investor presentation v04en · outlook for 2011 • 5,5% annual growth expectation for global...

PETKİM PETROCHEMICAL HOLDING CORP.

INVESTOR PRESENTATIONSeptember, 2011

AGENDA

2

2 I A Glance at Petkim

3 I Investments

4 I Growth Plans and Strategies

5 I Key Financials

1 I Petrochemical Industry

Outlook for 2011

• 5,5% annual growth expectation for global demand in basic chemicals&plastics between 2010-2015

• Volatile feedstock and product prices

• Contraction in margins in Q3 and Q2 2011 compared to Q1 2011

• Slowdown in Asia and Emerging Markets that are the drivingforce for global demand in petrochemicals

• Consolidation/rationalization of high cost, inefficient capacities

• Negative impact on global demand due to restrictive creditconditions in Emerging Markets

• Political uncertainties

• Smart debottlenecking investments

• Capacity maximization

• Improvement in efficiency

• Cost cutting efforts

• Expanding trading activities

• Strategical partnerships (Air Liquid)

• Increase in sales

• Strong export perfromance

• Q1 results indicate higher profitability

• Q2 and Q3 results indicate lower profitability due to contractionin margins

• Liquidity injection in Q3 with the sale of Air Seperation Unit

• Strong demand for petrochemical products, the market is back on pre-crisis levels*

• Slowdown in demand increase for sector boosters, polyolefins, fibers and –partially- aromatics feedstocks

• Strong domestic growth

• 10-11% growth expectation in domestic demand between2010 and 2015

• Domestic market size expected to exceed USD 8 bn

Domestic Petrochemical Industry

Petkim’s Strategy Financial Performance

Global Petrochemical Industry

* In 2010, the market grew by 15%.

3

400600800

1.0001.2001.4001.6001.800

0

20

40

60

80

100

120

140

200

400

600

800

1.000

1.200

Cru

deO

il(W

TI $

/BR

L)

LPG

, Gas

olin

e, N

apht

ha(C

IF N

WE)

WTI Gasoline Naphtha LPG

GLOBAL ETHYLENE OPERATING RATES ABOVE 90% RESULT IN TIGHT MARKET CONDITIONS, PROVIDING “PRICING POWER” TO SUPPLIERS.

PLATTS GLOBAL PETROCHEMICAL INDEX* FELL IN SEPTEMBER BY 5% ON FEAR OF SLOWDOWN IN GLOBAL ECONOMY AND WEAKER OIL.

IMPROVEMENT IS EXPECTED IN GLOBAL EBIT RATES AFTER 2011.

VOLATILITY IN CRUDE OIL PRICES IS EXPECTED TO CONTINUE DUE TO GLOBAL ECONOMIC CONCERNS IN THE SECOND HALF OF 2011.

Source: Reuters

2009-2012 Energy Prices ($/MT) Platts Global Petrochemical Index (PGPI)

Petrochemical Industry

4

%21

Petrochemical Industry EBIT(EBIT/ton)

* The Platts Global Petrochemical Index reflects a compilation of the daily price assessments of physical spot market ethylene, propylene, benzene, toluene, paraxylene, low density polyethylene (LDPE) and polypropylene as published by Platts and is weighted by the three regions of Asia, Europe and the United States.

Source: Reuters

Source: CMAI

World Ethylene Demand, Capacity & Operating Rate

Source: CMAI

AGENDA

5


3 I Investments


5 I Key Financials


PETKİM

6

PETKİM PORT

SOCAR&TURCAS RefineryPETKİM PLANTS

TÜPRAŞ

PETROL OFİSİ

ADDITIONAL LAND FOR EXPANSION POTENTIAL

PETKİM TODAY

ETHYLENE

C4

NAPHTHA-LPGPROPYLENE

AROMATICS

ETHYLENE

C4

NAPHTHA-LPGPROPYLENE

AROMATICS

C4

ETHYLENELDPEBags, greenhouse covers, film, cables, toys, pipes, bottles, hoses, packaging

HDPEPackaging film, construction and water pipes, bottles, soft drink crates, toys, jerry cans, barrels

MEGPolyester fiber, polyester film, antifreeze

VCM - PVC - EDCPipes, window and door frames, blinds and shutters, cables, bottles,construction materials, packaging film, floor tiles, serum bags

CA-CAUSTIC SODATextile, detergent

BUTADIENERubber Automobile tire

AROMATICS

BENZENE

Detergent, white goods,

TOLUENE

Solvents, explosives, pharmaceuticals, cosmetics

O-X - PAPigments, plasticizers, synthetic chemicals, polyester

P-X - PTAPolyester fiber, polyester resin, polyester film

PROPYLENE

PPKnitting yarn, sacks, carpet thread, ropes and hawsers, table cloths, napkins,doormats, felt, hoses, radiator pipes, fishing nets, brushes, blankets

ACNTextile fibers, artificial wool, ABS (Acrylonitrile Butadiene Styrene) resins

Petrochemicals from Naphtha

7

937

1.41

2 1.80

6

Net Sales (USD mn)

9M2009

9M2010

9M 2011

228

366

634

Exports (USD mn)

9M 2009

9M 2010

9M2011

1.04

9

1.20

8

1.30

3Sales (th. ton )

9M 2009

9M2010

9M2011

Net Sales totaled toUSD 1.806 mn in thefirst nine months of 2011.

Good performance in the first nine monthsof 2011 with salesrising by 24%

Exports increased by178% and reached tomore than 60 countries in the firstnine months of 2011.

Performance in the First Nine-Month of 2011

8

Company Overview• Established in 1965/Second complex commissioned in 1985• The sole petrochemical producer in Turkey• 25% domestic market share and well positioned assets in

an ever growing market• USD 1.806 mn net sales in 9M 2011• USD 147 mn EBITDA

• 15 main plants, 8 auxiliary units• Located in Aliağa near Izmir• Sits on a land of 19 mn sqm• Harbour, water dam, power generation unit (226 MW)• Adjacent to Tüpraş Aliağa Refinery

PETKİM

FACILITIES

MAIN FEEDSTOCKPRODUCTS

PRODUCTION

• Naphtha, LPG, C4, Condensate• Main product goups: olefins, polyolefins, vinyl

chain, aromatics and other basic chemicals

• Gross production totaling to 2.098 th. tons in 9M 2011• Capacity utilization rate (CUR) was 86,5% in 9M 2011

10

Petkim’s Ownership Structure

Share Information (30 September 2011)

Closing Price (TRY/Share) 2,40Market Cap (TRY mn) 2.400Market Cap (USD mn) 1.301

Free Float (%) 38,7

Source: Reuters

Stock Price Performance Ownership Profile

Privatization process was completed in May 2008. SOCAR&TURCAS Consortium acquired 51% stake

in Petkim at an amount of USD 2.04 bn.

Source: Reuters

10

-

20.000

40.000

60.000

80.000

100.000

120.000

707580859095

100105110115120

Volume (th Unit) Petkim ISE 100

Products and CapacityPETKIM

ALIAGA COMPLEXSTART-UP 1985

ETHYLENE 520 PROPYLENE 240C4 140 PY-GAS 390AROMATICS 320

BENZENE 134P-X 136O-X 50

CHLORINE 100 VCM 152 PVC 150 LDPE 350HDPE 96 PP 144 MEG 89 ACN 90 PTA 70 PA 34 Power (MW) 226

Product Capacities (thousand tons)

PLANT CAPACITIES

1 Ethylene (520,000), VCM (152,000), PA (34,000), Chlorine (100,000), Benzene (134,000), MB (10,000), Plastic Products (4,000)

11

1.371 1.3911.442

1.638

1.2081.303

444 406 430

0

200

400

600

800

1000

1200

1400

1600

1800

2007 2008 2009 2010 9M 10 9M 11 Q3 10 Q2 11 Q3 11

Petkim: Net Sales (Volume)

12

Net Sales (thousand tons) 9M 2011 Breakdown of Sales Volume 9M 2011

1.6711.795

1.342

1.943

1.412

1.806

491635 570

0

500

1.000

1.500

2.000

2.500

2007 2008 2009 2010 9M 10 9M 11 Q3 10 Q2 11 Q3 11

Petkim: Net Sales (USD mn)

13

Net Sales (USD mn) 9M 2011 Breakdown of Sales Revenue 9M 2011

410358

523

347

531

366

634

132

235 207

0

100

200

300

400

500

600

700

2006 2007 2008 2009 2010 9M 10 9M 11 Q3 10 Q2 11 Q3 11

Petkim: Exports

Exports Revenues by Years (USD mn) Breakdown of Export Revenues by Product 9M 2011

14

Petkim: Exports (Region)

• Petkim products are exported to nearly 60different countries.

• Benzene, C4, LDPE, Py-Gas and P-X are themain exports products

• The second exporter in chemical industry inTurkey in 2010.

• The exports account for 35% of total sales in thefirst nine months of 2011.

Breakdown of Exports by Region 9M 2011

15

EU Countries

52%

Asia-Far East17%

America6%

MENA18%

Others7%

-4

99

145

99

147

31 42 37

-55

-5

45

95

145

195

2008 2009 2010 9M 10 9M 11 Q3 10 Q2 11 Q3 11

Raw Material, Unit Price and MarginRaw Material and Product Prices (USD/ton)*

Petkim EBITDA Performance (USD mn)Petkim Thermoplastics and Naphtha Price Changes

Petkim: Product & Raw Material Prices

16

Index (2007 January=100)

USD/tonUSD/ton

-150-100-50050100150200

200400600800

1.0001.2001.4001.600

Margin (Right Axis)Unit PriceNaphtha

0

500

1000

1500

2000

LDPE HDPE PP MEG PVC

Naphtha Cost Product Prices

Plant Case Base Breakdown**

* As of 9M 2011** Overhead is not included in plant cost base

0

50

100

150

200

250

THERMOPLASTICS NAPHTHA

60,0

70,0

80,0

90,0

100,0

110,0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2008 2009 2010 2011

0

1000

2000

3000

4000

5000

6000

7000

0

200

400

600

800

1000

1200

2006 2007 2008 2009 2010 9M 2011

Net Sales per Capita (tho USD) (Left Axis)

Marketable Prod. per Capita (tons) (Left Axis)

# of Employees (Right Axis)

Initiatives Aiming to Improve Operational Efficiencies

Efficiencies on Marketable Production Per Capita

17

W. Europe Ethylene Capacity Utilitization Rates

Petkim Ethylene Capacity Utilitization Rates (%)

Low capacity due to incidental outage

• Feedstock flexibility (switching from Naphtha to LPG/C4)

• Maximization of capacity utilitization

• Initiatives for cost cutting and energy efficiency improvement

• Process optimization (APC, DCS implementation)

• Expanding trading activities

Yearly Averages 2010=> %992009=> %962008=> %95

Low capacity in June and July 2011 due to maintenance outage

AGENDA

18




5 I Key Financials

3 I Investments

Capital Expenditures and Planned Capacity Increases

• Moderate gearing of capital investments instead of fullyfinancing with equity

• Increasing capacities of existing plants with minor capex-smart debottlenecking investments

• Maximizing production of LDPE, where Petkim has acompetitive advantage

• Optimizing processes in the plants ( implementation of APCand DCS Systems)

• Investments to enhance energy savings and operationalefficiencies on existing plants (such as rehabilitation work forthe furnaces of the aromatics plant, optimization andmodelling of steam and energy system)

• Operational excellence studies• High value added new products and investments on new

plants

Capital Expenditures of Petkim (USD mn)

19

Ethylene 520 587 2013PA 34 49 2012PTA 70 105 2013ACN 90 105 2012

Planned Capacity Increases (th. ton)

Plants Current After Date Capacity Cap Increase

BDX 100 2014PET 120 2013XLPE 30 2012

New Plants Planned (th. ton)

Plants Capacity Date

Investment HighlightsPETKİM

Dominant producer25% market share

2002-2010 CAGRThermoplastics Demand 10,6%GDP Growth 5,6%

Growth Potential in the Domestic Market

• One of the fastest growing markets

• An attractive market, the second biggest importer of petrochemicals after China

• More than 6000 small and medium sized companies are active mainly in packaging, construction and automotive fields

• Petrochemical market size is 8 billion USD

0500

1000150020002500300035004000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2015E

ThermoplasticsFiber Raw Materials

USA 90 75 76 71W.Europe 78 69 70 65Turkey 45 43 45 52China 30 28 30 37World 25 24 24 25Brazil 23 25 27 28India 6 5 6 6

Petrochemicals Domestic Demand (th. ton)

Kg/Capita 2007 2008 2009 2010

Plastics Consumption per Capita

20

Source: CMAI

* Products considered in plastics consumption are PVC, LDPE, LLDPE, HDPE, PP, PS, ABS.

21

Carbon Management, Environment and Petkim

• Petkim participated in International Carbon Disclosure Project.

• Determined greenhouse gas emissions.

• Planned greenhouse gas reduction strategies

• Formed and announced its policies.

• Saved TRY 23 mn with the completed 80 projects in energy savings in the last 3 years.

• Reduced approximately 100.000 tons of CO2 emission with the completed 80 projects in the last 3 years.

• 400 hectares of wind energy production area next to Petkim’s production site.

• 25 MW auto producer license obtained in February 2011.

• Project partner and main sponsor to Conversion of Waste to Energy Campaign with cooperation of ENVERDER.

• Reducing energy costs by using wind, an environmentally friendly andrenewable energy source.

Operational ExcellencyEFQM Excellency Model

Updating Strategical Plan

Market and Competition Analysis

Measurement of Shareholders’Expectations

Current SituationAnalysis Studies

Key Performance Indicator SurveillanceSystem

Improvement of Process Management System

Sustainability Studies

22

-Management

Asset Management- Plant MaintenanceSystem- TurnaroundManagement- Risk and ReliabilityManagement- TroubleshootingManagement

Management

Health, Environment, Safety- Risk Management- Work Incident Reporting- Sustainable Environment- Contractor Management- Process SafetyManagement

AGENDA

23


3 I Investments

5 I Key Financials



DOWNSTREAM

• ADVANTAGES OF WIDE PRODUCT RANGE

• HIGH VALUE ADDED SPECIALTY CHEMICALS

• CLUSTER MODEL(PETKİM “VALUE-SITE”)

ENERGY PRODUCTION

LOGISTICS & TRADE

UPSTREAM

REFINERY SOCAR&TURCAS

Growth Plan and Strategy

4 PILLARS OF GROWTH PLAN

24

• Debottlenecking and modernization investments

• Maximizing asset utilization

• Investments on new productsand capacity expansion

• Ethylene and thermo-plastics revamping

Feedstock Flexibility

Logistics

Trading Sales&Marketing

Business Transformation

Capacity Increase

• Increasing LPG utilization in feed slate of cracker

• Utilization of Fluid Catalytic Cracking (FCC) and C4 stream

• Energy optimization study with KBC (steam and energy opt.)

• Fuel flexibilty in energy production • Advance control system application in aromatics, ethylene and VCM plants• Obtained 25 MW licence for power generation from wind• PETKİM is a project partner and main sponsor of Convertion of Waste to Energy Campaign

• New distribution centers

• Potential strategic partnership opportunities in port business

• Increased transportation by rail

• Capability for storage facilities leasing

• Meeting total needs of customers

• Increasing product trading

• New financial instruments to promote sales

Short Term Growth Plans

• Reviewing the current performance

• Assessing potential improvement areas in organization, maintenance, energy, HSE and operations

• Improving IT infrastructure with ERP and integrated Manufacturing Execution System (MES)

Energy

25

Capacity increase by:

“UPSTREAM” INVESTMENTSSECURING FEEDSTOCK WITH THE REFINERY INTEGRATION

Mid to Long Term Growth Plans

TO REACH 40% MARKET SHARE WITH“DOWNSTREAM” INVESTMENTS –VALUE SITE

To be built by SOCAR&TURCAS• Allocation of 130 ha area for the refinery investment• 10 million tons /year crude oil capacity• Product slate: naphtha, LPG, diesel, kerosene, jet fuel (no gasoline)• 30% investment cost reduction due to existing infrastructure• Creation of synergy with the vertical integration• Feedstock security for Petkim• Additional revenue from services to the refinery (ex. USD 3 mn annual rental income)

• Available infrastructure for potential investments• Double digit demand growth in the Turkish chemical sector • Increasing competitive advantage with sinergies created• New investment opportunities with local and foreign companies• Cluster Model (PETKİM “VALUE – SITE”)

26

PETKİM Port� Min. 1 million TEU Container Handling Terminal Capacity

WIND ENERGY Min 25 MW Energy

Production

Refinery (STAR)Capacity: 10 MMTPA

Petrochemical Production � New Petrochemical Products; BDX,

PET, XLPE � Capacity Increase of Current Plants;

AYPE-T, PA, PTA, � 600.000 MTPA Ethylene Production

2015 Petkim

27

GROWING WITH LOGISTICS INVESTMENTS

PETKİM: Growth Strategy

LOGISTICS

• To become one of the key logistics mainterminals in the region

• High capacity potential of container handling

• High capacity potential of liquid and drycargo handling

• High capacity of logistics support units

• Direct access to national railway hubs andnational transit ways and highways

• Tank Farm

ADVANTAGES

• Increasing harbor capacity and utilizationrate

• Storage of various solid, liquid, and gaschemicals

• Paving the way for potential investments ontransportation

• Import and export opportunities forchemicals

28

Negotiations are currently continuing with one of the industry-leading companies, APM Terminals BV, for the development of Petkim port.

PETKİM Cluster Model & Jurong International

29

• Petkim signed a consultancy contract withJURONG International Pte Ltd. (JURONG)which has established the cluster model ofJurong Island Chemical Park in Singaporeand planned chemical park fields in more than40 countries.• A Master Plan study is being conducted byJURONG in order to ensure the most efficientuse of the existing land and infrastructure andto establish a chemical park that will integratethe value chain of upstream, downstream,energy and logistics and first phase of thisstudy has finished.

JURONG ISLAND’S KEY FIGURESTotal Sales (billion USD) ~75 Land (hectare) 3.200 # of Operated Plants (unit) 95# of Labour 30.000Refinery Capacity (million barrel/day) ~1,3 # of Crackers (unit) 5Electricity Generation Capacity (mw) 4.650

Year 1960

Today

30

PETKİM 2020

AGENDA

31


3 I Investments

5 I Key Financials



147

130

116

Cash&Cash Equivalents

1.421

1.537

1.403

Total Assets

147

99

89

EBITDA

89

62

42

Net Income

9M 2011

2010

2009

9M 2011

2010

2009

9M2011

9M 2010

9M 2009

9M 2011

9M 2010

9M 2009

+%27

+%1

+%65

+%112

Financial Structure and Profitability

32

(USD mn)

2008 2009 2010 9M 10 9M 11 3Q 10 2Q 11 3Q 11

Net Sales 1.795 1.342 1.943 1.412 1.806 491 635 570

Cost of Goods Sold (-) (1.822) (1.269) (1.790) (1.305) (1.667) (465) (585) (555)

Gross Profit (Loss) (27) 73 153 106 140 26 50 15

Gross Profit (Loss) Margin -1,5% 5,4% 7,9% 7,5% 7,7% 5,3% 7,9% 2,6%

Operating Expenses (-) (72) (44) (63) (42) (55) (13) (20) (15)

Other Operating Income/(Expenses),net (3) (3) (5) (4) 31 (0) (3) 35

Operating Profit/(Loss) (102) 26 85 61 116 13 27 34

Financial Income/(Expenses) (20) 16 9 7 (9) 12 (2) (10)

Profit/(Loss) Before Taxation (122) 41 93 67 107 24 24 24

Deferred Tax 5 34 (7) (5) (18) (5) (5) (4)

Net Profit/(Loss) for the Period (117) 75 87 62 89 19 20 20

EBITDA (4) 99 145 99 147 31 42 37

EBITDA Margin -0,2% 7,4% 7,5% 7,0% 8,1% 6,3% 6,6% 6,5%

33

Financial TablesIncome Statement (USD mn)(IFRS )

Balance Sheet (USD mn) (IFRS)

Financial Tables

31/12/2010130

281

268

35

715

1.537

57

339

45

441

61

1.035

1.537

821

30/09/2011

272

264

27

710

1.421

86

266

53

405

71

945

711

1.421

147

99

140167

130

6328

147

58 57 58 57 61

131

86

0

50

100

150

200

Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11Cash Bank Debt

229 215 223268 308 267

264175 206 206

281365 320

272

-196 -225 -235-339

-319 -152-266

-600-400-200

0200400600

Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11Trade Receivables Inventories Trade Payables

Cash&Bank Debt (USD mn)

Receivables, Inventories and Payables (USD mn)

34

31/12/2009

224

52

208

567

58

1.403

116

19

265

51

976

1.403

376

Cash&Cash Equivalents

Trade Receivables

Inventories

Other Current Assets

Current Assets

Non-Current Assets

TOTAL ASSETS

Financial Liabilities

Other Payables

Trade Payables

Short-Term Liabilities

Long-Term Liabilities

Shareholders’ Equity

TOTAL LIABIL.& OE

836

35

Disclaimer

This presentation is confidential and does not constitute or form part of, and shouldnot be construed as, an offer or invitation to subscribe for, underwrite or otherwise acquire, anysecurities of Petkim Petrokimya Holdings A.Ş. (the “Company”) or any member of its group norshould it or any part of it form the basis of, or be relied on in connection with, any contract topurchase or subscribe for any securities of the Company or any member of its group nor shallit or any part of it form the basis of or be relied on in connection with any contract, investmentdecision or commitment whatsoever. This presentation has been made to you solely for yourinformation and background and is subject to amendment. This presentation (or any part of it)may not be reproduced or redistributed, passed on, or the contents otherwise divulged, directlyor indirectly, to any other person (excluding the relevant person’s professional advisers) orpublished in whole or in part for any purpose without the prior written consent of the Company.

36

We welcome your questions, comments and suggestions. Our corporate headquarters office address is:

Petkim Petrochemical Holding Corp. PO. Box.12Aliağa, 35801 İzmir/ TURKEY

To contact us with respect to shareholding relations for individual and corporate investors, please call directly or send an e-mail to

Ms. Füsun UGANFinance & Investor Relations ManagerTel :+90 232 616 1240 (Ext:4575)Direct :+90 232 616 6127E-mail :[email protected]

Mr. Şafak AYIŞIĞIAssistant General Manager (Finance)Tel :+90 232 616 1240 (Ext: 2150)Fax :+90 232 616 2297E-mail :[email protected]

Mr. Hayati ÖZTÜRKGeneral ManagerTel :+90 232 616 1240 (Ext:2040)Direct :+90 232 616 2297Fax :+90 232 616 8519E-mail :[email protected]

Also, please visit our web site at www.petkim.com.tr for further information and queries.

Investor Relations

investor presentation v04en · outlook for 2011 • 5,5% annual growth expectation for global...

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