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
2 I A Glance at Petkim
3 I Investments
4 I Growth Plans and Strategies
5 I Key Financials
1 I Petrochemical Industry
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
2 I A Glance at Petkim
1 I Petrochemical Industry
4 I Growth Plans and Strategies
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
2 I A Glance at Petkim
3 I Investments
5 I Key Financials
4 I Growth Plans and Strategies
1 I Petrochemical Industry
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
2 I A Glance at Petkim
3 I Investments
5 I Key Financials
1 I Petrochemical Industry
4 I Growth Plans and Strategies
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