211,9
10,69,6
Tüpraş Gross Margin Tüpraş Net Margin Mediterranean
OPERATIONS
Investor Presentation www.tupras.com.tr
Net Debt- Net Debt/ *Rolling EBITDA
EBITDA
Financial Highlights (Million $)
34
0
500
1.000
1.500
2.000
2.500
3.000
2012
-R
2013
2014
H1
2014
9M
2014
2015
H1
2015
9M
2015
2016
H1
2019
9M
2016
2017
Q1
2017
H1
2017
9M
2017
2018
2.3311.6571.2401.6801.5551.7291.7512.3912.3702.7482.5771.6631.5981.8691.340551
Net Debt
0
1
2
3
4
5
6
0,8
2,4
3,5 3,6
4,9
3,32,8
1,7 2,01,6 1,5
1,1 1,0 0,71,1
1,6
Net Debt/*R. EBITDA
Tüpraş generated 271 mn USD in EBITDA in Q1 2018.
Net Income*
Return of Average Equity (%)
0
0
0
0
0
1
2011
2012
2013
2014
2015
2016
Q1
2016
H1
2016
9M
2016
2017
Q1
2017
H1
2017
9M
2017
2018
0,17
0,41
0,490,55
0,45
0,220,16
0,110,04
0,35
0,260,24
0,320,3
0,17
-50
200
450
700
950
1200
2012 2013 2014 2015 2016 2017 2018
123
256
285
9147271
283
197
268175435309 405
113273
171
7575
992352711223172161
1.046
594
938
667629817
-50
242
533
825
1117
1408
1700
2012 2013 2014 2015 2016 2017 2018
321
480
422
-11
89106
435
294
410
226315361
431
237415
-27
78153 271427
11415015079951st Q2nd Q3rd Q4th Q715
560338
1.397
1.125
1.614
Net Debt/Rolling EBITDA was calculated with USD figures
*Excluding minority interest
KEY FINANCIALS
Investor Presentation www.tupras.com.tr
Balance Sheet Analysis (Billion $)
35
0,0
0,6
1,2
1,8
2,4
3,0
Mar
.14
Jun.
14
Sep.
14
Dec
.14
Mar
.15
Jun.
15
Sep.
15
Dec
.15
Mar
.16
Jun.
16
Sep.
16
Dec
.16
Mar
.17
Jun.
17
Sep.
17
Dec
.17
Mar
.18
1,7
2,32,2
1,6
2,01,7
2,5
1,61,6
1,00,8
1,01,2
1,71,61,3
1,7
0,4
0,8
1,2
1,6
2,0
Mar
.14
Jun.
14
Sep.
14
Dec
.14
Mar
.15
Jun.
15
Sep.
15
Dec
.15
Mar
.16
Jun.
16
Sep.
16
Dec
.16
Mar
.17
Jun.
17
Sep.
17
Dec
.17
Mar
.18
1,421,361,57
1,151,090,91
0,750,91
0,700,88
1,07
0,66
0,200,09
0,510,520,71
0
1
2
3
4
Mar
.14
Jun.
14
Sep.
14
Dec
.14
Mar
.15
Jun.
15
Sep.
15
Dec
.15
Mar
-16
Jun-
16
Sep-
16
Dec
.16
Mar
.17
Jun.
17
Sep.
17
Dec
.17
Mar
.18
2,192,18
2,68
2,172,181,991,961,67
1,211,331,581,691,72
2,42
3,033,26
2,91
0,00,71,42,12,93,64,35,0
Mar
.14
2014
1h
2014
9M
Dec
14
Mar
.15
Jun.
15
Sep.
15
Dec
.15
Mar
-16
Jun-
16
Sep-
16
Dec
.16
Mar
.17
Jun.
17
Sep.
17
Dec
.17
Mar
.18
1,61,41,31,1
0,60,61,11,21,00,60,60,50,4
0,30,30,30,9
2,42,62,12,13,02,93,12,82,92,83,03,13,33,02,92,92,8
LT Loans ST Loans
Given our strong liquidity management and cash generation capabilities, our cash position funded the highest dividend payout in our history.
Cash & Cash Equivalents Trade Receivables
Trade PayablesFinancial Loans
1,70
3,73,2 3,2 3,3
3,73,6 3,6 3,4
3,9 4,04,2
3,4 3,6 3,2 3,4
1,42
4,0 4,0
2,19
KEY FINANCIALS
Investor Presentation www.tupras.com.tr
Q1 Profit Before Tax Bridge (2017-2018)
36
Decline in Profit Before Tax was driven by narrowing of crude oil differentials and impact of maintenances.
Million TL
2017 Crude Oil Differentials
Inventory Effect
Crack Margin Effect
Other 2018Maintenance Effect
471,8
1051,7
303,4
199,1
58,628,7
9,8
KEY FINANCIALS
Investor Presentation www.tupras.com.tr
Dividend (TL)
37
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
13,6
6,26,5
01,58
3,853,932,98
2,52,31
15,22
7,16
10,18
0
4,785,83
4,96
2,943,24
1,73
One of the highest dividend yield in BIST
2012/2013 EPS includes the tax incentive
KEY FINANCIALS
Investor Presentation www.tupras.com.tr
Tüpraş Balance Sheet
38
Million USD 31.12.2017 31.03.2018 Difference %Current Assets 5.399 5.144 -256 -5
Cash & C. Equivalents 2.334 1.701 -633 -27Receivables 1.355 1.416 61 4Derivatives 92 117 25 27Inventories 1.403 1.701 298 21
Pre-paid expenses 17 11 -5 -31Other Current Assets 199 198 -2 -1
Long Term Assets 4.718 4.526 -192 -4Financial Assets & Subsidiaries 303 272 -31 -10
Fixed Assets 3.263 3.112 -151 -5Derivatives 27 33 6 24
Pre-paid expenses 26 51 25 95Deferred Tax 813 765 -49 -6
Other Long Term Assets 286 293 7 3
Total Assets 10.118 9.670 -448 -4Short Term Liabilities 4.686 5.335 649 14
Financial Loans 1.398 1.615 217 16Payables 2.219 2.643 424 19
Derivatives 47 36 -11 -23Deferred Incomes 5 1 -4 -83
Provisions 24 32 8 34Other ST Liabilities 993 1.008 16 2
Long Term Liabilities 2.654 2.475 -179 -7Financial Loans 2.592 2.417 -175 -7
Payables & Provisions 59 56 -4 -6Derivatives 1 1 0 43
Other LT Liabilities 1 1 0 -8Equity 2.750 1.832 -919 -33
Minority Interests 28 28 0 0
Total Liabilities 10.118 9.670 -448 -4
KEY FINANCIALS
Investor Presentation www.tupras.com.tr
Creating Competitive & Sustainable Shareholder Value
39
%38
%62
BuyHold
Foreign Currency Long Term
Tüpraş BBB-(Stable) Ba1 (Stable)
Türkiye BB+ (Stable) Ba2 (Stable) BB- (Stable)
Koç Holding Ba1 (Stable) BBB- (Negative)
Analyst Recommendations
Board
Stakeholders
Transparency
Shareholders
Overall
0 25 50 75 100
94,7
95,5
94,0
98,6
92,9
Tüpraş has one of the highest Corporate Governance Ratings
KEY FINANCIALS
Investor Presentation www.tupras.com.tr
Financial Policy
40
Financial Discipline: Risk management policies focusing on areas such as leverage, liquidity, counter party risk, interest rate, commodity and currency exposure
Thresholdand limits
• Net financial debt/EBITDA • Net foreign currency position/shareholders' equity • Inventory and crack margin exposure • Current ratio • The fixed/floating profile of financial debt • Liquidity: share of long term debt • Counter party risk limits
Counter partyRisk Policy
Deposit is kept, within certain limits, by banks that comply with the criteria determined in our policy
• Credit rating and strong capital base • Cap on the maximum deposit allocated to a single bank • Threshold for deposits subject to banks shareholders’ equity
KEY FINANCIALS
Investor Presentation www.tupras.com.tr
Inventory & Crack Margin Hedge
41
Operational Hedge: • Maintaining minimum amount of stock required for the refining activities • Forward Pricing: Purchasing crude oil through forward-priced contracts Financial Hedge: Proxy Hedging (both crude oil and refined product inventories) • Expected inventory exposure for the year end is hedged • Derivative transactions: Asian swap, Zero Cost Collar • Hedging ratio increasing throughout the year
• Crack margins: Gasoline, Diesel and Jet Fuel Cracks • Derivative transactions: Asian Swaps • Hedging Parameters: Budget figures, historical average prices of the cracks + standard deviations, market expectations • Maximum hedge ratio: 50%, • Tenor: up to next 4 quarters
InventoryHedgingPolicy
MarginHedgingPolicy
KEY FINANCIALS
Investor Presentation www.tupras.com.tr
FX Exposure Management (31 March 2018)
42
* Cash flow hedge accounting : 1,194 mn $
Consolidated Assets
Consolidated Liabilities
Cash1,393
Receivables & other assets
43
Stock1,647
Forward & CFH2,534
Payables1,806
ST Financial 1,254
• RUP : 311• Eurobond : 700
LT Financial 2,417
• RUP : 949• Eurobond 700• Other Loans : 768
+140 mn $
Million $
Active management of FX exposure kept the risk level within our limits.
• 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
OUTLOOK
Investor Presentation www.tupras.com.tr
2018 Refinery Maintenance Schedule & Capacity Utilization
44
Our year-end total capacity utilization target has not changed. We expect full year-end total capacity utilization.
Unit Quarter Duration (weeks) Reason
İzmir
*Plt 7000 Crude Oil Unit Q4 ’17 - Q2’ 18 17 in 2018 Revamp
*Hydrocracker, DHP & Platformer Q1 5-6Periodic Maintenance
Plt 4000 FCC Q2 5-6
İzmit
Plt 2 Crude Oil & Vacuum Unit Q4 5-6
Periodic Maintenance
Plt 5 Crude Oil & Vacuum Unit Q2 5-6
Plt 25 Crude Oil & Vacuum Unit Q4 5-6
Plt 47 Hydrocracker Complex Q2 4-5
Plt 63 CCR & DHP Q4 5-6
Kırıkkale *All Units Q1- Q2 9 Battery Shutdown
Batman *Plt. 100/Crude Oil & Vacuum Q1 4-5 Periodic Maintenance
2018 Crude Capacity Utilization 95,4 %2018 Total Capacity Utilization Full
* Completed Maintenances
OUTLOOK
Investor Presentation www.tupras.com.tr
Future Expectations
45
The average Brent price in 2018 is expected to be 65 - 70 $/dollars per barrel
We expect Med Complex margins to be between 4,75 - 5,00 dollars per barrel band in 2018
Net Tüpraş refinery margin is expected to be in the region of 7,50 - 8,00 dollars per barrel
• Full Total Capacity Utilization using imported semi-products such as ASRFO and HVGO • Production: approximately 28.3 million tons • Total sales: 31.0 million tons
Refining investments is expected to be around 250 Million dollars.
Brent Price Estimation
Med Complex Margin
Tüpraş Net Margin
Operations
Investment
We only updated our average Brent Price expectation. The rest of our expectations remains the same as before.
OUTLOOK
Investor Presentation www.tupras.com.tr
Competition # 1 (SOCAR-STAR Refinery)
46
• Goldman Sachs has acquired a 13 percent stake in SOCAR Turkey for $1.3 billion. • Goldman Sachs has the right to resell 10 percent of its stakes to Socar, and the remaining 3
percent to ‘Sermaye Investments Limited’ owned by SOCAR within 6 year at the same price.
STAR Refinery (Total Cap. 10 mn ton)
2019 mn ton
Production Turkish Demand Balance
Tüpraş Star Total
LPG 1,1 0,3 1,4 4,1 -2,7
Petchem Feeds 0,2 2,6 2,8
Gasoline 6,1 6,1 2,4 3,7
Jet Fuel 5,2 1,6 6,8 5,2 1,6
Diesel 10,7 4,5 15,2 26,5 -11,3
Coke 0,8 0,7 1,5 4,6 -3,1
Fuel Oil 1,8 1,8 1,3 0,5
Bitumen 3,1 3,1 3,1
Star Refinery Production Numbers (K Ton)Diesel 4.500Jet Fuel 1.600Sulphur 158Petrocoke 698
LPG 260Naptha 1.600Mixed xylene 460Reformate 524
Fuels
Petrochemical Feedstock
• 3,3 billion dollar credit agreement. First 4 year grace period total 15-18 year term.
• Project finance is supplied to company (US$ 1.5 billion)
• It is planned to be commissioned in 2018.
Credit : 3.3 Billion $
Equity : 2.4 Billion $
Total Investment : 5.7 Billion $
OUTLOOK
Investor Presentation www.tupras.com.tr
Competition # 2 (Regional Competition)
47
Ukraine
Russia
Georgia
Turkey
Bulgaria
Romania
Moldova
EgyptLibya
Tunisia
AlgeriaMorocco
PortugalSpain
France
Italy
IsraelSyria
TurkeyGreece
Albania
Croatia
• 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 7.8mn bpd
17 Refineries 1.8mn bpd
OUTLOOK
Investor Presentation www.tupras.com.tr
Marine Bunker Specification Changes and Its Effects
48
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.
HS Fuel Oil
Diesel
LS FO
HS FOScrubbed
1,8LS Fuel Gap
2,1LS Fuel Gap
Mn
b/d
• 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
%74Buy Low Sulphur Fuel
%19 Install Scrubber
switch %5 to LNG
%2 Other
Ship Owners Intention Survey2020 2022
OUTLOOK
Appendix
Investor Presentation www.tupras.com.tr
12M Product Yields
50
White Product %76.56
Production 27,93 mn tons
API 30,62
White Product %76.27
Production 28,88 mn tons
API 30,26
2016
Bitumen%12
Fuel Oil%7
Coke%3
Other%2
ULSD%33
Jet%17
Naphtha%1
Gasoline%20
LPG%4
Black Prod.%22,3
Mid. Distil.%50,4
Light Distil.%25,5
Other%1,7
Bitumen%12
Fuel Oil%7
Coke%3
Other%2
ULSD%33
Jet%17
Naphtha%1
Gasoline%20
LPG%4
Black Prod.%22,6
Mid. Distil.%50,3
Light Distil.%25,0
Other%2,1
2017
APPENDIX
Investor Presentation www.tupras.com.tr
Crack Margin Effect on Tüpraş in Q1 (FOB Italy Prices)
51
Product Price, $/ton Tüpraş Crack Margin, $/bbl2018 2017 2018 Yield 2018 2017
LPG 485,0 455,8 3,89 -23,6 -13,2Gasoline 630,5 544,2 20,31 10,9 13,3Naphtha 552,3 466,6 0,17 -4,4 -1,1Jet Fuel 629,6 497,5 18,27 13,3 9,5Diesel 588,5 478,4 31,00 12,3 10,5Diesel 1000 577,3 470,8 1,22 10,8 9,5Fuel Oil 1% 366,0 314,5 1,73 -10,3 -5,3Fuel Oil 3.5% 351,1 289,9 5,51 -12,6 -9,1Others 322,9 269,5 12,46 -12,8 -8,8
94,6Total Crack Margin,$/bbl 5,2 5,6Margin Difference, $/bbl -0,4Total Processed, mn bbl 39,0Total Effect, mn $ -15,4Total Effect, mn TL -58,6
Weighted average of total crack margin difference in Q1 2018 over Q1 2017 indicates a -0,4 $/bbl, yielding 58.6 million TL.
APPENDIX
Investor Presentation www.tupras.com.tr
Diesel 2.883
Gasoline LPG 522 69
PetroCoke 690
Sulphur 86
High Complexity (Resid Upgrading Units Production-(Thousand Tons)
52
Doğal Gaz 246
Vakum Resid1,214
Atm. Dip3,036
Total Feed 4,496
Total Production
4,250
Raw Materials Products
APPENDIX
Investor Presentation www.tupras.com.tr
Flexibility & Reliability; Multiple routes to maksimum capacity
53
• Increased conversion capacity
• Strong integration among refineries
CRUDE OIL 970008
VACUUM 423208
NAPHTHA SPLITTER 8
LPG MEROX 6
ISOMERISATION
UNIFINER REFORMER
LPG
GASOLINE NAPHTHA
JET FUELOİL
DIESEL
LUBE OIL
22.0%
33.9%
0.5%
19.9%
Capacity (m3/d)
KERO/DIES EL(HDS) 3730010
3.5%
FCC 2 4700
4 18200
3 6400
7 16900
COKER 82001
LPG MEROX
Yields (%)
16.5%
BITUMEN & FUEL OİL
OTHER 3.8%
More than one distillation and production units
VACUMMDİST.
NAFTASPLITTER UNIFINER
REFORMER
KERO / DIESEL
HDS
HYDROC.
FCC
COKER
ISOMER.
Benzen Saturation
FCCBenzin HDS
Lube Oil
Bitumen
CRUDE OIL
Flow Diagram
HYDROCRACKER
Number of unitsKey units
APPENDIX
Investor Presentation www.tupras.com.tr
Competition (European Pump Price Comparison)
54
Not: Prices valid on 21 May 2018-Turkey pirice as of May 22th 2018
Gasoline (Krş / Lt)
0
250
500
750
1000
TR Spa. UK Ger Eu19 Fra. Gre. Ita.
547550508487477482
370
308
5558503951
268320261319263248
338266
Pump No Tax Distr. Marg. Tax
624
708770 790 806
827 870 870
Diesel 10 (Krş / Lt)
0
100
200
300
400
500
600
700
800
900
TR Spa. Ger. EU19 Fra. Gre. UK Ita.
476487371
457394
363311
243
5045596150
279269377
267333
269347
272
566
658693
727783
748801 804
APPENDIX
Investor Presentation www.tupras.com.tr
Tüpraş HSE KPI: Loss Time Incident Frequency and Severity Frequency Ratios
55
0
2
4
6
8
2000 2001 2002 2003 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
0,9
2,01,3
0,81,4
2,61,8
3,23,6
3,13,42,8
2,41,71,91,71,9
3,53,4
5,04,8
6,16,97,17,1
Tüpraş Contractor
Loss Time Severity Frequency Rate 2008 2009 2010 2011 2012 2013 2014 2015 2016
Tüpraş 92 44 40 53 65 61 59 719 101
Contractor 116 101 81 118 424 17 378 51 551
Total 105 73 57 83 290 26 308 315 354
Incident Frequency Including contractors
3,6
2,5 1,7 2,21,5 1,1 1,6
2,51,9
Total
loss time incident freaquency rate =number of incident *1000000/man hours loss severity frequency rate = loss time*1000000/man hours
APPENDIX
Investor Presentation www.tupras.com.tr
Koç Holding
56
Turkey’s Leading Investment Holding CompanyTurkey’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 • 16% CARG in consolidated profit2 the last five years
Notes : Data as of YE17, 2017 GDP reflects the projection of Turkish government’s Medium Term Program(1)2017 Report(2)In TL terms between
Turkey’s Leading Investment Holding Company Combined Revenues / GDP
Total Exports / Turkey’s Exports
Total MCap on Borsa İstanbul
7%
10%
19%
APPENDIX
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