Petkim Petokimya Turkey - Var?Ova_2009

7/27/2019 Petkim Petokimya Turkey - Var?Ova_2009.

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1

Petkim Petrochemical Holding Corp.

Presentation to Investors

June 2009



2

Investm ent Highl igh ts

Grow th Plan & Strategy

AGENDA

Company Overv iew

Key Financ ials

General Overview o f Turkey

Economy &

Petrochemical Industry



3

World Economy and Petrochemical Market

WORLD GDP GROWTH RATE IS ESTIMATEDAROUND 2 % IN 2010THE DOWNTURN IS ABOUT TO BOTTOM

OUT, TIME FOR INVESTMENT

WORLD PETROCHEMICALPRODUCTION WAS DRAG DOWNTO THE LEVELS OF 15-20 YEARS

EARLIER

CAPACITY UTILIZATION RATESDECREASED TO 65-70% LEVELSIN PETROCHEMICAL SECTOR IN

WESTERN EUROPE

THE ABRUPT DECLINES IN OILAND NAPHTHA PRICES ARE

MAINLY DUE TO CONTRACTIONIN DEMAND

crude

naphtha

Daily QNAF-C-NWE, QBRT- 29/05/2008 - 07/06/2009 (GMT)

Line, QNAF-C-NWE, Last Quote(Last)05/06/2009, 548

Line, QBRT-, Last Quote(Last)

04/06/2009, 499.28

Price

USD

T

.12

200

300

400

500

600

700

800

900

1,000

1,100

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Q2 08 Q3 2008 Q4 2008 Q1 2009 Q2 2009



4

Much lower energy p ric es

Consumers see p rices f al li ng

Unemployment benef it s ex tended

Cons truc ti on cos ts dec li n ing ; in teres t s rates at hi sto ri c l ow Stimu lu s Packages to boost the demand

Percep t ion i s real it y ; al l are engaged in fi ght ing back

Global GDP g row th w il l r esume ~ back to t rend rat e by lat e 2010

Good News

Consumer adver se to spend ing

Au to Indus tr y l iv ing on inven to ry

In f lat ion on the hori zon

Cred i t s t il l somewhat res t ri c ted

Developed economies in dec l ine

Worse g lobal recess ion s ince 1938

Bad News

The World Economy - Uncertainty Continues.

Consumer Con fidence Ind ices imp rove around the wo rld Over-Suppl ied market envi ronment

Closu re o f h igh cos t underper fo rm ing capac it ies

Source: CMAI



Market Conditions

2008 2009 Q1Demand for most petrochemicals was heavily

bottemed. Lately, however there is some rebound in

demand mainly driven by Asia (China and India)

Operating rates were greatly reduced, placing

mounting pressure on fixed costs of production.

All sectors are experiencing over-supply

challenges, even though some of the new capacity

has been delayed.

Demand is improving, feedstock prices aremoderating, margins are building up

Crude oil prices surged to $147 per barrel inJune, a leap of 40 percent from the beginning of the year,

Naphtha prices increased for the sixthconsecutive quarters, above $1,150/MT in mid-June.

Rising costs associated with rocketing energy

values forced prices higher, negatively impactingearnings all through the value chain.

In the second half; oil and naphtha prices tumbleddown to five year lows

Polymer producers suffered from the erosion of

margins, profitability collapsed.

Extremely poor demand forced companies to

reduce operating rates and temporarily close downplants

Due to increasing risks and volatilities, producers

are heading towards their domestic markets

Goverments’ stimulus packages including tax cuts

(e.g. VAT, excise tax) started to show on demand

side.



General Overview of Turkey

Source: Investment Support and Promotion Agency





BTC & BTE: A Major Role in Transportation of Oil and Natural Gas

PETKİM

CEYHAN

TBILISI

BAKUERZURUM

BTE

BTC

With a 50 mi l li on ton /year

capac it y, near ly 1768 km

long, Baku-Tbi l is i -Ceyhan oi l

p ipel ine t rans fer s Casp ian o il to wo rld mark ets .

With a 30 b il l ion cub ic m eters

n atu ral g as th ro ug hp ut cap acity ,933 km (580 mi les) long of Baku-

Tbil isi-Erzurum (BTE) pipel ine

tr an sfers Azer baijan i g as f rom t he

Shah Den iz-I f ield to Tu rkey v ia

Georgia

The min im izat ion o f t ranspo rtat ion cos ts

Dec reas ing f inanc ial cost s due to shor ter delivery

Supp ly secu ri ty and p ri ce s tab il it y



PETKIM’s Landscape



Company Overview• Established in 1965/Second complex commissioned in 1985

• The sole petrochemical producer in Turkey

• 25% domestic market share (2008) well positioned ingrowing markets

• US$ 227 mn revenue (2009 Q1)• US$ 18 mn EBITDA (2009 Q1)

• Naphtha, LPG, C4, Condensate

• Olefins, polyolefins, chlorine vinyl chain,

aromatics and other basic chemicals

• 15 main plants, 8 auxiliary units

• Located in Aliağa near Izmir

• Sit on a land of 1,900 hectares (4,700 acres)

• Port, water dam, power generation unit (220 MW)

• Adjacent to Tüpraş Aliağa Refinery

• About 2.9 mn. tons gross production(realized in 2008)

• About 3.2 mn. tons gross production

(planned for 2009)

PETKIM

FACILITIES

MAINFEEDSTOCK

PRODUCTS

PRODUCTION



Closing price (TRY per share) 6,50

MCAP (TRYmn) 1.331

MCAP (USDmn) 870

Free float (%) 38.7%

PA

54,4%

Free Float

38,6%

Civil

Servants'

Pension

Fund

7,0%

PA

10,3%

Free Float

38,7%

SOCAR-

TURCAS

PETRO

CHEMICAL

COMPANY

51,0%

Petkim’s Ownership Structure

Petkim Share Information (30 June 2009) Shareholding structure beforePrivatization

Petkim’s Share Performance Shareholding structure after Privatization

In May 2008 the long-awaited privatization was realized. Socar&Turcas Consortium bid $ 2.04 bn.and ac uired 51 % of Petkim’s stake successfull

Relative Performance

50

60

70

80

90

100

110

120

J u n - 0 8

J u l - 0 8

A u g - 0 8

S e p - 0 8

O c t - 0 8

N o v - 0 8

D e c - 0 8

J a n - 0 9

F e b - 0 9

M a r - 0 9

A p r - 0 9

M a y - 0 9

J u n - 0 9

ISE 100 PETKIM



12

Petkim’s privatization: a powerful symbol of economic cooperation

PETKIM

A b ridge l inking Caspian and the Aegean

SOCAR, a 100% state-owned company,

operating on extraction, refining,

transportation of oil, gas and gas

condensate A major shareholder in the 50million ton capacity BTC crude oil

pipeline, which transports 6,6 mn. cubic

meters of natural gas to Turkey

Turcas Petrol (Turcas), is a nationwide

petroleum products distribution company

operating on petroleum distribution, oil

refining, petrochemical production and

marketting, power generation, distribution

and trading, natural gas importation and

whosesale in energy markets



13

Products and Capacity

PETKIM ALIAGA COMPLEX

START-UP 1985

PETKIMPETKIM

ALIAGA COMPLEX ALIAGA COMPLEX

STARTSTART--UP 1985UP 1985

TOTALCapacity 1,916,000 ton/yr

TOTALTOTAL

Capacity 1,Capacity 1,916916,000 t,000 toon/yrn/yr

Other Products1

Capacity 954,000 ton/yr

Other ProductsOther Products11

Capacity 9Capacity 95454,000 t,000 toon/yrn/yr

Fiber Raw MaterialsCapacity 249,000 ton/yr

FiberFiber Raw MaterialsRaw Materials

Capacity 249,000 tCapacity 249,000 toon/yrn/yr

Thermoplastics

Capacity 724,000 ton/yr

ThermoplasticsThermoplastics

Capacity 7Capacity 72424,000 t,000 toon/yrn/yr

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

ETHYLENE 520

PROPYLENE 240C4 140

PY-GAS 390

AROMATICS33 346

BENZENE 160

P-X 136

O-X 50

CHLORINE 100

VCM 152

PVC 150

LDPE2 334

HDPE 96

PP 2 144

MEG 89

ACN 90

PTA 70

PA 34

Power (MW) 226

Product Capacity(thousand tons)

PLANT CAPACITY PLANT CAPACITY PLANT CAPACITY



14

Petkim’s Today

Production Revenues

Production for Marketing (thousand tons)

Breakdown of Production for MarketingQ1 2009

1427 1409

335 307 294

1383

0,0

200,0

400,0

600,0

800,0

1000,0

1200,0

1400,0

1600,0

2006 2007 2008 Q1 08 Q4 08 Q1 09

Net Sales (mn $)

Breakdown of Sales RevenuesQ1 2009

PVC

12%

LDPE

21%

HDPE

7%PP

9% ACN7%

C5

5%

Benzene

9%

P-X

6%

Others

14%

PTA

3%

Py-Gas

7%

PVC

10%

LDPE

34%

HDPE

10%

PP

11%

ACN7%

C5

2%

P-X

6%

Others

10%

Benzene

3%

PTA

3%

Py-Gas

4%

1.5611.674

1.795

476

227278

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

2.000

2006 2007 2008 Q1 08 Q4 08 Q1 09



15

Petkim’s Today

Others

1%

America

14% EU

Countries

54%

Asia-Far East

22%

Middle East-

Africa

9%

Benzen

27%

PTA

2%

P-X

7%Py-Gas

8%

Caustic

1%

ACN

4%

MEG

6%

Other

4%

C423%

PP

2%

PVC

2%

HDPE

2%

LDPE

12%

•Petkim products are exported to around 60 differentcountries

•Benzene, LDPE, Py-Gas and P-X are the main exportproducts, in Q4 2008 and Q1 2009, C4 was co-crackeddue to cost advantage

•The third exporter in chemical industry in Turkey

Share of export products in revenues 2008

Breakdown of exports by region 2008

Export Revenues by Years (mn $)

Exports

127

217

410358

523

143

7945

182

0

100

200

300

400

500

600

2003 2004 2005 2006 2007 2008 Q1 08 Q4 08 Q1 09





17

Petkim’s Today

Increase in Productivity

Employees and per Capita Efficiency

0

100

200

300

400

500

600

2001 2002 2003 2004 2005 2006 2007 2008 2009

Q1

0

1000

2000

3000

4000

5000

6000

7000Net sales(US$000)/capita (Left axis)

Production for marketing (tons)/capita (Left axis)Employees (Right axis)

Production per capita hasincreased from 457

tons/capita in 2008 to

651 tons/capita in Q1

2009

Improving productivity and efficiency

Increasing capacity

with reduced number of employees

Ongoing restructuring at organizational level:

9 Assessing personnel efficiency with

benchmarks

9 Outsourcing of non-core activities

(catering, some support services)

completed.

9 Oursourcing of maintenance, after sales

services.

Plant maintenance, power generation, port

management are currently managed in-

house.



18

76 68

44

19

43

25

52

19 1922

0

20

4060

80

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09

Cash Bank Debt

Balance Sheet (US$ Million) (IFRS)

Key Financials

FX rates are 1 ,5123 TL/USD and 1,6880 for r 31 March 2009 and 31 December 2008 respect ively .

Cash&Bank Debt mn USD

Receivables, Inventories and Payables mn USD

31/12/2008 31/03/2009

149

58

115

293

19

1.123

19

11

43

115

146

89

60

897

1.123

166

13

317

1.053

19

121

45

185

57

811

1.053

Cash&Cash Equivalents

Trade Receivables

Inventories

Other Current Assets

Current Assets

Long-Term AssetsTOTAL ASSETS

Financial Liabilities

Payables

Trade Payables

Sort-Term Liabilities

Long-Term Liabilities

Shareholders’ Equity

TOTAL LIABILITIES

830 736

-300

-150

0

150

300

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09

Receivables Inventories Payables



19

Key Financials

Income Statement (US$ Million) (IFRS )

31.12.2007 31.12.2008 Q1 2008 Q4 2008 Q1 2009

Net Sales 1.674 1.795 476 278 227

Cost Of Sales (-) (1.509) (1.822) (470) (303) (205) Gross Profit (Loss) 165 (27) 5 (25) 22

Operating Expenses (-) (77) (72) (22) (22) (7)

Other Operating Income/(Expenses),net (24) (3) (3) (4) (1)

Operating Profit/(Loss) 65 (102) (19) (51) 14

Financial Income/(Expenses), Net (5) (20) 6 (17) (2)

Profit/(Loss) Before Taxation 60 (122) (13) (68) 12

Deferred Tax (3) 5 1 4 (4)

Net Profit/(Loss) for the Period 57 (117) (12) (64) 7

Depreciation 75 83 21 18 17

Interest (Income)/Expenses

on Cash and Bank Debt(1) 6 (0) 7 1

Provisions 17 30 (2) 11 (12)

EBITDA 151 (2) 6 (32) 18

Average FX rates TL/USD 1,30151 1,29291 1,19658 1,53322 1,6495



20

FOREIGN

CURRENCY

LONG TERM LONG TERM NATIONAL

May, 2009 BB- (negative) BB- (negative) AA- (tur) (negative)

September, 2008 BB- (stable) BB- (stable) AA- (tur) (stable)

January, 2008 BB (stable) BB (stable) AA (tur) (stable)

June, 2007 BB (stable) BB (stable) AA (tur) (stable)

April, 2007 BB (stable) BB (stable) AA- (tur) (stable)

February, 2006 BB- (stable) BB (stable) AA- (tur) (stable)

February, 2005 BB- (stable) BB (stable) A+ (tur) (stable)

DATE

LOCAL CURRENCY

Petkim’s Today

FITCH RATINGS

While many petrochemical companies’ credit ratings were downgradedall around the world, Fitchratings affirmed Petkim’s rating with BB-

and changed its outlook to negative due to Fitch’s anticipation

of economic slump weighing on global petrochemical sector



21

Investment Highlights

Turkish Petrochemical Industry

PETK İ

M Dominant producer 25% market share

Market SizeUS $ 6-7 billion

1998-2008 CAGR Thermoplasticsdemand 8%

GDP 4%

Growth Potential in the Domestic Market

-20,0

-10,0

0,0

10,0

20,0

30,0

40,0

1 9 9 8

1 9 9 9

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

Growth in Plastics Demand GDP Growth



22

TURKEY An attractive

market

0

1000

2000

3000

4000

5000

6000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2015E

Thermoplastics

Fiber Raw

Rubber Raw

U.S.A 93 90 75W.Europe 75 78 69Turkey 40 45 43Republic of China 20 30 28World 24 25 24Brazil 22 23 25India 5 6 5

Petrochemicals Domestic Demand(tons)

Kg/capita 2006 2007 2008

Plastics Consumption per Capita

1998-2008 CAGRThermoplastics 8%Fiber Raw Mat. 3%Rubber Raw Mat. 8%

Large market size suitable for optimum

scale plants

New Refinery Projects in Turkey

“Integration Synergy”

One of thefastest growing

markets

Domestic Demand




23

NEW INCENTIVE PACKAGE

• Incentive package has been announced by the government

• The following related sectors are within the scope of the package- Basic Chemicals >TL 1 bn- Other Chemicals >TL 300 mn- Refinery >TL 1 bn- Port and Port Services >TL 250 mn

- Pipeline Transportation

• Incentives include;- Corporate tax reductions (from 20% to 10%)- Social security premium waivers for two years

- VAT & Customs tax exemption

• The positive impact of incentive package on investment costis estimated as 10%.



24

• Hydrocarbon rich owner (SOCAR)

• Experienced local owner inPetroleum market (Turcas)

• Vertical integration possibility to increase competitive power of Petkim with refinery investment

Feedstock Reliability


• Excellent locationand logistics

• Power and steamgeneration

• On the shore

• Next to the refinery • Existing infrastructure for

capacity expansion

A “supersite”

• Naphtha-LPG based fully integrated production resultsin a more diversified product

portfolio

• Well maintained assets• 10-year average capacity

utilization rate 93%

Production base

• Completed recent capacity

expansion debottlenecking

and modernizaiton at around

US$ 500 million.

Capacity increase

• Energy saving

• Operational excellence

• Business TransformationProgramme

• ERP implementation

• EFQM Total Quality Management

• Performance Management

• Suggestion and Reward System

Restructuring

• One of the fastest growing

markets

• One of the biggest importers of

petrochemicals

Turkish Market



25

GROWTH PLAN

UPSTREAM

Secure andreliable feedstock

Refinery

(Socar-Turcas)

DOWNSTREAM

• wide product range

• specialty chemicalswith high value

added

ENERGY PRODUCTION

LOGISTICS

&

TRADE

Growth Plan and Strategy

Potential Investment Areas



26

Growth Plan and Strategy

GROWTH PLAN

Short Term Growth Plans

Mid to Long Term Growth Plans• Capacity expansion/ debottlenecking• Business Transformation Program• Feedstock Flexibility• Energy Saving/cost reduction

• Logistics• Sales and Marketing• ERP Project• Trading Activities

• Upstream investments(SOCAR-TURCAS)• Downstream investments• Energy –Wind Turbine• Logistics (Harbour, railway.)

Petkim has a general strategy of increasing market share and high customer satisfaction

VISION 2018

To become a regionalforce in the petrochemical

sector

40% of Market Share in2018



27

Feedstock Flexibility Energy Logistics

TradingSales&Marketing

BusinessTransformation

Capacity increase

• Cut of excise tax on LPG

• Increasing LPG utilization in feedslate of cracker

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

• Energy saving program

• Opportunity for importing NGfrom Azerbaijan

• Feasibility study for 47,7 MWpower generation from wind

•Dual fuel feature

• New distribution centers

• Increased transportation by rail

• Increased sales delivered tocustomers

• Harbour expansion studies for container and RORO transportation

• Capability for storage facilitiesleasing

Meeting the total needs of customers

• Increased product trade

• Trading will be conducted bothfrom Aliaga and new logisticcenters

• New financial option topromote selling activities

Capacity increase by:

•Ethylene and Thermoplaticsrevamping

•Debottlenecking and modernization

•Maximizing asset utllitization

Short Term Growth Plans

Reviewing the current performance

Assessing the potential improvementareas in organization, maintenance,energy, Cracker&Aromatics, HSE andoperations

• Improving IT infrastructure with ERP

and intergrated ManufacturingExecution System (MES)



28

GROWING WITH “UPSTREAM” INVESTMENTS

REFINERY FOR FEEDSTOCK SUPPLY

Mid to Long Term Growth Plans

TO REACH %40 MARKET SHARE WITH

“DOWNSTREAM” INVESTMENTS

Constructed by SOCAR& TURCAS

•Creation of synergy by vertical integration•Feedstock reliability for Petkim•Additional revenue from services provided to the refinery

Petkim has enough infrastructure and land for these investments

There is a double digit demand growth in Turkish chemical markets

Petkim will take the advantage of increasing competition power in global

markets by created synergy

New investment opportunities will be seeked with the domestic and foreign firms.



29

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

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

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

Ms. Füsun UGANFinance Manager Tel :+90 232 616 1240 (Ext:4575)Direct :+90 232 616 6127E-mail :[email protected]

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

Mr. Kenan YAVUZGeneral Manager Tel :+90 232 616 3645Direct :+90 232 616 3642Fax :+90 232 616 3680E-mail :[email protected]

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

Investor Relations



PETKİM GUZELHISAR WATER DAM PETKİM PORT



31

¾ PETKİM PETROKİMYA HOLDİNG A.Ş.GENERAL MANAGEMENT

ALİAĞA – İZMİR / TURKEY¾ Phone: +90-232-6161240 (20 lines)

+90-232-6163240 (20 lines)

¾ Fax: +90-232-6161248+90-232-6161439+90-232-6162490

¾ Web site : www.petkim.com.tr , E-mail: [email protected]

Petkim Flow Diagram

http://www.petkim.com.tr/

mailto:[email protected]

mailto:[email protected]

http://www.petkim.com.tr/



32



33

Azerbaijan and Turkey Strategic Projects

Baku-Tbilisi-Ceyhan oil pipeline (BTC)

Natural gas pipeline “Şahdeniz”

Railway project between two countries

“Petkim project”

Turkey and Azerbaijan have many strategic corporations planned and realized up to now



34

Baku-Tbilisi-Ceyhan* COPLProject

Turkey-Greece NGTL

Project

Transcaspian Turkmenistan-Turkey Europe NGTL Project

Azerbaijan-Turkey NGTLProject

Iraq-Turkey NGTL Project

Egypt-Turkey NGTL Project

Turkey-Bulgaria-Romania-Hungary-Austria NGTL

Project (Nabucco Project)

Eastern Black Sea NGTL

Western Black Sea Project

Natural Gas Underground

Storage Project

Source: Investment Support and Promotion Agency

Turkey: A Regional Energy Hub

.



35

Azerbaijan & Turkey

Turkey and Azerbaijan are strategic partners. Azerbaijan have crude oil and natural gas

sources which Turkey do not have.

Turkey and Azerbaijan partnership will providemany opportunities for Turkey and for Petkim

SUPPLY SECURITY

FOR TURKEY

DEMAND SECURITY

FOR AZERBAIJANENERGY

SECURITY ++





37

Petkim’s privatization: a powerful symbol of economic cooperation

PETKIM

A br idge linking Casp ian and the Aegean

Turkey’s first privately-owned distribution co.Turkpetrol and Lubricant Oils (founded in1931) teamed up with British Castrol to layfoundation of Turcas Petroleum in 1988. After merging with Tabas in 1999 renamed asTurcas Petrol, working in petroleumdistribution, oil refining, petrochemical

production and marketting, power generation,distribution and trading, natural gasimportation and whosesale in energy markets

urcas Petrol (Turcas), is a nationwide petroleum productsistribution company operating on petroleum distribution,

il refining, petrochemical production and marketting,ower generation, distribution and trading, natural gasportation and whosesale in energy markets

The State Oil Company of AzerbaijanRepublic, SOCAR, is a 100% state-owned company with the activities of extraction, refining, transportation of oil, gas and gas condensate, and saleof oil and gas products. Amajor shareholder in the 50 million toncapacity BTC crude oil pipeline, whichtransports 6,6 mn. Cubic meters of natural gas to Turkey



38

PETKIM PORT

2008

GENERAL CARGO HANDLING : 1.251.029 TON

LIQUID CARGO HANDLING : 1.794.029 TON

PLANNING

2015 TARGET

GENERAL CARGO/BULK HANDLING CAPACITY: 3.000.000 TON/YEAR LIQUID CARGO HANDLING CAPACITY : 6.000.000 TON/YEAR CONTAINER HANDLING CAPACITY : 500.000 TEU/YEAR VEHICLE HANDLING CAPACITY : 140.000 CEU/YEAR

2026 TARGET

GENERAL CARGO/BULK CAPACITY : 3.000.000 TON/YEAR LIQUID CARGO HANDLING CAPACITY : 10.000.000 TON/YEAR CONTAINER HANDLING CAPACITY : 1.200.000 TEU/YEAR

VEHICLE HANDLING CAPACITY : 140.000 CEU/YEAR



Documents

Petkim Petokimya Turkey - Var?Ova_2009