Management’s Discussion and Analysis (MD&A) and operating …ptt.listedcompany.com/newsroom/121120151812580479E.pdf · 2015-11-12 · PTT Public Company Limited 1 Q3/2015 Management’s

PTT Public Company Limited 1

Q3/2015

Management’s Discussion and Analysis (MD&A) and operating results for the three-month and

nine-month periods ended September 30, 2015

Economic Overview in the third quarter of 2015

The world economy in the third quarter of 2015 (Q3/2015) expanded at a slower pace than in the second quarter of 2015 (Q2/2015), reflecting a weaker than expected recovery in advanced economies and a further slowdown in emerging market and oil exporting countries. The US economy stumbled in this quarter amid businesses cutting back on warehouse stocking to work off an inventory glut; and a stronger dollar, especially against the yuan, putting downward pressure on US exporters and manufacturers. As a result, the Federal Reserve (the Fed) continues to maintain its policy rate at a low level. For the euro area, the economic recovery continued on the back of the European Central Bank (ECB) quantitative easing (QE). Meanwhile, China’s economic growth was slightly below the government’s target of 7%, partly reflecting a sharp fall in China’s stock market in August 2015 over concerns about China’s economic outlook and a still sluggish property market in consequence of the excess supply although property sales and prices began to show signs of improvement in response to increasingly accommodative housing policy. Citing fears over China’s economic slowdown and falling commodity prices, the International Monetary Fund (IMF), in October 2015, lowered its global growth forecast for 2015 to 3.1% from its previous forecast of 3.3% in July 2015.

International Energy Agency (IEA) reported in October 2015, global oil demand in Q3/2015 averaged 95.2 million barrels per day (MMBD), increased from 93.9 MMBD in Q2/2015 mainly from OECD countries demand and also increased from 93.2 MMBD in Q3/2014.

Average Dubai oil price in Q3/2015 was US$49.7 per barrel, declined from US$61.3 per barrel in Q2/2015 as a result of the increasing of Non-OPEC crude production, while OPEC production was maintained over quota and Iran sanction easing. In addition, Dubai oil price also declined from the average US$101.5 per barrel in Q3/2014 mainly from persistently high global supply.

Unit: US$/bbl Q3/2014 Q2/2015 Q3/2015 % Inc.(Dec.)

9M/2014 9M/2015 % YoY QoQ

Average Dubai 101.5 61.3 49.7 (51.0%) (18.9%) 104.0 54.3 (47.8%)

Petroleum product prices in the Singapore Spot Market in Q3/2015 declined from those in previous quarter. However, the crack spread between gasoline and Dubai in Q3/2015 was stable compared to the previous quarter. While, the crack spread between diesel and Dubai in Q3/2015 declined from the previous quarter on accounts of a reduced demand from China and Indonesia, as well as fuel oil crack spread in Q3/2015 decreased from the previous quarter because of reduced demand from China and more arbitrage from the West.

Economic Overview

Non-recurring items

Overall Performance Segm

entation Performance Analysis of Financial Position

Economic Outlook


Q3/2015

Petrochemical prices of Olefins in Q3/2015, both High Density Polyethylene (HDPE) and Polypropylene (PP) decreased from previous quarter, in parallel with a drop in crude and naphtha prices and sluggish plastic demand in Asia due to a slowing economy amid high inventory level. For Aromatics, the Benzene (BZ) price declined amid a turnaround of Styrene Monomer (SM) plants and a reduction of Phenol plants’ operating rate in China, resulting in substantial reduction in BZ demand. Similarly, Paraxylene (PX) price lowered after PTA plants scheduled maintenance in China causing excess supply of PX.

Unit: US$ per Ton Q3/2014 Q2/2015 Q3/2015 % Inc.(Dec.)

9M/2014 9M/2015 %

Inc.(Dec.) YoY QoQ

HDPE 1,604 1,375 1,234 (23.1%) (10.3%) 1,576 1,266 (19.7%)

PP 1,617 1,343 1,135 (29.8%) (15.5%) 1,587 1,209 (23.8%)

BZ 1,307 805 666 (49.0%) (17.3%) 1,301 713 (45.2%)

PX 1,337 912 808 (39.6%) (11.4%) 1,283 843 (34.3%)

The Thai economy in Q3/2015 expanded at a slightly slower pace than in Q2/2015 due to a severe drought in mid-2015 which negatively affected crop production, especially the production of wet season rice. Tourism, though briefly affected by Bangkok bombing incident on August 17, 2015, and government spending remained the key drivers of economic growth in Q3/2015. Exports of goods in Q3/2015 improved from Q2/2015, especially exports of intermediate products to China, due to an improving Chinese export outlook after the Yuan devaluation. Thus, the Office of the National Economic and Social Development Board (NESDB), as of August 2015, projected the Thai economy to grow in the range of 2.7 – 3.2% in 2015

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

Non-recurring items in the third quarter of 2015

Summary of non-recurring items for Q3/2015 are as follows:

July 2015 PTT divested 49% shareholding interest in PTT Polymer Logistic Company Limited (“PTTPL”) to PTTGC and 1% shareholding interest in PTTPL to Solution Creation Company Limited, a wholly-owned subsidiary of PTTGC to be in line with PTT Group restructuring policy aiming to align the shareholding structure of PTTPL with service usage.

PTT Green Energy Pte Ltd. ("PTTGE SG") (a subsidiary of PTT in Singapore of which PTT holds 100 percent shares) had already signed the Sale and Purchase Agreement to dispose of its entire investment totally 99.98 percent in PT Az Zhara in which the disposition of the entire investment and the assignment of loan in this subsidiary will be completed within September 2015.

August 2015 PTTGC has shutdown its Aromatics Complex 2 (Aromatics production capacity of 1.07 million ton/year) since July 28, 2015. The Company also rescheduled the annual maintenance shutdown plan and the tie-in of the debottlenecked capacity of Aromatics Complex 2 to the same period, previously scheduled in September for 46 days. This reschedule will shorten total shutdown period to only 75 days

PTTGC BOD approved the share repurchase program for financial management purpose in the maximum amount not exceeding Baht 4,500 million and the number of the shares to be repurchased is approximately 2% of the total issued shares. The repurchase period covers the duration of 6 months, starting from September 8, 2015 to March 7, 2016.

GPSC BOD approved a resolution for project investment of CUP-4 Phase 1 of approximately 3,980 million baht for construction of Cogeneration Power Plant with power capacity 40-45 MW and steam capacity 70 tph for industrial users in ecological industrial estate (PTT WecoZI) and other industrial estates nearby.

PTT BOD approved the payment of interim dividends for the first half of 2015 performance at the rate of Baht 6.00 per share or 37.3% of consolidated net income.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

August 2015 PTT established OGP Energy Solutions Co., Ltd. (“OGP”), the Joint Venture between PTT Retail Business Co., Ltd. (“PTTRB”), a subsidiary of PTT, and Osaka Gas (Thailand) Co., Ltd. (“OGT”) with shareholding proportion of 40 and 60 percent, respectively. The business objective of the company is to provide “One-Stop Service” of Energy Service Solution.

The Disposition of the entire investment and the assignment of loan in PT Az Zhara were completed on 31 August 2015. The total value of the transaction is USD 6.8 million. As a result, PT Az Zhara, including PT Az Zhara's subsidiaries, which consists of 6 companies, will cease to be the subsidiaries of PTT.

PTTEP South Asia Limited (“PTTEP SA”)(a subsidiary of PTTEP) changed the participating interest of Blocks PSC-G and EP2, located onshore in the Central Myanmar Basin, Republic of the Union of Myanmar, in which previously held 90%. PTTEP SA divested 20% participating interest to a subsidiary of Mitsui Oil Exploration Co., Ltd. (MOECO) and PALANG SOPHON OFFSHORE PTE. LTD.

September 2015 PTTGE SG had already signed the Sale and Purchase Agreement to dispose of its entire investment totally 100 percent in PTT Green Energy (Netherlands) Cooperatief U.A. (“PTTGE COOP”) (the company established in Netherlands), of which held shares in 7 companies doing palm oil business in the Republic of Indonesia together called "KPI Project”.

October 2015 PTT raised fund by issuing the unsubordinated and unsecured debentures to retail investors in the total amount of Baht 4,200 million on October 19, 2015.

PTTEP has commenced its first production in the Algeria 433a & 416b Project with current flow rate of approximately 20,000 barrels per day. The first crude oil sales is expected within the fourth quarter of 2015.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

Overall performance of PTT and its subsidiaries

Financial performance of Q3/2015 compared with Q3/2014 and Q2/2015 as well as 9M/2015 compared

with 9M/2014 are summarized as follows:

% Inc.

YoY QoQ (Dec.)

Sales & services income 694,325 536,678 505,066 (27.3%) (5.9%) 2,039,086 1,557,327 (23.6%)

: Exploration & Production 64,021 48,791 48,968 (23.5%) 0.4% 187,469 145,763 (22.2%)

: Natural gas 1/ 146,056 138,381 137,419 (5.9%) (0.7%) 434,176 416,022 (4.2%)

: Oil 155,360 134,438 121,938 (21.5%) (9.3%) 487,474 390,158 (20.0%)

: International trading 454,465 272,313 240,773 (47.0%) (11.6%) 1,262,338 751,170 (40.5%)

: Petrochemical 127,041 113,488 95,993 (24.4%) (15.4%) 388,630 313,135 (19.4%)

: Refining 157,326 133,723 122,993 (21.8%) (8.0%) 514,335 376,845 (26.7%)

: Coal 4,734 3,184 3,116 (34.2%) (2.1%) 16,131 10,993 (31.9%)

: Others 1,302 1,281 1,143 (12.2%) (10.8%) 3,557 3,511 (1.3%)

EBITDA 77,496 87,610 59,729 (22.9%) (31.8%) 240,277 219,079 (8.8%)

: Exploration & Production 45,544 34,277 33,225 (27.0%) (3.1%) 134,423 103,194 (23.2%)

: Natural gas 16,210 14,348 9,033 (44.3%) (37.0%) 45,120 32,643 (27.7%)

: Oil 3,108 4,455 2,375 (23.6%) (46.7%) 11,760 10,757 (8.5%)

: International trading (1,286) 1,080 859 >100% (20.5%) 467 2,098 >100%

: Petrochemical 12,573 15,467 7,212 (42.6%) (53.4%) 36,032 33,257 (7.7%)

: Refining (1,469) 18,831 6,857 >100% (63.6%) 7,646 37,714 >100%

: Coal 1,152 510 628 (45.5%) 23.1% 3,540 2,586 (26.9%)

: Others 231 1,081 403 74.5% (62.7%) 957 2,830 >100%

EBIT 43,045 50,939 23,859 (44.6%) (53.2%) 143,494 110,374 (23.1%)

: Exploration & Production 24,197 10,184 10,204 (57.8%) 0.2% 76,745 32,311 (57.9%)

: Natural gas 12,343 10,546 5,071 (58.9%) (51.9%) 33,651 21,142 (37.2%)

: Oil 2,392 3,607 1,606 (32.9%) (55.5%) 9,665 8,375 (13.3%)

: International trading

- Excluding effect of FX (1,306) 1,072 851 >100% (20.6%) 439 2,074 >100%

- Including effect of FX 896 1,705 292 (67.4%) (82.9%) 6,829 3,352 (50.9%)

: Petrochemical 8,576 11,692 3,320 (61.3%) (71.6%) 23,989 21,849 (8.9%)

: Refining (4,515) 15,832 3,691 >100% (76.7%) (1,161) 28,688 >100%

: Coal 47 (242) (54) >(100%) 77.7% (82) 255 >100%

: Others (123) 686 33 >100% (95.2%) (85) 1,679 >100%

Depreciation and amortization expenses 34,452 36,671 35,871 4.1% (2.2%) 96,784 108,705 12.3%

Loss on impairment of assets 370 - (51,080) >(100%) >(100%) (1,106) (51,080) >(100%)

Finance costs 8,028 7,829 7,528 (6.2%) (3.8%) 24,566 23,250 (5.4%)

Gain (loss) on foreign exchange 3,584 (3,289) (6,906) >(100%) >(100%) 9,716 (8,254) >(100%)

Share of net income (loss) from investments in 645 2,433 263 (59.2%) (89.2%) 3,458 4,587 32.6%

Income taxes 9,769 8,989 7,699 (21.2%) (14.4%) 33,811 20,139 (40.4%)

Net income (loss) 26,590 23,746 (26,582) >(100%) >(100%) 84,485 19,748 (76.6%)

Earnings per share (Baht/share) 9.30 8.19 (9.14) >(100%) >(100%) 29.54 6.94 (76.5%)

1/ Including infrastructure business

9M/2014

(Restated) 9M/2015Unit : Million Baht

Q3/2014

(Restated) Q2/2015 Q3/2015

% Inc. (Dec.)

Economic Overview

Non-recurring items



Economic Outlook

Note: Financial performance of Q3/2014 and 9M/2014 were restated in accordance with Thai Financial Reporting Standard No. 10 “Consolidated

Financial Statements” and Thai Financial Reporting Standard No. 11 “Joint Arrangements”, effective from January 1, 2015.


Q3/2015

Third quarter of 2015 compared with Second quarter of 2015

In Q3/2015, PTT and its subsidiaries had net loss of Baht 26,582 million, decreased from Baht 23,746

million of net income in Q2/2015 by Baht 50,328 million or more than 100% mainly due to the recognition of loss

on impairment of assets of PTTEP. As crude oil price and reference petrochemical product prices dropped from

the previous quarter, performances of PTT’s affiliates in the petrochemical and refinery business groups decreased

as a result of a drop in accounting GRM caused by a rise in stock loss and a drop in spread margins of petrochemical

business, especially Aromatics. Furthermore, the Baht has continually depreciated against US$ since the end of

2014 which led to loss on foreign exchange from foreign currency debts of PTT Group.

In Q3/2015, sales revenue of PTT and its subsidiaries was Baht 505,066 million, decreased by Baht

31,612 million or 5.9% mainly from petrochemical business group and international trading business. The main

reason was the lower average selling prices of petroleum and petrochemical products, both Olefins and

Aromatics, in line with the decline in crude oil price. As the result of crude oil price decreased in Q3/2015, refinery

business group had stock loss in this quarter, whereas there was stock gain in the previous quarter. For

petrochemical business group, performance dropped from both price and volume factors due to the lower spread

margin of Benzene due to economic slowdown while there were additional supply in China this quarter.

Furthermore, PTTGC has shutdown of Aromatics 2 for 65 days in this quarter. Hence, earnings before interest,

taxes, depreciation and amortization (excluding other non-operating incomes and expenses) (EBITDA) of PTT

and subsidiaries in Q3/2015 was Baht 59,729 million, decreased by Baht 27,881 million or 31.8%

In Q3/2015, the share of net income from investments in associates and joint ventures was Baht 263

million, decreased by Baht 2,170 million from Baht 2,433 million in Q2/2015. The main reason was stock loss of

refining business associates caused by declining crude oil price.

1,891

(178)

105

82

209

191

280

338

(52)(170)

Q2/2015 Q3/2015

Others

Gas

Oil

Petrochemical

Refinery

Share of net income (loss) from investments in associates and joint ventures

2,433

89.2%

Unit: Million Baht

Economic Overview

Non-recurring items



Economic Outlook

263


Q3/2015

According to continuing declined oil prices from Q4/2014 with a trend of slow recovery, PTTEP

recognized loss on impairment of assets amounting to Baht 49,893 million principally from exploration and

production projects in overseas which mainly produce crude oil and condensate.

In Q3/2015, there was loss on foreign exchange of Baht 6,906 million, increased by Baht 3,617 million

from Q2/2015 mainly resulted from the effect of the Baht depreciation against US$. Hence, many affiliates within

PTT Group had unrealized loss on foreign exchange from foreign currency debts.

Moreover, gain on financial derivatives increased by Baht 4,558 million, whereas loss on financial derivatives was Baht 3,210 million in Q2/2015. This was mainly resulted from oil price hedging contracts of PTTEP.

In Q3/2015, corporate income taxes were Baht 7,699 million, decreased by Baht 1,290 million from Baht

8,989 million in Q2/2015, mainly from the drop of operating incomes of PTT and petrochemical and refinery

business groups as aforementioned. Nonetheless, income taxes of PTTEP, with functional currency in US$,

increased as a result of deferred tax from functional currency following the Baht depreciation against US$.

First nine months of 2015 compared with First nine months of 2014

Net income of PTT and its subsidiaries in the first nine months of 2015 (9M/2015) was Baht 19,748

million, decreased from Baht 84,485 million in the first nine months of 2014 (9M/2014) by Baht 64,737 million or

76.6% mainly due to the recognition of loss on impairment of assets of PTTEP as a result of the drop in crude oil

prices, as well as the decline in selling price despite the increase in sales volume. In additions, performances of

PTT decreased, especially gas business from the selling of natural gas to industrial customers and GSP’s products

due to decreased fuel oil and petrochemical prices following crude price drop. The performance of petrochemical

business group slightly decreased due to the drop in Olefins prices. However, the performance of refinery business

group increased because the rise of Dubai crack spreads, which led to the higher accounting GRM. On the other

hand the weakening of Baht against US$ compared to last year has generated loss on foreign exchange for PTT

group.

In 9M/2015, sales revenue of PTT and its subsidiaries was Baht 1,557,327 million, decreased by Baht

481,759 million or 23.6%, mainly due to the drop in average selling prices, despite the continuous growth in sales

volume. Average product selling prices dramatically declined following Dubai crude oil prices which decreased

47.8% compared with 9M/2014. Thus, sales revenue decreased in almost all business groups, especially

international trading business, refinery business group, and oil business. EBITDA of PTT and subsidiaries in

9M/2015 was Baht 219,079 million, decreased by Baht 21,198 million or 8.8% compared to 9M/2014 mainly from

the better performance of refinery business group.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

In 9M/2015, the share of net income from investments in associates and joint ventures was Baht 4,587

million, increased by Baht 1,129 million or 32.6% from Baht 3,458 million in 9M/2014. The main reason was better

performance of refining business associates caused by better GRM in relations to higher refining utilization rates

compared to 9M/2014, which had major turnarounds.

According to continuing declined oil prices from Q4/2014 with a trend of slow recovery, PTTEP recognized losses from impairment of assets amounting to Baht 49,893 million principally from exploration and production projects in overseas with the main productions of crude oil and condensate.

Depreciation and amortization expenses increased by Baht 11,921 million or 12.3% from Baht 96,784

million in 9M/2014 to Baht 108,705 million in 9M/2015, mainly caused by depreciation and amortization expenses

of PTTEP from Contract 4, Arthit and S1 projects following the increase in completed assets, as well as production

volumes of Zawtika project after having reached its full capacity in August 2014.

Loss on foreign exchange in 9M/2015 was Baht 8,254 million while gain on foreign exchange in 9M/2014 was Baht 9,716 million mainly from realized losses of foreign currency accounts receivable and accounts payable of PTT. Furthermore, affiliates within PTT Group had unrealized loss on foreign exchange from foreign currencies debts as a result of the Baht depreciated against US$.

Furthermore, loss on financial derivatives in 9M/2015 was Baht 392 million while there was gain on financial derivatives in 9M/2014 of Baht 8,705 million. The loss was mainly from crack spread hedging of PTT’s subsidiaries within the refinery business group. However, there was gain on disposal of investment in BCP in 9M/2015.

747

2,5581,304

783

604

648974

855

(171) (257)

9M/2014 9M/2015

Others

Gas

Oil

Petrochemical

Refinery

4,587

3,458

Unit: Million Baht

32.6%

Share of net income (loss) from investments in associates and joint ventures

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

In 9M/2015, corporate income taxes were Baht 20,139 million, decreased by Baht 13,672 million or

40.4% from Baht 33,811 million in 9M/2014, mainly from a drop in PTTEP’s petroleum income tax expenses in line

with a decrease in operating income.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

Segmentation performance of PTT and its subsidiaries

The details of revenue, EBITDA and EBIT of 9M/2015 by segmentation are as follow;

1. Upstream Petroleum and Natural Gas Business Group

Petroleum Exploration and Production Business: PTT Exploration and Production Public Co., Ltd. (PTTEP)

%Inc.

YoY QoQ (Dec.)

Average selling price

(US$/BOE)

Average sales volume

(BOED)

Q3/2014 Q2/2015 Q3/2015%Inc. (Dec.)

9M/2015

65.2 48.5 44.6 (31.6%) (8.0%) 65.9 47.2

9M/2014

(28.4%)

325,248 325,534 332,203 2.1% 2.0% 313,324 328,312 4.8%


In Q3/2015, sales revenue of PTTEP, a subsidiary of PTT, was Baht 48,968 million, increased by Baht 177 million or 0.4% mainly from the increase in average sales volume by 2.0% from 325,534 per barrel of oil equivalent per day (BOED) in Q2/2015 to 332,203 per BOED in Q3/2015. Nonetheless, the average selling prices decreased by 8.0% from US$ 48.5 per BOE in Q2/2015 to US$ 44.6 per BOE in Q3/2015, primarily because of the rapid drop of crude oil prices which decreased by 18.9% in Q3/2015 while gas prices just started to decline.

In Q3/2015, EBITDA was Baht 33,225 million, decreased by Baht 1,052 million or 3.1%, mainly from the rise in exploration expenses as a result of the exploration well write - off in the Myanmar M3.

EBIT in Q3/2015 was Baht 10,204 million, increased by Baht 20 million or 0.2%, as a result of the decrease in depreciation, depletion and amortization expenses mainly from Contract 4 project.

17%

13%16%

47%

6%1%

14%

15%17%

6%

46%

2%

18%

19%

24%

9% 28%

2%1,557,327

Economic Overview

Non-recurring items



Economic Outlook

* Including coal and others.

Gas Oil & Trading PTTEP Others*

Unit: Million Baht

219,079

9

110,374

GAS Oil & Trading PTTEP Refine Petrochem Others*


Q3/2015

First nine months of 2015 compared with first nine months of 2014

In 9M/2015, sales revenue of PTTEP was Baht 145,763 million, decreased by Baht 41,706 million or 22.2% from 9M/2014, because the average selling prices decreased by 28.4% from US$ 65.9 per BOE in 9M/2014 to US$ 47.2 per BOE in 9M/2015, while the sales volume continuously increased. The sales volume increased by 4.8% from 313,324 BOED in 9M/2014 to 328,312 BOED in 9M/2015, because the Zawtika project started its natural gas sales in Myanmar since March 2014, and reached its full production capacity as well as exported natural gas to Thailand since August 2014.

In 9M/2015, EBITDA was Baht 103,194 million, decreased by Baht 31,229 million or 23.2%, mainly from lower sales revenue as aforementioned, despite the decrease in royalty and operating expenses. Furthermore, in 9M/2014, PTTEP Australasia project incurred additional expenditures from drilling of H5 development well and from the restructuring of participating interest in the Canada Oil Sand KKD project.

In 9M/2015, EBIT was Baht 32,311 million, decreased by Baht 44,434 million or 57.9%, as a result of the increase in depreciation expenses in relation to higher completed assets of Contract 4, Arthit, S1 projects as well as higher production volume of Zawtika project.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

Natural Gas Business Group The details of all product sales volume from gas separation plants (GSP) are as follows:

Note: 1/ include Pentane (start to sell in February 2015)

The details of reference product prices of GSP are as follows:

Note: 1/ Contract price (CP) 60:40

2/ South East Asia - Spot Price

3/ MOP Singapore (MOP’S)

4/ On December 15, 2014, NEPC passed a resolution of LPG price restructuring effective from February 2, 2015 onwards, with the

cancellation of LPG Ex-GSP pricing at US$ 333 per ton and setting the calculating method for LPG Pool price which reflects actual

costs of LPG production and supply (GSPs, Refineries and Aromatics plants, Imported) based on weighted average of the volume

from production and supply for the last 3 months.


In Q3/2015, sales revenue of natural gas business was Baht 137,419 million, decreased by Baht 962

million or 0.7% from Q2/2015 mainly from lower sales volume of gas business subsidiaries, GPSC and PTT Natural

Gas Distribution Co., Ltd. (PTTNGD). The sales revenues of GPSC declined from its Sriracha plant turnarounds.

And PTTNGD sales revenue also decreased following lower fuel oil price. Nevertheless, sales revenue of PTT’s

GSP increased in line with the higher sales volume. The sales volume of all products from GSPs (including NGL

derived from Dew Point Control units) increased from 1,501,944 tons in Q2/2015 to 1,590,649 tons in Q3/2015,

especially LPG and Ethane, despite the drop in product selling price in Q3/2015 in line with global product

reference prices.

Unit : Ton Q3/2014 Q2/2015 Q3/2015 % Inc.(Dec.)

9M/2014 9M/2015 % Inc.

(Dec.) YoY YoY QoQ LPG 719,895 608,443 652,222 (9.4%) 7.2% 2,024,496 1,935,153 (4.4%)

Ethane 531,635 496,448 547,529 3.0% 10.3% 1,509,030 1,595,558 5.7%

Propane 162,068 220,988 211,314 30.4% (4.4%) 575,017 636,499 10.7%

NGL1/ 183,685 176,065 179,584 (2.2%) 2.0% 549,213 545,621 (0.7%)

Total 1,597,283 1,501,944 1,590,649 (0.4%) 5.9% 4,657,756 4,712,831 1.2%

Unit : US$ per Ton Q3/2014 Q2/2015 Q3/2015 % Inc. (Dec.)

9M/2014 9M/2015 %Inc.(Dec.

) YoY YoY QoQ

LPG 1/,4/ 792 451 371 (53.2%) (17.7%) 853 428 (49.8%)

Ethylene 2/ 1,478 1,386 970 (34.4%) (30.0%) 1,455 1,128 (22.5%)

Propylene 2/ 1,301 940 736 (43.4%) (21.7%) 1,316 836 (36.5%)

HDPE 2/ 1,604 1,375 1,234 (23.1%) (10.3%) 1,576 1,266 (19.7%)

PP 2/ 1,617 1,343 1,135 (29.8%) (15.5%) 1,587 1,209 (23.8%)

Naphtha 3/ 832 505 405 (51.3%) (19.8%) 855 451 (47.3%)

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

In addition, sales revenue of PTT Natural Gas Supply and Trading (GSMs), Natural Gas Transmission

(GTMs) and Natural Gas Distribution (NGRs) business units slightly increased as a result of the rise in average

selling prices in all customer groups compared with Q2/2015. However, the average natural gas sales volume

(calculated at heating value of 1,000 BTU per cubic foot) slightly decreased by 57 million standard cubic feet per

day (MMSCFD) or 1.2% from 4,879 MMSCFD in Q2/2015 to 4,822 MMSCFD in Q3/2015.

EBITDA of natural gas business in Q3/2015 was Baht 9,033 million, decreased by Baht 5,315 million or

37.0% mainly from PTT’s GTMs. This was mainly resulted from compensation payments for delayed construction

of the 4th natural gas pipeline project amounting to Baht 3,062 million. EBIT in Q3/2015 was Baht 5,071 million,

decreased by 51.9% in line with EBITDA.


In 9M/2015, sales revenue of natural gas business was Baht 416,022 million, decreased by Baht 18,154

million or 4.2% from 9M/2014 mainly due to the lower sales revenue of PTT’s GSMs, GTMs and NGRs, as a result

of the drop in average selling prices in all customer groups, especially selling prices for industrial customers,

which was in line with the decrease in reference fuel oil price, compared with the same period of last year. Even

though the average natural gas sales volume (calculated at heating value of 1,000 BTU per cubic foot) increased

by 195 MMSCFD or 4.2% from 4,650 MMSCFD in 9M/2014 to 4,845 MMSCFD in 9M/2015. The higher sales volume

was mainly from higher demands from IPP customers as a result of new IPPs that commercially operated in June

and December 2014.

In addition, sales revenue of PTT’s GSPs decreased as a result of the drop in product selling price in

line with global product reference prices in 9M/2015. Nevertheless, the sales volume of all products from GSPs

(including NGL derived from Dew Point Control units) increased 1.2% from 4,657,756 tons in 9M/2014 to 4,712,831

tons in 9M/2015, mainly from the sales volume of Propane and Ethane.

EBITDA of natural gas business in 9M/2015 was Baht 32,643 million, decreased by Baht 12,477 million

or 27.7%. The main reason was from the drop in gross margin of PTT’s natural gas business, especially the gross

margins of GSMs, GTMs and NGRs. These were the results of the drop in selling prices for industrial customers

of NGRs in relations to the lower reference fuel oil price while the feed gas cost has had slower pace adjustment.

Similarly, GSPs margins dropped in line with the decrease in product selling prices as aforementioned.

Nevertheless, NGV loss decreased from NGV price lifting to be at Baht 13.50 per kilogram for private cars and

Baht 10 per kilogram for taxi and public cars. EBIT in 9M/2015 was Baht 21,142 million, decreased by 37.2% in

line with EBITDA.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

Downstream Petroleum Business Group

Oil Business Group

YoY QoQ YoY

Average sales volume 5,943 6,214 6,158 3.6% (0.9%) 18,448 18,758 1.7%

% Inc.(Dec.)9M/2014 9M/2015Unit : million liter Q3/2014 Q2/2015 Q3/2015

% Inc.(Dec.)


Sales revenue of oil business in Q3/2015 was Baht 121,938 million, decreased by Baht 12,500 million

or 9.3% because product selling prices decreased as a result of the decline in average Dubai crude oil price from

US$ 61.3 per barrel in Q2/2015 to US$ 49.7 per barrel in Q3/2015. Furthermore, sales volume in this quarter

decreased by 56 million liters or 0.9% from 6,214 million liters or equivalent to 429,513 barrels per day in Q2/2015

to 6,158 million liters or equivalent to 421,016 barrels per day. This was resulted mainly from the drop in sales

volume of fuel oil of EGAT due to the annual shutdowns of Myanmar natural gas wells in Q2/2015, and the

decrease in sales volume of Diesel in relation to economic slowdown.

EBITDA in Q3/2015 was Baht 2,375 million, decreased from Q2/2015 by Baht 2,080 million or 46.7%,

mainly due to the increase in stock loss in relation to the drop in oil price. Hence, EBIT in Q3/2015 was Baht 1,606

million, decreased from the prior year by Baht 2,001 million as a result of the decline in EBITDA as aforementioned.


Sales revenue of oil business in 9M/2015 was Baht 390,158 million, decreased by Baht 97,316 million

or 20.0%, resulting from the decrease in product selling prices. The average Dubai crude oil price decreased

from US$ 104.0 per barrel in 9M/2014 to US$ 54.3 per barrel in 9M/2015. However, sales volume increased by

310 million liters or 1.7% from 18,448 million liters or equivalent to 425,047 barrels per day in 9M/2014 to 18,758

million liters or equivalent to 432,186 barrels per day in 9M/2015, mainly from the increase in the sales volume of

gasoline, diesel, and aviation fuel.

EBITDA in 9M/2015 was Baht 10,757 million, decreased by Baht 1,003 million or 8.5% due to the drop

in margins of diesel, LPG, and gasoline as a result of the rise in stock loss. Consequently, EBIT in 9M/2015 was

Baht 8,375 million, decreased by Baht 1,290 million, in line with the drop in EBITDA as aforementioned.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

International Trading Business Group

YoY QoQ YoY

Average sales volume 21,517 20,248 19,470 (9.5%) (3.8%) 58,098 60,785 4.6%

% Inc. (Dec.)9M/2014 9M/2015Unit : million liter Q3/2014 Q2/2015 Q3/2015

% Inc. (Dec.)


Sales revenue of international trading business was Baht 240,773 million in Q3/2015, decreased by

Baht 31,540 million or 11.6% from Q2/2015 mainly from the drop in global crude oil price. Moreover, sales volume

in this quarter decreased by 778 million liters or 3.8% from 20,248 million liters or equivalent to 1,399,546 barrels

per day in Q2/2015 to 19,470 million liters or equivalent to 1,331,143 barrels per day in Q3/2015, mainly due to

the drop in sales volume from the Out – Out trading as well as Out – In trading, especially crude oil and

condensate.

EBITDA in Q3/2015 was Baht 859 million, decreased by Baht 221 million mainly from the lower margins

from sales of crude oil and finished products. EBIT, which included an effect of foreign exchange, was Baht 292

million, decreased by Baht 1,413 million.


Sales revenue of international trading business was Baht 751,170 million in 9M/2015, decreased by

Baht 511,168 million or 40.5% which resulted from the drop in product selling prices in accordance with global oil

market prices. However, the sales volume in 9M/2015 increased by 2,687 million liters or 4.6% from 58,098 million

liters or equivalent to 1,338,573 barrels per day in 9M/2014 to 60,785 million liters or equivalent to 1,400,480

barrels per day, mainly due to the rise in sales volume from the Out – In and Out – Out trading, especially crude

oil and condensate, due to no major refinery turnaround in this period.

EBITDA in 9M/2015 was Baht 2,098 million increased by Baht 1,631 million. EBIT, which included the effect of foreign exchange, in 9M/2015 was Baht 3,352 million, decreased by Baht 3,477 million from 9M/2014 mainly due to the drop in margin of domestic condensate.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

Petrochemical Business Group

YoY QoQ

HDPE 1,604 1,375 1,234 (23.1%) (10.3%) 1,576 1,266 (19.7%)

PP 1,617 1,343 1,135 (29.8%) (15.5%) 1,587 1,209 (23.8%)

BZ - Cond 430 271 235 (45.3%) (13.3%) 394 241 (38.8%)

PX - Cond 479 391 397 (17.1%) 1.5% 400 374 (6.5%)

Unit : US$ per ton Q3/2014 9M/2014 9M/2015 %Inc. (Dec.)%Inc. (Dec.)

Q2/2015 Q3/2015


Sales revenue of petrochemical subsidiaries of PTT in Q3/2015 was Baht 95,993 million, decreased by

Baht 17,495 million or 15.4% mainly from PTTGC, especially from petroleum products. This was resulted from the

decline in both selling prices, following crude oil price, and sales volume from previous quarter especially aviation

fuel and diesel.

In addition, sales revenue of Aromatics products decreased from the drop in sales volume due to

Aromatics 2 plant shutdown for 65 days, and selling prices also decreased following the weakening in demand

for BZ in China. Meanwhile, Olefins and derivatives sales revenue increased because of the rise in sales volume

as well as Baht depreciation in this quarter, even though the selling prices decreased following crude oil price.

HDPE price dropped 10.3% from US$ 1,375 per ton in Q2/2015 to US$ 1,234 per ton in Q3/2015.

EBITDA in Q3/2015 was Baht 7,212 million, decreased by Baht 8,255 million or 53.4%, and EBIT in

Q3/2015 was Baht 3,320 million, decreased by Baht 8,372 million or 71.6% mainly from lower performance of

petroleum products, caused by declining crude oil price. The falling crude oil price also led to stock loss in

Q3/2015, while there was stock gain in previous quarter. Furthermore, most of petroleum product spreads

dropped in accordance with lower seasonal demand, as well as total refinery intake decreased from the shutdown

of Aromatics 2. This plant shutdown led to declining in the performance of Aromatics product group as well. The

utilization rate of Aromatics production (BTX utilization) decreased from 85% in Q2/2015 to 57% in Q3/2015. In

addition, BZ spread dropped by 13.3%, while PX spread slightly increased. The performance of Olefins and

derivatives also declined from the decrease in product prices as aforementioned.

Share of net income from investments in associates and joint ventures of petrochemical business group

decreased by Baht 23 million from Baht 105 million in Q2/2015 to Baht 82 million in Q3/2015. The main part came

from the lower performance of PTTAC caused by unrealized loss on foreign exchange from foreign currency debt.

This was resulted from the impact of the Baht depreciation against the US$.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015


Sales revenue of petrochemical subsidiaries of PTT in 9M/2015 was Baht 313,135 million, decreased

by Baht 75,495 million or 19.4% mainly from PTTGC especially from petroleum products due to the decrease in

average selling prices following crude oil price, despite the slight increase of sales volume. Aromatics sales

revenue also decreased from the decline of both price and sales volume. BZ and PX selling prices significantly

declined owing to weakening in demand of BZ and oversupply of PX. In addition, sales volume decreased from

the reduction of utilization rate, affected from Aromatics 2 plant shutdown. Olefins and derivatives sales revenue

also declined mainly caused by the drop in product prices following crude oil price. HDPE price dropped by

19.7% from US$ 1,576 per ton in 9M/2014 to US$ 1,266 per ton in 9M/2015.

EBITDA and EBIT of petrochemical business group decreased. EBITDA in 9M/2015 was Baht 33,257

million, decreased by Baht 2,775 million or 7.7% and EBIT in 9M/2015 was Baht 21,849 million decreased by Baht

2,140 million or 8.9% mainly from the lower performance of Olefins and derivatives following the decline in product

prices. Meanwhile, there was higher performance of Aromatics products from the lower value of fuel used and

loss following the decrease in condensate price despite BZ spread and PX spread decreased by 38.7% and

6.5%, respectively. Similarly, the performance of refinery business unit increased from the rise in sales volume

and market GRM, despite the stock loss in 9M/2015.

Share of net income from investments in associates and joint ventures of petrochemical business

decreased by Baht 521 million from Baht 1,304 million in 9M/2014 to Baht 783 million in 9M/2015. The main portion

came from the decline in performance of HMC and PTTAC caused by loss on foreign exchange from foreign

currency debt which was the impact of the Baht depreciation against the US$. Moreover, the PP spread margin

was decreased following crude oil price.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

Refinery Business Group

YoY QoQ

Market GRM 3.84 6.97 5.51 43.5% (20.9%) 3.58 6.93 93.6%

Inventory gain (loss) (3.94) 2.81 (3.80) (3.6%) >(100%) (1.34) (1.50) 11.9%

Accounting GRM 0.52 9.70 1.78 >100% (81.6%) 2.98 5.43 82.2%

Accounting GIM 1.99 13.14 5.76 >100% (56.2%) 5.22 8.58 64.4%

Utilization rate (%) 84.9% 99.2% 97.3% 14.6% (1.9%) 87.5% 97.8% 11.8%

Q2/2015Unit : US$ per barrel Q3/2014 9M/2014 9M/2015%Inc.

(Dec.)

%Inc. (Dec.)Q3/2015

Note: GRM was calculated from refineries of TOP, IRPC, and SPRC excluding PTTGC’s refining unit and BCP refinery GIM was calculated from refineries of TOP and IRPC


In Q3/2015, sales revenue of refinery subsidiaries of PTT (TOP and IRPC) was Baht 122,993 million,

decreased by Baht 10,730 million or 8.0% because the average petroleum product prices decreased in relation

to the drop in oil prices from Q2/2015 which reflected the impact of sluggish economy in China, as well as product

spreads decreased from higher supply. On the other hand, Aromatics sales revenue increased from higher sales

volume; even though, the average product selling prices dropped as aforementioned. PX and BZ prices also

decreased mainly from the lower Chinese demand owing to slowdown economic and additional supply from a

new Aromatics plant in China which had started its operations since August 2015.

EBITDA in Q3/2015 of TOP and IRPC was Baht 6,857 million, decreased by Baht 11,974 million from

Q2/2015 and EBIT was Baht 3,691 million, decreased by 12,141 million. This was mainly from stock loss following

the decrease in average Dubai crude oil price. In addition, most petroleum product crack spreads decreased.

Also, the performance of petrochemical business declined from decreases Aromatics spreads despite the higher

sales volume.

Share of net income from investments in associates and joint ventures of refinery business decreased

by Baht 2,069 million from Baht 1,891 million gains in Q2/2015 to Baht 178 million losses in Q3/2015. The main

portion came from stock loss of SPRC in Q3/2015 while there was stock gain in Q2/2015.

Overall, market GRM of PTT group refineries (including refineries of TOP, IRPC, and SPRC excluding

PTTGC’s refining unit) was at US$ 5.51 per barrel in Q3/2015, decreased from US$ 6.97 per barrel in Q2/2015

mainly from the drop in most petroleum product crack spreads. However, the lower crude oil price in Q3/2015 led

to stock loss of US$ 3.80 per barrel. All in all, accounting GRM of PTT group refineries was at US$ 1.78 per barrel,

decreased by US$ 7.92 per barrel. And when combined with the lower performance of petrochemical business

as aforementioned, accounting GIM of TOP and IRPC was at US$ 5.76 per barrel, decreased by US$ 7.38 per

barrel.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015


In 9M/2015, sales revenue of refinery subsidiaries of PTT (TOP and IRPC) was Baht 376,845 million,

decreased by Baht 137,490 million or 26.7% mainly from the drop in petroleum product prices following the

decrease in crude oil price despite utilization rate increased. In addition, Aromatics sales revenue of TOP and

IRPC dropped as a result of Aromatics selling price dramatically declined in line with crude oil price and sluggish

economy in China.

Although the sales revenue declined, the performance of refinery business significantly improved.

EBITDA of TOP and IRPC in 9M/2015 was Baht 37,714 million, increased by Baht 30,068 million from Baht 7,646

million in 9M/2014. EBIT in 9M/2015 was Baht 28,688 million, increased by Baht 29,849 million. These were mainly

from the increase in petroleum product crack spreads especially gasoline crack spread as a result of shortened

supply from maintenance of Taiwanese refineries’ gasoline production units and the increasing demand from low

retail selling prices. Also, the costs of production decreased following the drop in crude price as well as the

utilization rates and crude intake increased due to higher production rates of TOP and IRPC, while in 9M/2014

there were planned and emergency shutdowns from IRPC’s fire incident in the VGOHT unit.

Share of net income from investments in associates and joint ventures of refinery business increased

by Baht 1,811 million to Baht 2,558 million in 9M/2015. This was mainly from the better performance of SPRC

which improved from higher utilization rate, while there was major turnaround in 9M/2014, as well as the increase

in market GRM.

Overall, market GRM of PTT group refineries (including TOP, IRPC, and SPRC excluding PTTGC’s

refining unit) in 9M/2015 was at US$ 6.93 per barrel, increased from US$ 3.35 per barrel. Utilization rate also

increased from 87.5% in 9M/2014 to 97.8% in 9M/2015. However, the continuous decrease in crude oil price

resulted in stock loss of US$ 0.16 per barrel in 9M/2015. Accounting GRM of PTT group refineries was at US$

5.43 per barrel, increased by US$ 2.45 per barrel or 82.2% comparing to 9M/2014. As a result, accounting GIM

of TOP and IRPC was at US$ 8.58 per barrel, increased by US$ 3.36 per barrel or 64.4%.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

Coal Business

%Inc.

YoY QoQ (Dec.)

Average selling price (US$ per ton) 62.2 55.0 53.0 (14.8%) (3.6%) 64.8 54.8 (15.4%)

Sales volume (million ton) 2.3 1.7 1.6 (30.4%) (5.9%) 7.6 5.9 (22.4%)

9M/2014 9M/2015Q2/2015%Inc. (Dec.)

Q3/2014 Q3/2015


Sales revenue of coal business in Q3/2015 was Baht 3,116 million, decreased by Baht 68 million or

2.1% mainly from the drop in average selling price by US$ 2.0 per ton or 3.6% to US$ 53.0 per ton in Q3/2015,

Sales volume also decreased by 0.1 million tons or 5.9% following the slowdown production and selling policy in

order to lower impact during a coal price down turn.

In Q3/2015, EBITDA was Baht 628 million, increased by Baht 118 million or 23.1% mainly caused by

the slowdown production and selling policy as mentioned as well as improving efficiencies in production and

transportation which caused the lower cost of goods sold and operating expenses. Besides, the policy also

affected the rising of EBIT by Baht 188 million from Baht 242 million losses in Q2/2015 to Baht 54 million losses in

Q3/2015 mainly from the decrease of depreciation and amortization expenses in line with the decline in production

volume.


Sales revenue of coal business in 9M/2015 was Baht 10,993 million, decreased by Baht 5,138 million

or 31.9% from the decrease in sales volume by 22.4% mainly from Sebuku and the decrease in average selling

price by US$ 10.0 per ton or 15.4%.

In 9M/2015, EBITDA was Baht 2,586 million, decreased by Baht 954 million or 26.9% mainly caused by

both average sales volume and average selling price as aforementioned. However, EBIT was Baht 255 million

gains in 9M/2015, while there was Baht 82 million losses in 9M/2014, mainly from the drop in depreciation and

amortization expenses in line with the drop in production volume.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

The analysis of PTT and its subsidiaries’ consolidated financial position as of September 30, 2015 compared with December 31, 2014

Assets

As of September 30, 2015, total assets of PTT and its subsidiaries were Baht 2,226,180 million,

decreased by Baht 24,275 million or 1.1% compared with December 31, 2014. This decrease was mainly from

the net effect of the followings:

: A decrease of Baht 32,828 million or 4.7% in current assets was mainly from the followings: - A decrease of Baht 28,488 million in accounts receivable, mainly from receiving payments of trade

accounts receivable in international trading business and oil business of PTT. - A decrease of Baht 15,045 million in inventories, mainly from a decrease in petroleum products

because the legal reserve volumes decreased along with cost per unit in relation to a decrease of crude oil prices.

- A decrease of Baht 4,012 million in cash and cash equivalents and current investments mainly due to debenture and long-term loan repayments and payment of corporate income tax for the year ended 2014 of PTTEP. However, cash and current investment of PTTGC increased from its cash flows from operation

- A decrease of Baht 10,222 million of other accounts receivable was mainly from advances for long-term crude oil purchasing contract of PTTT.

336,913 334,290

1,105,147 1,130,082

104,154 90,395

704,241 671,413

1,054,694 1,087,773

191,562 205,334

697,000 663,779

307,199 269,294

2,250,455 2,226,180

1.1% 1.1%

2,250,455 2,226,180

Economic Overview

Non-recurring items



Economic Outlook

Total Assets Total Liabilities & Equity Unit: Million Baht

Current assets

Long-term loans (including current portion)

Non-current liabilities

Other current liabilities

Equity

Available-for-sale investments, Investments in associates, and

other long-term investments

Other non-current assets

Property, plant and equipment

31 Dec 2014 30 Sep 2015 31 Dec 2014 30 Sep 2015


Q3/2015

: A decrease of Baht 13,759 million or 13.2% in long-term investments was mainly from the disposal of

investment in BCP on April 30, 2015 and a decrease in capital in SPRC on September 15, 2015.

: An increase of Baht 24,935 million or 2.3% in property, plant and equipment was mainly from land

purchase, assets under construction of the 4th natural gas pipeline project, assets under construction of UHV

project of IRPC, assets under construction of Nakornsawan pipeline project of PTT, and assets under construction

of power plant of TOP, including asset under construction of Phenol II project, capacity expansion of TOCGC,

and Debottlenecking project of Aromatics 2 plant of PTTGC, However, property plant and equipment decreased

because PTTEP recognized the impairment loss on petroleum exploration and production assets.

Liabilities

As of September 30, 2015, PTT and its subsidiaries had total liabilities of Baht 1,138,407 million,

decreased by Baht 57,354 million or 4.8% from the year ended 2014, mainly from the net effect of the followings:

: Long-term loans (including the current portion within 1 year) decreased by Baht 33,221 million or

4.8%. The decrease was mainly due to the long-term loan repayment and bond redemption totaling Baht 99,824

million, mainly from PTT, PTTGC and TOP. However, during the period, there were additional long-term loans

totaling Baht 39,799 million, mainly from PTTGC IRPC and TOP. Furthermore, there were an effect from the Baht

depreciation, compared with the year ended 2014, led to the increase in the foreign currency loans by Baht 26,192

million.

: A decrease of Baht 37,905 million or 12.3% in other current liabilities was primarily from repayment of

short-term loans from financial institutions and payment for income tax payable of PTTEP.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

Equity

As of September 30, 2015, PTT and its subsidiaries had total shareholders’ equity of Baht 1,087,773

million, increased by Baht 33,079 million or 3.1% from the year ended 2014, mainly from the net effect of the

followings:

: The decrease of Baht 11,587 million in unappropriated retained earnings mainly resulted from a

decrease in PTT and its subsidiaries’ net income in 9M/2015 amounting to Baht 19,748 million. Meanwhile, there

were payments of dividends for the second half-year performances of 2014 and for the first half-year of 2015 by

Baht 31,401 million.

: Other comprehensive income increased by Baht 27,592 million mainly from an increase in currency

translation differences caused by the Baht depreciation, compared with the year ended 2014.

: Non-controlling interests increased by Baht 17,074 million.

Liquidity

For the nine-month period ended September 30, 2015, PTT and its subsidiaries had net decrease in cash and cash equivalents amounting to Baht 64,534 million, and cash and cash equivalents at the beginning of the period was Baht 234,212 million. As a result, cash and cash equivalents at the end of the period was Baht 169,678 million. Details of cash flow by activities are as follows:

Net cash provided by operating activities 203,982Net cash used in investing activities (158,929)Net cash used in financing activities (121,558)Effects of exchange rates on cash and cash equivalents 8,066Currency translation differences 3,905Net decrease in cash and cash equivalents during the period (64,534)Cash and cash equivalents at the beginning of the period 234,212Cash and cash equivalents at the end of the period 169,678

Unit: Million Baht

Net cash provided by operating activities of Baht 203,982 million was derived from Baht 19,748 million

of net profit attributable to equity holders of the company, adjusted by net profit to net cash provided (used in) by

operating activities. The increase in net cash flow from operating activities mainly resulted from Baht 108,705

million of depreciation and amortization expenses, Baht 51,080 million of impairment loss on assets and

investments, Baht 17,532 million of loss on exchange rate and unrealized loss on derivatives, Baht 23,250 million

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

of finance costs, and Baht 20,139 million of income taxes expenses. However, the decrease in net cash flow from

operating activities was mainly from Baht 8,721 million of the reversal of allowance for loss on decline in value of

inventories, together with Baht 14,867 million of changes in net operating assets and Baht 40,969 million of income

taxes paid.

Net cash used in investing activities was Baht 158,929 million mainly resulted from the followings:

: The cash outflow of investments in property, plant and equipment, intangible assets, and mining

properties amounting to Baht 129,471 million, mainly due to the additional investments of PTTEP in petroleum

exploration and production assets mainly from the investments in Zawtika, Arthit, and PTTEP Australasia projects,

including the investments in various projects of PTT principally from the 4th Nakornsawan natural gas transmission

pipeline and Nakornratchasrima natural gas transmission pipeline projects. Furthermore, there were investment

in UHV project of IRPC, assets under construction of power plant of TOP, asset under construction of Phenol II

project, capacity expansion of TOCGC and Debottlenecking project of Aromatics 2 plant of PTTGC.

: The decrease in current investments amounting to Baht 60,522 million, mainly from an increase in

fixed deposits and current investments of PTT, PTTEP, PTTGC and GPSC.

: The net cash received from long-term investments amounting to Baht 13,993 million, mainly due to

cash received from the disposal of investment in BCP and PT. Mar amounting to Baht 13,491 million and Baht

1,153 million respectively. However, there were the payments for acquisition of GPSC’s subsidiary, Ichinoseki

Solar Power 1 GK, the power plant in Japan amounting to baht 274 million. In addition, there were additional

investments in joint ventures and associates of GPSC and IRPC.

Net cash used by financing activities was Baht 121,558 million, mainly from the followings:

: The repayment of loans and debentures totaling Baht 97,679 million, principally from PTT, PTTGC,

TOP and IRPC.

: Dividend paid amounting to Baht 43,332 million.

: Cash paid for finance costs amounting to Baht 25,338 million.

: Cash received from the proceeds from loans totaling to Baht 39,799 million, mainly was derived from

PTTGC, IRPC, and TOP.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

Financial ratios and earnings per share of PTT and its subsidiaries

Profitability Ratios

Gross profit margin % 10.24 11.17

Net profit margin % 5.45 1.56

Solvency Ratios

Interest coverage Times 10.71 9.67

Earnings per share

Earnings per share Baht/share 29.54 6.94

Financial Ratio and Earnings per share Unit 9M/2014 9M/2015

Financial Ratio Unit 31 Dec 2014 30 Sep 2015

Liquidity Ratios

Current ratio Times 1.71 1.97

Quick ratio Times 1.20 1.35

Solvency Ratios

Debt to equity Times 0.69 0.64

Note:

Gross profit margin = Gross profit divided by Sales and service income

Net profit margin = Net profit (including Non-controlling interests) divided by Sales and service income

Interest coverage = (Net cash flow from operating activities + Taxes paid from operating activities) divided by Interest paid from financing activities

Current ratio = Current assets divided by Current liabilities

Quick ratio = (Cash and cash equivalent + Current investments + Accounts receivable) divided by Current Liabilities

Debt to equity = Interest bearing debt divided by Total shareholder’s equity

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

Economic Outlook in the third quarter of 2015

The world economy in the fourth quarter of 2015 (Q4/2015) is expected to expand at a faster pace than in Q3/2015 as recovery continues in advanced economies and growth firms up in emerging market. US economic growth is expected to pick up given strong domestic fundamentals, including strong labor market, consumer consumption, and service sector; while the inventory drag in Q3/2015 is expected to be short-lived. The euro area’s economic recovery is expected to continue on the back of the ECB’s QE, although intensifying refugee crisis may impose higher fiscal burdens in the short run. As for China, growth is expected to edge up on the back of more accommodative monetary and fiscal policy settings, with continued focus on incremental rather than major stimulus measures. Also, continued warm up of the property market should help drive the economy back on track to meet the government’s annual growth target of 7%. Downside risks to the world economy include further declines in commodity prices and sharp appreciation of the US dollar which could further strain corporate balance sheets in some emerging market countries; and a US rate hike and its effect on capital flows.

Global oil demand in 2015 is forecasted to grow by 1.8 MMBD and reach 94.5 MMBD according to the IEA in October 2015, and will be driven by an increase in oil demand from developing countries. However, demand from developed countries such as Europe and US are slightly increased. Despite an increased oil demand, a sufficient oil supply is expected, specifically a surge in US shale oil production and OPEC production remains high level. As a result, Dubai oil price in 2015 is estimated to fall in the range of US$50-60 per barrel owing to a continued surplus supply. Oil price is expected to decrease in the second half of the year because a drop in price could dampen crude oil supply from high cost producers and lower oil price should boost global demand as well.

Dubai crude cracking in Singapore in 2015 is projected to be in the range of US$8-9 per barrel slightly increased from 2014.

Olefins prices in Q4/2015 are on a downward trend due an excess supply and thin trading amid buyers concern about the slowing Chinese economy. HDPE and PP prices are expected at US$ 1,170 and US$ 1,045 per ton respectively. Meanwhile, Aromatics prices tend to be lowered as demand outlook remains bearish amid market surplus. BZ and PX prices are forecasted at US$ 591 and US$ 790 per ton respectively.

The Thai economy in Q4/2015 is expected to expand at a slightly faster pace than in Q3/2015. Government stimulus measures that have been implemented since September 2015 will play a vital role in supporting growth during the remaining months. Moreover, tourism will also be another key driver of economic growth in Q4/2015, as the number of foreign tourists tends to surge during the end-of-year high season. Downside risks to the Thai economy include delays in government budget disbursement and the slow recovery of goods exports due to sluggish growth of major trading partners.

Economic Overview

Non-recurring items



Economic Outlook


Q3/2015

Appendix

Natural Gas Business consists of PTT natural gas business unit, PTT Natural Gas Distribution Co., Ltd. (PTTNGD), PTT LNG Co., Ltd (PTTLNG), and PTT FLNG Limited, which is a joint venture of PTT International (Singapore) Pte. Ltd. (a subsidiary of PTTER) with 50% shareholding interest and a joint venture of PTTEP FLNG Holding Company

Limited (a subsidiary of PTTEP) with 50% shareholding interest. PTT FLNG is currently under business dissolution.

Oil Business consists of PTT oil business unit, PTT (Cambodia) Co., Ltd. (PTTCL), Subic Bay Energy Co., Ltd. (SBECL), PTT Tank Terminal Co., Ltd. (PTT TANK), PTT Retail Business Co., Ltd. (PTTRB), consolidating Thai Lube Blending Company Limited (TLBC) due to the 100% TLBC’s shareholding acquisition by PTTRB and PTT,

and PTT Oil Myanmar Co., Ltd. (PTTOM).

International Trading Business consists of PTT international business unit and PTT International Trading Pte Ltd (PTTT).

Petrochemical Business consists of PTT Global Chemical Public Company Limited (PTTGC), PTT Polymer Marketing Co., Ltd. (PTTPM), PTT Polymer Logistics Co., Ltd. (PTTPL), PTT Maintenance and Engineering Co.,

Ltd. and PTT PMMA Co., Ltd. (PTTPMMA).

Refinery Business consists of Thai Oil Public Company Limited (TOP), IRPC Public Company Limited (IRPC), and Thai Oil Power Co., Ltd. (TP).

Coal Business consists of Sakari Resources Ltd. (SAR), Straits (Brunei) Pte Ltd (Straits (Brunei)), and Yoxford Holdings (95.26% shareholding in SAR and 100% shareholdings in the others, held by PTT Mining Limited

(PTTML), a 100% shareholding subsidiary of PTT Energy Resources Company Limited (PTTER)).

Infrastructure Business consists of Global Power Synergy Public Company Limited (GPSC), PTT Energy Solution Co., Ltd. (PTTES) and Energy Complex Co., Ltd. (EnCo).

Other Business consists of Business Services Alliance Co., Ltd. (BSA), PTT Green Energy Pte. Ltd. (PTTGE), PTT Energy Resources Company Limited (PTTER), and PTT Regional Treasury Center Pte. Ltd. (PTTRTC) and PTT

ICT Solution Co., Ltd. (PTTICT).

Earnings per share is calculated by dividing net income attributable to ordinary shareholders by the weighted average number of ordinary shares which are held by third parties during the periods.

Documents

Management’s Discussion and Analysis (MD&A) and operating …ptt.listedcompany.com/newsroom/121120151812580479E.pdf · 2015-11-12 · PTT Public Company Limited 1 Q3/2015 Management’s