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Operating Results for the Second Quarter and the First Six Months of 2020
IRPC Public Company Limited
Management Discussion and Analysis
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
2
Executive Summary Performance Financial Positions
Management Discussion and Analysis (MD&A)
IRPC Public Company Limited and its subsidiaries
Operating Results for the Second Quarter and the First Six Months of 2020
Executive Summary
Unit Quarter Change 1H
YoY
2Q20 2Q19 1Q20 YoY QoQ 2020 2019
Crude Intake Million bbl 17.18 18.78 17.11 (9%) 0.4% 34.29 36.75 (7%)
Sales[1] Million Baht 35,529 63,710 48,910 (44%) (27%) 84,439 123,430 (32%)
Net Sales [2] Million Baht 30,370 57,702 43,617 (47%) (30%) 73,987 111,976 (34%)
Market GIM Million Baht 4,669 5,429 3,665 (14%) 27% 8,334 10,387 (20%)
USD/bbl [3] 8.46 9.11 6.82 (7%) 24% 7.64 8.90 (14%)
Accounting GIM Million Baht 4,758 5,920 (3,146) (20%) 251% 1,612 11,598 (86%)
USD/bbl 8.63 9.94 (5.84) (13%) 248% 1.48 9.94 (85%)
EBITDA Million Baht 1,505 2,304 (6,436) (35%) 123% (4,932) 4,659 (206%)
Net Profit Million Baht (411) 507 (8,905) (181%) 95% (9,316) 660 n.a.
Note: [1] Sales includes (1) Petroleum Sales (2) Petrochemical Sales (3) Power and Utilities Sales (4) Sales of tank farm and port service, etc
[2] Net Sales includes (1) Petroleum Sales (excluding excise tax) (2) Petrochemical Sales (3) Power and Utilities Sales
[3] Market GIM per bbl : [(Market GIM / Crude Intake)/exchange rate]
The operating results in the second quarter of 2020 compared to those in the first
quarter: In the second quarter of 2020 (2Q20), the Company’s net sales was Baht 30,370 million,
decreasing 30% from the first quarter of 2020 (1Q20), QoQ, including a 27% decrease in average
selling price following a volatility of crude oil price and a 3% decrease in sales volume. The average
crude intake was 189,000 barrels per day, was similar to those of 1Q20.
The Market GIM was Baht
4,669 million (USD 8.46 per barrel),
jumped 27% thanks to the lower
crude premium amid the oil-price
war. Saudi Arabia announced a
significant reduction in the selling
price of crude oil (Official Selling
Price: ”OSP”) together with the
improving petrochemical products
spread especially the medical and
69%
29%
2%
1Q20
Net Sales
62%
35%
3%
2Q20
30,370 43,617
Unit: MB
30%
Petroleum Petrochemical Power & Utilities
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
3
Executive Summary Performance Financial Positions
packaging product groups. On the contrary, most petroleum products spread remained under pressure
derived from weakening demand caused by the COVID-19 pandemic.
Crude oil price situation in 2Q20 seems highly volatile. At the beginning of the quarter, crude oil
price continued to decline from 1Q20. Dubai price was dropping to the lowest level of USD 13.55 per barrel
as the COVID-19 outbreak and recovering in May 2020. As a result, the Company had a net stock gain of
Baht 89 million or USD 0.17 per barrel, including the reversal of LCM amounting to Baht 2,835 million
and oil hedging gain of Baht 644 million offset with the stock loss of Baht 3,390 million against the net
stock loss of Baht 6,811 million in the prior quarter. These led to the Accounting GIM of Baht 4,758
million or USD 8.63 per barrel contrasted with the loss on Accounting GIM amounted to Baht 3,146
million in the last quarter.
The operating expenses of Baht 3,476 million, slightly increased by 2% was due mainly to the
higher maintenance cost and consulting expense. These resulted in the earning before interest, tax,
depreciation and amortization (EBITDA) of Baht 1,505 million, comparing with the 1Q20 loss on EBITDA
of Baht 6,436 million. The financial cost was Baht 457 million, down by 2%, QoQ. Meanwhile, there
were loss from financial derivatives amounting to Baht 26 million decreasing from the loss totaling Baht
558 million in the previous quarter comprising of loss from Interest Rate Swap contracts (IRS)
amounting to Baht 213 million and realized loss of Cross Currency Swap contracts (CCS) amounting to
Baht 346 million that unwinding in the preceding quarter.
In addition, the Company recorded foreign exchange gain on USD loan of Baht 353 million
owing to the Thai Baht appreciation against the foreign exchange loss of Baht 500 million in the previous
period. There was unrealized gain from oil hedging of Baht 359 million compared to unrealized loss
from oil hedging of Baht 993 million last quarter. Gain from Investments was Baht 68 million, was up
39%. There was corporate income tax benefit amounting to Baht 39 million against corporate income
tax benefit of Baht 2,246 million in the prior quarter. All mentioned above resulted to the 2Q20 net loss
of Baht 411 million, sharply improved from the net loss of Baht 8,905 million in 1Q20.
The operating results in the second quarter of 2020 compared to those in the second
quarter of 2019: The Company’s net sales dropped by Baht 27,332 million or 47%, attributed to 36%
decrease in average selling price as well as 11% decrease in sales volume. The average crude intake
was 189,000 barrels per day, declined by 9%. The Market GIM was down by Baht 760 million or 14%
(declined by USD 0.65 per barrel) due to the drop of products spread both petroleum and petrochemical
businesses amidst the COVID-19 outbreak. The net stock gain also decreased by Baht 402 million.
These led to the lower of Accounting GIM by Baht 1,162 million or 20%, YoY. On the other hand, the
operating expenses dropped by Baht 498 million or 13% consequent to the lower EBITDA by Baht 799
million or 35%, YoY.
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
4
Executive Summary Performance Financial Positions
The financial cost was down by Baht 10 million or 2%. The loss from financial derivatives was
amounting to Baht 26 million whereas there was gain of Baht 490 million in 2Q19. While foreign
exchange gain was up by 140 million as a result of Thai Baht appreciation. These resulted in the net
loss of Baht 411 million in 2Q20 against the net profit of Baht 507 million at the same period last year.
The operating results in the first six months of 2020 (1H20) compared to those in
the first six months of 2019 (1H19): The Company reported net sales of Baht 73,987 million in
1H20, decreasing 34% from 1H19. This attributed to the 26% decrease in average selling price
following crude oil price together with the 8% decrease in sales volume. The crude intake was 188,000
barrels per day, down 7% because of the decline in products demand during the COVID-19 pandemic.
The Market GIM was Baht 8,334 million (USD 7.64 per barrel), decreasing 20% as a falling of
both petroleum and petrochemical products spread amid the COVID-19 pandemic. The pandemic also
caused the plummeting of crude oil price and brought to the net stock loss of Baht 6,722 million or USD
6.16 per barrel, including the stock loss of Baht 7,851 million opposed to the reversal of LCM of Baht
162 million and oil hedging gain of Baht 967 million. While there was the net stock gain of Baht 1,211
million in 1H19. Hence, the Accounting GIM was Baht 1,612 million (USD 1.48 per barrel) against the
Accounting GIM amounting to Baht 11,598 million or USD 9.94 per barrel in 1H19. The other incomes
were Baht 1,022 million, down by 11%. The operating expenses were Baht 6,871 million, decreasing
7% mostly from the implementation of cost reduction initiatives. These caused the loss on EBITDA of
Baht 4,932 million comparing to the EBITDA of Baht 4,659 million in 1H19.
The net financial cost was Baht 921 million, decreasing 2%. There was loss from financial
derivatives amounting to Baht 584 million, mainly from the realized loss of CCS amounting to Baht 346
million as well as the loss of IRS amounting to Baht 239 million against the gain from financial
derivatives amounting to Baht 576 million in 1H19. Likewise, there was foreign exchange loss of Baht
147 million as the Thai Baht depreciation while there was foreign exchange gain of Baht 340 million at
the same period last year and 1H20 unrealized loss from oil hedging amounting to Baht 634 million.
Gain from investments was Baht 117 million, declined by 40% owing to a weakening performance from
associates and joint ventures. The Company had the corporate income tax benefit of Baht 2,285 million
compared to 1H19 corporate income tax benefit of Baht 4 million because of the decreasing operating
results. All previously mentioned resulting the net loss of Baht 9,316 million in 1H20 against the net
profit of Baht 660 million in 1H19.
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Executive Summary Performance Financial Positions
Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
5
Operating Performance
1. Operating Performance by Business Units
1.1. Petroleum business unit
1.1.1 Petroleum Market Overview
Crude oil situation in the second quarter of 2020 (2Q20): The global oil consumption was
84 million barrels per day, further declined by 10 million barrels per day from 1Q20. The Dubai price
had moved between USD 13.55 per barrel and USD 43.35 per barrel, an average of USD 30.55 per
barrel, dropping by USD 20.19 per barrel from an average of USD 50.74 per barrel in 1Q20. The collapse
of crude oil price was mainly from
the demand for transportation
fuel has continued to decline as
countries maintaining travel
restrictions (Lockdown) both
local and international travel to
curb the spread of the COVID-19
pandemic. This caused the falling
of crude oil price to the lowest in
April at USD 13.55 per barrel.
However, crude price began to pick up after OPEC and its allies announced production cuts in May-July
by more than 9 million barrel per day along with the countries easing of the lockdown measures causing
the increase in oil demand. These contributed to the recovering of crude oil price.
Crude oil outlook in the third quarter of 2020: Crude oil demand continued to improve,
moving within the range of USD 38 – 45 per barrel. The favorable factors include the easing of lockdown
measures and the recovering of tourism sector supported by the government's economic stimulus
packages through a discounts program and an additional long weekend. Additionally, crude oil
producers have cut production of more than 9 million barrels per day through July and will maintain
the production cuts by 7.7 million barrels per day starting from August till December. The major oil
producers are closely monitoring the situation and stand ready to act if needed to keep crude oil in
equilibrium. There are also factors to watch, if the global crude oil price is higher than USD 40 per
barrel, the high-cost producers in the U.S. are likely to increase later in 2020 and the “phase two” trade
deal between the U.S. and China is looking less likely, are the factors that continue to pressure the
market.
10
20
30
40
50
60
70
80
90
Dubai Price
43.35
13.55
2Q20 AVG price
30.55
1Q20 AVG price
50.74
Unit : USD/BBL
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
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Executive Summary Performance Financial Positions
1.1.2 Crude Intake and Capacity
Petroleum Quarter % Change 1H
YoY 2Q20 2Q19 1Q20 YoY QoQ 2020 2019
Crude Intake
Million barrels 17.18 18.78 17.11 (9%) 0.4% 34.29 36.75 (7%)
KBD 189 206 188 (9%) 0.4% 188 203 (7%)
Utilization Rate
Refinery 88% 96% 87% (8%) 1% 88% 94% (6%)
RDCC 79% 114% 93% (35%) (14%) 86% 92% (6%)
Lube Base Oil 87% 82% 79% 5% 8% 83% 83% 0%
In 2Q20, crude intake was 17.18 million barrels or
189,000 barrels per day. The utilization rate was 88%, was similar
to that of 188,000 barrels per day in 1Q20. When compared with
2Q19 of crude intake of 206,000 barrels per day, it decreased by
9%.
The utilization rate of RDCC plant in 2Q20 was 79%, decreasing by 14% from 1Q20 of 93%
utilization rate, mainly due to the optimization of production along with the market situation. When
compared to 114% utilization rate in 2Q19, it was down by 35%.
Lube base oil plant’s utilization rate in 2Q20 was 87%, increasing by 8%when compared to
1Q20 of 79% utilization rate. Likewise, it increased by 5% when compared to 2Q19 of 82% utilization
rate. This caused by an increase in demand after lockdown easing.
1.1.3 Petroleum Sales
Products
Sales Volume (Million Barrel)
Sales Value (Million Baht)
Quarter 1H Quarter 1H
2Q20 2Q19 1Q20 2020 2019
2Q20 2Q19 1Q20 2020 2019
Refinery 12.72 14.92 13.42 26.13 29.08
16,066 37,005 26,384 42,450 70,341
Lube Base Oil 1.73 1.71 1.74 3.48 3.52
2,716 4,462 3,860 6,576 8,899
Total 14.45 16.63 15.16 29.61 32.60
18,782 41,467 30,244 49,026 79,240
In 2Q20, crude intake was
17.18 million barrels (189 KBD)
was similar to that of 1Q20
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
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Executive Summary Performance Financial Positions
In 2Q20, net sales of petroleum businesses were
Baht 18,782 million, decreasing by Baht 11,462
million or 38% from 1Q20. This caused by 33%
decrease in average products prices toward the
falling crude oil price as well as 5% decrease in sales
volume from 15.16 million barrels to 14.45 million
barrels owing to the impact of COVID-19. The
decreased sales volume was mainly from Diesel and Gasoline while sales volume of Naphtha and Asphalt
increased.
When compared with 2Q19, the net sales were down by Baht 22,685 million or 55%, mainly
from 42% decrease in average products prices following the crude oil price and 13% decrease in sales
volume as the lockdown measures to contain the COVID-19 outbreak. The decline in sales volume was
mainly from Diesel and Gasoline while sales volume of Naphtha and Asphalt increased.
For 1H20, net sales of petroleum businesses were Baht 49,026 million, fell by Baht 30,214
million or 38% from 1H19. This resulted from 29% decline in average products prices following the
decreased crude oil price as well as 9% decrease in sales volume from 32.60 million barrels to 29.61
million barrels as a result of the COVID-19 outbreak. The decreased sales volume was mainly from
Diesel and Naphtha though Fuel Oil sales volume increased.
1.1.4 Petroleum Sales Breakdown
Products
Quarter
1H
2Q20 2Q19 1Q20 2020 2019
Local Export Local Export Local Export
Local Export Local Export
Refinery 60% 40% 61% 39% 64% 36%
63% 37% 59% 41%
Lube Base Oil 40% 60% 40% 60% 34% 66% 36% 64% 41% 59%
Total 57% 43% 59% 41% 60% 40% 59% 41% 57% 43%
For 2Q20, the percentage of domestic and export of petroleum product was 57% and 43%
accordingly. The percentage of domestic sales decreased by 3% from 1Q20, mainly from Diesel and
Gasoline. When compared with 2Q19, the percentage of domestic decreased by 2%, mainly from Diesel.
The export products in 2Q20 mostly shipped to Singapore, Cambodia and Malaysia, respectively.
For 1H20, the percentage of domestic and export of petroleum product was 59% and 41%
accordingly. The percentage of domestic rose by 2% compared with the same period last year, mainly
from Fuel Oil.
In 2Q20, net sales of petroleum businesses
decreased by 38% from last quarter due to
lower average products prices following the
crude oil price and a decrease in sales volume
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
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Executive Summary Performance Financial Positions
1.1.5 Petroleum Products Spread
Average price
Quarter % Change 1H
YoY
2Q20 2Q19 1Q20 YoY QoQ 2020 2019
Dubai Crude Oil (USD/bbl) 30.55 67.36 50.74 (55%) (40%) 40.64 65.45 (38%)
Petroleum (USD/bbl)
Naphtha – Dubai (3.0) (9.1) (2.9) 67% (3%) (3.0) (8.3) 64%
ULG95 – Dubai 2.6 7.5 6.7 (65%) (61%) 4.6 5.6 (18%)
Gas Oil 0.05%S - Dubai 5.7 12.4 11.0 (54%) (48%) 8.4 12.6 (33%)
FO 180 3.5%S - Dubai (1.6) (2.3) (7.4) 30% 78% (4.5) (0.9) n.a.
Lube Base Oil (USD/MT)
500SN - FO 180 3.5%S 372 287 370 30% 1% 371 308 20%
150BS - FO 180 3.5%S 524 473 536 11% (2%) 529 478 11%
Asphalt - FO 180 3.5%S 42 (4) 27 n.a. 56% 34 (22) 255%
The spread between Petroleum products and raw material in 2Q20
The spread between Petroleum products and Dubai
Naphtha Spread - Lower: Naphtha-Dubai spread in 2Q20 was USD –3.0 per barrel,
decreased by 3% from USD -2.9 per barrel of 1Q20. This caused by a pressure from lower demand for
Gasoline blending while the demand for Olefin Plants (Naphtha Cracker) remained stable. When
compared to 2Q19 of USD -9.1 per barrel, it increased by 67%.
ULG95 Spread - Lower: ULG95 - Dubai spread in 2Q20 was USD 2.6 per barrel, falling
61% when compared to 1Q20 of USD 6.7 per barrel. It continued to decline from the last quarter. This
resulted from the countries lockdown measures in order to control a global pandemic of COVID-19,
especially India, Malaysia and Vietnam, brought about the pressure in Asian market. When compared
with 2Q19 of USD 7.5 per barrel, it decreased by 65%.
Gas Oil Spread - Lower: Gasoil-Dubai spread was USD 5.7 per barrel, fell by 48% from
USD 11.0 per barrel of 1Q20. This was because of the lockdown measures and the lower operating rate
of industrial sector caused by the coronavirus pandemic. These led to the decline in Gas Oil and Jet
demand. Though the refineries had cut their operating rates, it could not settle with the demand
collapse consequence to the increasing inventory level. When compared with 2Q19 of USD 12.4 per
barrel, it declined by 54%.
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
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Executive Summary Performance Financial Positions
Fuel Oil Spread - Higher: High Sulphur Fuel Oil (HSFO) - Dubai spread was USD -1.6 per
barrel, increasing by 78% from USD -7.4 per barrel of 1Q20 as the refineries used less crude from
OPEC according to its cut run. This resulted to the decrease in fuel oil products. The higher demand of
electricity during the summer in the Middle East also supported fuel oil market. When compared with
2Q19 of USD -2.3 per barrel, it increased by 30%.
The spread between Lube Base Oil products and FO 180 3.5%S
500 SN Spread - Unchanged: Lube base 500SN - Fuel Oil spread was USD 372 per ton,
being stable from USD 370 per ton in 1Q20 due to an increase demand from travel and transportation
activities after the easing of lockdown measures. When compared with 2Q19 of USD 287 per ton, it
increased by 30%.
Asphalt Spread- Higher: Asphalt - Fuel oil spread was USD 42 per ton, up by 56% when compared to 1Q20 of USD 27 per ton, caused by high demand from the accelerating of road
construction which was delayed in 1Q20. When compared with 2Q19 of USD -4 per ton, it increased by
USD 46 per ton.
1.1.6 Gross Refinery Margin
708 877 (458) 249 1,346 Refinery
707 733 907 1,615 1,349 Lube Base Oil
1,415 1,610 449 1,864 2,695 Market GRM
1.29 1.47 (0.85) 0.23 1.15 Refinery
1.28 1.23 1.69 1.48 1.16 Lube Base Oil
2.57 2.70 0.84 1.71 2.31 Market GRM
Market GRM in 2Q20 was Baht 1,415 million or USD
2.57 per barrel, increased by Baht 966 million or USD 1.73
per barrel from 1Q20.This caused by sharply decrease in
crude premium while the drop in almost all petroleum
products spread owing to the COVID-19 outbreak. When
compared with 2Q19, Market GRM decreased by Baht 195
million or USD 0.13 per barrel, mainly from lower products
spread, especially Diesel and Gasoline as a consequence of the COVID-19 outbreak, whereas the lower
crude premium supported margin.
1,415 1,610 449
1,864 2,695
765 368
(4,928)(4,163)
1,389 2,180 1,978
(4,479)
(2,299)
4,084
2Q20 2Q19 1Q20 1H20 1H19
AccountingGRM
Net StockGain/(Loss)
Market GRM
2.57 2.70 0.84 1.71
2.31
1.39 0.62
(9.16)
(3.81)
1.20
3.96 3.32
(8.32)
(2.10)
3.51
2Q20 2Q19 1Q20 1H20 1H19
AccountingGRM
Net StockGain/(Loss)
Market GRM
Unit: MB
Unit: USD/bbl
In 2Q20, Market GRM increased by
Baht 966 million from last quarter
due to sharply decrease in crude
premium
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
10
Executive Summary Performance Financial Positions
In 2Q20, there was the net stock gain of Baht 765 million or USD 1.39 per barrel, comprising
of stock loss of Baht 2,063 million versus gain from reversal of LCM by Baht 2,184 million and oil
hedging gain of Baht 644 million. This led to the Accounting GRM of Baht 2,180 million or USD 3.96 per
barrel. Accounting GRM rose by Baht 6,659 million or USD 12.28 per barrel from loss on Accounting
GRM of Baht 4,479 million in 1Q20. Furthermore, there was the profit increased by Baht 202 million or
USD 0.64 per barrel from 2Q19.
For 1H20, Market GRM was Baht 1,864 million or USD 1.71 per barrel, declining by Baht 831
million or USD 0.60 per barrel. This resulted from a decrease in almost all petroleum products spread
especially Diesel and Gasoline affected by the COVID-19 pandemic. The net stock loss was Baht 4,163
million or USD 3.81 per barrel including stock loss of Baht 5,130 million versus oil hedging gain of Baht
967 million. Thus, Loss on Accounting GRM was Baht 2,299 million or USD 2.10 per barrel. The
Accounting GRM declined by Baht 6,383 million or USD 5.61 per barrel from the same period last year.
1.2 Petrochemical business units
1.2.1 Petrochemical Market Overview
Petrochemical market situation in 2Q20: The petrochemical products demand improved
from 1Q20. The demand in April slumped to the lowest level and picked up after the COVID-19 outbreak
in China and the ASEAN could be controlled. These led to the country’s lockdown easing since May.
The businesses were gradually re-open, especially the downstream manufacturers that have restarted
their operations. In addition, the government has rolled out the stimulus packages, such as the money
injection through the Mega Project, financial support for consumers to increase their purchasing power,
government bond issuing to raise funds and lend to entrepreneurs with low interest rates, etc.
Furthermore, the low product price also encouraged manufacturers to increase inventory.
Petrochemical market situation in 3Q20: The petrochemical products demand growth is
expected to further increase. The market projected that polyolefins demand will increase from 2019,
contrasted with 2020 global economic growth (GDP) rate of -3%, according to the International Money
Fund (IMF) report. This will be driven by the increasing productions in China and the ASEAN, especially
the medical product group and packaging for the Food Delivery business. Besides, the return of the
automotive industry, electronics and electrical appliances, home appliances and construction industry
in 3Q20 as well as the delay of addition capacities due to the insufficient cost and the international
travel restrictions to prevent the spread of the COVID-19 will be the other factors to support the
petrochemical market.
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
11
Executive Summary Performance Financial Positions
1.2.2 Petrochemical Capacity
Quarter % Change 1H
YoY 2Q20 2Q19 1Q20 YoY QoQ 2020 2019
Utilization Rate
Olefins Group 91% 99% 95% (8%) (4%) 93% 94% (1%)
Aromatics and Styrenics Group 95% 99% 94% (4%) 1% 95% 91% 4%
In 2Q20, the utilization rate of Olefins was 91%, decreasing by 4% from 1Q20 of 95% utilization
rate. When compared with 2Q19 of 99% utilization rate, it decreased by 8%. The main reason was that
PP plant reduced its utilization rate in order to balance feedstock in 2Q20.
The utilization rate of Aromatics and Styrenics in 2Q20 was 95%, being the same level as 1Q20.
When compared with 2Q19 of 99% utilization rate, it decreased by 4% for inventory management.
1.2.3 Petrochemical Sales
Products
Sales Volume (KMT)
Sales Value (Million Baht)
Quarter 1H Quarter 1H
2Q20 2Q19 1Q20 2020 2019
2Q20 2Q19 1Q20 2020 2019
Olefins Group 262 270 274 535 553
6,597 9,536 8,090 14,687 19,523
Aromatics and Styrenics Group
188 178 155 344 359
4,136 5,813 4,407 8,543 11,456
Total 450 449 429 879 912
10,733 15,349 12,497 23,230 30,979
Net sales of petrochemical businesses in 2Q20 were
Baht 10,733 million, declining by Baht 1,764 million or 14%
from the previous quarter. The main reasons were 19%
decrease in average selling price following lower raw material
prices versus 5% increase in sales volume by 21,000 Tons,
mainly from ABS and PS products in Aromatics and Styrenics
Group, as the increasing demand after the lockdown easing.
Compared with 2Q19, net sales decreased by Baht 4,616 million or 30%, due to 30% decrease
in average selling price according to lower raw material prices.
For 1H20, net sales of petrochemical businesses were Baht 23,230 million, dropping by Baht
7,749 million or 25% from the same period last year. This caused by 21% decline in average selling
price following lower raw material and 4% decrease in sales volume by 33,000 Tons, impacted by
COVID-19. The drop in sale volume was mainly from Mixed Xylene product in Aromatics Group.
In 2Q20, net sales of petrochemical
businesses declined by 14%, QoQ,
owing to 19% decrease in average
selling price while 5% increase in
sales volume
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
12
Executive Summary Performance Financial Positions
1.2.4 Petrochemical Sales Breakdown
Products
Quarter 1H
2Q20 2Q19 1Q20 2020 2019
Local Local Local Export Local Export Local Export Local Export
Olefins Group 62% 38% 59% 41% 63% 37%
62% 38% 61% 39%
Aromatics and Styrenics Group
31% 69% 47% 53% 44% 56% 38% 62% 49% 51%
Total 50% 50% 54% 46% 56% 44% 53% 47% 56% 44%
For 2Q20, the proportion of Petrochemical sales were 50% domestic and 50% export. The
domestic sales decreased by 6% from last quarter, mostly from ABS and Polystyrenics (PS) in Styrenics
group. When compared with 2Q19, domestic sales decreased by 4%, mainly from PP in Olefins group
and Mixed Xylene in Aromatics group. The petrochemical exported products in 2Q20 mostly shipped to
Hong Kong, Singapore and Vietnam, respectively.
For 1H20, the proportion of Petrochemical sales were 53% domestic and 47% export. The
domestic sales decreased by 3% from the same period last year, mostly from PP product in Olefins
group and Mixed Xylene in Aromatics group.
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
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Executive Summary Performance Financial Positions
1.2.5 The spread between key petrochemical products and raw material
Average Price
(USD/MT)
Quarter % Change 1H
YoY
2Q20 2Q19 1Q20 YoY QoQ 2020 2019
Naphtha 274 541 440 (49%) (38%) 357 530 (33%)
Olefins
Ethylene - Naphtha 283 283 240 0% 18% 261 346 (25%)
HDPE – Ethylene 346 395 315 (12%) 10% 331 329 1%
HDPE – Naphtha 629 678 555 (7%) 13% 592 675 (12%)
Propylene – Naphtha 370 255 347 45% 7% 359 287 25%
PP – Propylene 215 337 180 (36%) 19% 197 314 (37%)
PP – Naphtha 585 592 527 (1%) 11% 556 601 (7%)
Aromatics
BZ - Naphtha 97 84 174 15% (44%) 136 77 77%
TOL - Naphtha 76 108 123 (30%) (38%) 100 101 (1%)
MX – Naphtha 124 164 148 (24%) (16%) 136 159 (14%)
Styrenics
SM - Naphtha 347 523 367 (34%) (5%) 357 523 (32%)
ABS - Naphtha 919 955 892 (4%) 3% 905 977 (7%)
PS (GPPS) - Naphtha 649 763 678 (15%) (4%) 663 775 (14%)
The spread between Petrochemical products and raw material in 2Q20
The spread between Polyolefins (HDPE/PP) and Naphtha in 2Q20
HDPE Spread - Higher: HDPE - Naphtha spread was USD 629 per ton, increased by 13%
from USD 555 per ton in 1Q20. It was owing to the increasing demand of construction and higher
demand for water pipes to ease drought. Furthermore, the demand in medical sector continued to
increase. When compared with 2Q19 of USD 678 per ton, it declined by 7%.
PP Spread - Higher: PP - Naphtha was USD 585 per ton, increasing by 11% from USD
527 per ton in 1Q20. This caused by an increasing demand due to higher utilization of downstream
producers after the lockdown easing, stock building ahead of scheduled maintenance of petrochemicals
as well as increasing inventory owing to the higher price trend. When compared with 2Q19 of USD 592
per ton, its spread slightly decreased.
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
14
Executive Summary Performance Financial Positions
The spread between Aromatics (Toluene and Mixed Xylene) and Naphtha
TOL and MX Spread –Lower: Toluene - Naphtha spread and Mixed Xylene - Naphtha
spread were USD 76 per ton and USD 124 per ton respectively, down by 38% and 16% when compared
with 1Q20. This was owing to an increase of new integrated Paraxylene capacity in China as well as
the lower Paraxylene demand due to the COVID-19 outbreak.Therefore, the demand in Toluene and
Mixed Xylene which were the Paraxylene raw materials also decreased. When compared with 2Q19,
Toluene and Mixed Xylene spreads decreased by 30% and 24% respectively.
The spread between Polystyrenics (ABS/PS) and Naphtha
ABS Spread - Higher: ABS - Naphtha spread was USD 919 per ton, increasing by 3% from
USD 892 per ton of 1Q20. This was driven by an increasing demand of household appliances such as
air fryer and air purifier, thanks to the speed up of Work-From-Home trends. In addition, an increase
production of helmets for small electrical motorcycles, including seat belts in accordance with the
“China's One Helmet One Belt” campaign as well as the resuming of automobile productions in China
had supported ABS market. When compared with 2Q19 of USD 955 per ton, spread declined by 4%.
PS Spread - Lower: PS – Naphtha spread was USD 649 per ton, decreasing by 4%, from
USD 678 per ton in 1Q20, due to the weaker PS demand in electronics device and electrical appliances
sectors influenced by the COVID-19 outbreak. When compared with 2Q19 of USD 763 per ton, spread
declined by 15%.
1.2.6 Product to Feed Margin (Product to Feed : PTF)
1,897 2,090 1,847
3,744 4,510 Olefins Group
680 1,000 656
1,336 1,826 Aro & Styrenics
2,577 3,090 2,503
5,080 6,336 Market PTF
3.43 3.51 3.44
3.43 3.87 Olefins Group
1.23 1.68 1.22
1.22 1.56 Aro & Styrenics
4.66 5.19 4.66
4.65 5.43 Market PTF
In 2Q20, Market PTF of Baht 2,577 million or USD 4.66
per barrel was similar to 1Q20 Market PTF of Baht 2,503 million
or USD 4.66 per barrel because Olefins products spread
improved due to higher demand in medical and packaging
products amid the COVID-19 pandemic while lower Aromatics product spread. When compared with
2,577 3,090 2,503 5,080 6,336
(676)
123
(1,883) (2,559)(178)
1,901 3,213 620
2,521 6,158
2Q20 2Q19 1Q20 1H20 1H19
AccountingPTF
Net StockGain/(Loss)
Market PTF
4.66 5.19 4.66 4.65 5.43
(1.22)
0.21
(3.50) (2.35)(0.16)
3.44 5.40 1.16 2.30 5.27
2Q20 2Q19 1Q20 1H20 1H19
AccountingPTF
Net StockGain/(Loss)
Market PTF
Unit: MB Unit: USD/bbl
In 2Q20, Market PTF of Baht 2,577
million was similar to last quarter
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
15
Executive Summary Performance Financial Positions
2Q19, Market PTF dropped by Baht 513 million or USD 0.53 per barrel owing to lower petrochemical
products spread.
The net stock loss of Baht 676 million in 2Q20, including stock loss of Baht 1,327 million versus
gain from a reversal of LCM of Baht 651 million. Therefore, the Company had Accounting PTF of Baht
1,901 million or USD 3.44 per barrel. When compared with last quarter, it rose by Baht 1,281 million
or USD 2.28 per barrel while it fell by Baht 1,312 million or USD 1.96 per barrel from the Accounting
PTF of Baht 3,213 million in 2Q19.
For 1H20, Market PTF was Baht 5,080 million or USD 4.65 per barrel, declining by Baht 1,256
million or USD 0.78 per barrel from the same period last year. The main reason was the extremely
decline in petrochemical products spread through the outbreak of COVID-19. Meanwhile, the Company
reported the net stock loss of Baht 2,559 million attributed to the stock loss of Baht 2,721 million but
there was gain from the reversal of LCM amounting to Baht 162 million. As such, the Accounting PTF
was Baht 2,521 million or USD 2.30 per barrel. It was down by Baht 3,637 million or USD 2.97 per
barrel when compared to the same period last year.
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
16
Executive Summary Performance Financial Positions
1.3 Power Plant and Utility business units
1.3.1 Power Plant Capacity and Sales
Quarter % Change 1H
YoY 2Q20 2Q19 1Q20 YoY QoQ 2020 2019
Utilization Rate
Electricity 70% 74% 71% (4%) (1%) 70% 71% (1%)
Steam 63% 63% 66% 0% (3%) 65% 61% 4%
Sales (Baht million)
Electricity 505 511 505 (1%) 0% 1,010 1,045 (3%)
Steam 295 311 308 (5%) (4%) 603 587 3%
Others 55 64 63 (14%) (13%) 118 126 (6%)
Total 855 886 876 (3%) (2%) 1,731 1,758 (2%)
In 2Q20, the utilization rate of Electricity was 70%, similar to that of 1Q20. When compared
with 2Q19, the utilization rate of Electricity was lower by 4%, following the reduction of refinery
utilization.
The utilization rate of Steam in 2Q20 was 63%, down by 3%, QoQ. This resulted from planned
maintenance shutdown of the industrial area customers. And it was similar rate to 2Q19.
In 2Q20, the net sales of power and utility businesses were Baht 855 million, decreasing by
Baht 21 million or 2% QoQ. When compared with 2Q19, it decreased by Baht 31 million or 3% YoY.
This was due mainly to lower selling price of steam and electricity following lower fuel price.
In 1H20, the net sales of power and utility businesses were Baht 1,731 million, slightly
decreased by 2% from 1H19.
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
17
Executive Summary Performance Financial Positions
2. Total Operating Performance
Total Operating Performance of IRPC and its subsidiaries for 2Q20 and 1H20 are as follow;
Note : [1] Average market prices of crude used in the production process
[2] Sales includes (1) Petroleum Sales (2) Petrochemical Sales (3) Power and Utilities Sales (4) Sales of tank farm and port service, etc.
[3] Net Sales includes (1) Petroleum Sales (excluding excise tax) (2) Petrochemical Sales (3) Power and Utilities Sales
[4] Including port, tank farm and service etc.
[5] Net Financial Cost excludes gain (loss) from financial derivatives
2Q20 2Q19 1Q20 2020 2019 2Q20 2Q19 1Q20 2020 2019
Average FX (THB/USD) 32.12 31.76 31.45 31.78 31.77
Total Crude Intake (Mbbl) 17.18 18.78 17.11 34.29 36.75
Average Crude (USD/bbl) (1) 29.74 70.15 56.05 42.73 67.90
Sales (2) 35,529 63,710 48,910 84,439 123,430 64.39 106.81 90.89 77.49 105.72
Net Sales (3) 30,370 57,702 43,617 73,987 111,976 55.04 96.74 81.06 67.89 95.91
Cost of Feedstock (Market Price) (25,701) (52,273) (39,952) (65,653) (101,589) (46.58) (87.63) (74.24) (60.25) (87.01)
Market GIM 4,669 5,429 3,665 8,334 10,387 8.46 9.11 6.82 7.64 8.90
Stock Gain (Loss) (3,390) 176 (4,461) (7,851) 54 (6.14) 0.30 (8.29) (7.20) 0.05
Lower of Cost or Market 2,835 (148) (2,673) 162 693 5.14 (0.25) (4.97) 0.15 0.59
Oil Hedging Gain (Loss) 644 463 323 967 464 1.17 0.78 0.60 0.89 0.40
Accounting GIM 4,758 5,920 (3,146) 1,612 11,598 8.63 9.94 (5.84) 1.48 9.94
Other Incomes (4) 583 723 439 1,022 1,145 1.06 1.21 0.82 0.94 0.98
Selling Expenses (359) (366) (335) (694) (731) (0.65) (0.61) (0.62) (0.64) (0.63)
Accounting GIM and Other Incomes 4,982 6,278 (3,041) 1,940 12,012 9.04 10.54 (5.64) 1.78 10.29
OPEX (3,476) (3,974) (3,395) (6,871) (7,353) (6.29) (6.67) (6.31) (6.31) (6.30)
EBITDA 1,505 2,304 (6,436) (4,932) 4,659 2.75 3.87 (11.95) (4.53) 3.99
Depreciation (2,224) (2,135) (2,227) (4,451) (4,151) (4.03) (3.58) (4.14) (4.08) (3.56)
EBIT (719) 169 (8,663) (9,383) 508 (1.28) 0.29 (16.09) (8.61) 0.43
Net Financial Cost(5) (457) (467) (464) (921) (940) (0.83) (0.78) (0.86) (0.85) (0.81)
Gain (Loss) from Financial Derivatives (26) 490 (558) (584) 576 (0.05) 0.82 (1.04) (0.54) 0.49
Gain (Loss) from Foreign Exchange 353 213 (500) (147) 340 0.64 0.36 (0.93) (0.13) 0.29
Unrealized Gain (Loss) from Oil Hedging 359 - (993) (634) - 0.65 - (1.85) (0.58) -
Gain (Loss) from impairment and disposal of fixed assets (35) (2) (4) (39) (10) (0.06) - (0.01) (0.04) (0.01)
Gain (Loss) from Investment 68 112 49 117 195 0.12 0.19 0.09 0.11 0.17
Other Expenses 11 5 (10) 1 - 0.02 0.01 (0.02) - -
Net Profit (Loss) before Income Tax (447) 520 (11,143) (11,590) 669 (0.79) 0.89 (20.71) (10.64) 0.57
Income Tax 39 (5) 2,246 2,285 4 0.07 (0.01) 4.17 2.10 -
Gain (Loss) from non-controlling interests (3) (8) (8) (11) (13) (0.01) (0.01) (0.01) (0.01) (0.01)
Net Profit (Loss) (411) 507 (8,905) (9,316) 660 (0.73) 0.87 (16.55) (8.55) 0.56
Earning per share (EPS) (Baht/share) (0.02) 0.02 (0.44) (0.46) 0.03
Quarter 1H Quarter 1H
Unit : Million Baht Unit : USD per barrel
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
18
Executive Summary Performance Financial Positions
2.1 Market Gross Integrated Margin (Market GIM)
In 2Q20, Market GIM of Baht 4,669 million or USD 8.46 per barrel increased by Baht 1,004
million or USD 1.64 per barrel from last quarter. It caused by the greatly falling crude premium
amounting to USD 6.12 per barrel. However, almost all the petroleum products spread sharply dropped,
especially Diesel and Gasoline, while the petrochemical products spread especially medical and
packaging products improved.
When compared with 2Q19 Market GIM of Baht 5,429 million dropped by Baht 760 million or
USD 0.65 per barrel owing to the decline in most petroleum and petrochemical products spread amid
the COVID-19 outbreak while a drop in crude premium by USD 3.60 per barrel.
For 1H20, Market GIM was Baht 8,334 million or USD 7.64 per barrel, decreasing by Baht 2,053
million or USD 1.26 per barrel from 1H19. This was because of the sharply decline in petroleum and
petrochemical products spread as a result of the COVID-19 outbreak.
MB USD/bbl
1,415 1,610 449
1,864 2,695
2,577 3,090
2,503
5,080
6,336
677 729
713
1,390
1,356
4,669 5,429
3,665
8,334
10,387
2.57 2.70
0.84 1.71 2.31
4.66 5.19
4.66 4.65
5.43
1.23 1.22
1.32 1.28
1.16
8.46 9.11
6.82 7.64
8.90
-
5
10
15
-
5,000
10,000
15,000
2Q20 2Q19 1Q20 1H20 1H19 2Q20 2Q19 1Q20 1H20 1H19
Market GIM
GRM PTF Power & Utilities
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
19
Executive Summary Performance Financial Positions
2.2 Accounting Gross Integrated Margin (Accounting GIM)
In 2Q20, Accounting GIM of Baht 4,758 million or USD 8.63 per barrel rose by Baht 7,904
million or USD 14.47 per barrel compared with last quarter. This resulted from an increase in Market
GIM amounting Baht 1,004 million or USD 1.64 per barrel and a rise in net stock gain amounting Baht
6,900 million or USD 12.83 per barrel. In 2Q20, there was net stock gain of Baht 89 million or USD 0.17
per barrel, comprising of gain from Realized Oil Hedging amounting Baht 644 million or USD 1.17 per
barrel versus stock loss & reversal of LCM amounting Baht 555 million or USD 1.00 per barrel whereas
there was net stock loss of Baht 6,811 million or USD 12.66 per barrel in 1Q20.
When compared with 2Q19 Accounting GIM decreased by Baht 1,162 million or USD 1.31 per
barrel because of a decrease in Market GIM of Baht 760 million or USD 0.65 per barrel plus a decline
in net stock gain of Baht 402 million or USD 0.66 per barrel.
For 1H20, Accounting GIM was Baht 1,612 million or USD 1.48 per barrel. It declined by Baht
9,986 million or USD 8.46 per barrel from the same period last year. This caused by a decrease in
Market GIM of Baht 2,053 million or USD 1.26 per barrel together with 1H20 net stock loss of Baht
6,722 million or USD 6.16 per barrel despite 1H19 net stock gain of Baht 1,211 million or USD 1.04 per
barrel.
2.3 Other incomes
Other incomes consist of port and tank farm services and other services. In 2Q20, the Company
had other incomes amounting to Baht 583 million, increased by Baht 144 million from last quarter
because of an increase in tank farm services. When compared with 2Q19, other incomes dropped by
Baht 140 million due to a warranty claim of UHV project in 2Q19.
For 1H20, the Company had other incomes amounting Baht 1,022 million, decreasing by Baht
123 million from the same period last year owing to a decrease in warranty claim of UHV project.
MB USD/bbl
4,669 5,429 3,665 8,334
10,387
(555)
28
(7,134) (7,689)
747
644 463 323 967
464
4,758 5,920
(3,146)
1,612
11,598
8.46 9.11 6.82 7.64 8.90
(1.00)
0.05
(13.26)
(7.05)
0.64 1.17 0.78
0.60 0.89
0.40 8.63 9.94
(5.84)
1.48 9.94
(20)
(15)
(10)
(5)
-
5
10
15
20
(20,000)
(15,000)
(10,000)
(5,000)
-
5,000
10,000
15,000
20,000
2Q20 2Q19 1Q20 1H20 1H19 2Q20 2Q19 1Q20 1H20 1H19
Accounting GIM
Market GIM Stock Gain/(Loss)+LCM Oil Hedging
-
Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
20
Executive Summary Performance Financial Positions
2.4 Operating Expenses
In 2Q20, the operating expenses of Baht 3,476 million increased by Baht 81 million or 2% QoQ,
mainly from an increase in maintenance expense versus a decline in other expenses as a result of cost
control measures. When compared with 2Q19, the operating expenses fell by Baht 498 million due
mainly to the recording of employee benefit expense in 2Q19 in accordance with the new Labor
Protection Act.
For 1H20, there were the operating expenses of Baht 6,871 million, fell by Baht 482 million or
7% from 1H19, mainly because of a decline in employee benefit expense and other expenses as a
result of cost control measures.
2.5 Depreciation and Amortization Expenses
In 2Q20, the depreciation of Baht 2,224 million was similar to last quarter while it increased by
Baht 89 million or 4% from 2Q19. For 1H20, the depreciation of Baht 4,451 million, increased by Baht
300 million or 7% from the same period last year. The main reason was the completion of the expansion
and efficiency improvement projects such as the Catalyst Cooler project and Floating Solar project that
started commercial operation since June 5, 2020.
2.6 Net Financial cost
In 2Q20, net financing cost was Baht 457 million, declining by Baht 7 million or 2% QoQ, and
Baht 10 million or 2% YoY. For 1H20, financial costs of Baht 921 million decreased by Baht 19 million
or 2% from the same period last year. It was because of a decrease in interest rate.
2.7 Gain (Loss) from Financial Derivatives
In 2Q20, there were loss from financial derivatives amounting to Baht 26 million, mainly
attributing to realized loss from Interest Rate Swap (IRS) of Baht 15 million and unrealized loss from
IRS of Baht 11 million. When compared with 1Q20, there were loss from financial derivatives of Baht
558 million, the loss declined by Baht 532 million. When compared with 2Q19 there were gain from
financial derivatives of Baht 490 million, the gain decreased by Baht 516 million.
For 1H20, there were loss from financial derivatives amounting to Baht 584 million, mainly
attributing to realized loss from Cross Currency Swap (CCS) of Baht 346 million and loss from IRS of
Baht 239 million. When compared with 1H19 there were gain from financial derivatives of Baht 576
million, the gain declined by Baht 1,160 million, mainly owing to gain from CCS of Baht 571 million in
1H19 while loss from CCS of Baht 346 million in 1H20 due to the foreign exchange fluctuation.
2.8 Gain (Loss) from Foreign Exchange
In 2Q20, the Company recorded gain from foreign exchange of Baht 353 million, mainly
unrealized gain from foreign exchange due to Thai Baht appreciation from Baht 32.83 per USD at the
end of 1Q20 to Baht 31.07 per USD at the end of 2Q20. When compared with 1Q20 loss from foreign
-
Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
21
Executive Summary Performance Financial Positions
exchange of Baht 500 million, the gain increased by Baht 853 million. While there was gain from foreign
exchange of Baht 213 million in 2Q19. The Company has outstanding USD debt of USD 170 million at
the end of 2Q20.
For 1H20, there was loss from foreign exchange of Baht 147 million, mainly unrealized loss
from foreign exchange, while there was gain from foreign exchange of Baht 340 million in 1H19, mainly
unrealized gain from foreign exchange, due to Thai Baht depreciation.
2.9 Unrealized Gain (Loss) from Oil Hedging
In 2Q20, the Company had unrealized gain from oil hedging of Baht 359 million following the
price risk management. When compared with 1Q20, there was unrealized loss from oil hedging
amounting to Baht 993 million. For 1H20, there was unrealized loss from oil hedging amounting to Baht
634 million.
2.10 Gain (Loss) from Impairment and disposal of fixed assets
In 2Q20, the Company had loss from impairment and disposal of fixed assets of Baht 35 million,
while loss of Baht 4 million and loss of Baht 2 million in 1Q20 and 2Q19, respectively.
For 1H20, there was loss from impairment and disposal of fixed assets of Baht 39 million, when
compared with 1H19 loss from impairment and disposal of fixed assets of Baht 10 million. This caused
by the write-off of intangible assets – dredging in 2Q20.
2.11 Gain (Loss) from Investments
In 2Q20, there was gain from investments of Baht 68 million, increased by Baht 19 million from
1Q20 owing to higher equity values in associates. However, it declined by Baht 44 million from 2Q19
due to lower equity values in associates.
For 1H20, there was gain from investments of Baht 117 million, declined by Baht 78 million
from 1H19, mainly from lower equity values in associates.
2.12 Corporate Income Tax
In 2Q20, the Company recorded the corporate income tax benefit amounting to Baht 39 million,
compared with 1Q20 income tax benefit of Baht 2,246 million. This was owing to improving
performance. When compared with 2Q19, there was the corporate income tax expense amounting to
Baht 5 million. For 1H20, there was the corporate income tax benefit amounting to Baht 2,285 million,
compared with 1H19 the corporate income tax benefit amounting to Baht 4 million. This mainly caused
by the decline in operating results.
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
22
Executive Summary Performance Financial Positions
Financial Positions as of 30 June 2020 (Unit: Million Baht)
Assets
As of June 30, 2020, the Company had total assets of Baht 167,484 million, decreased by
Baht 10,366 million or 6% from December 31, 2019. It was due to the following reasons:
• Account receivables: decreased by Baht 3,328 million or 33% from the end of 2019, due
mainly to a decrease in selling price and sales volume. As of June 30, 2020, there were overdue more
than 3-months account receivables amounting to Baht 50 million or only 0.74% of the total account
receivables which incorporated in the provision for doubtful debt of Baht 31 million. The average
collection period for 2Q20 was 18 days, increased by 1 day from the end of 2019.
• Inventory: decreased by Baht 6,650 million or 26% mainly due to a decrease in crude oil price
and products price following the market prices while an increase in inventory volume. The average
inventory period was 44 days, increased by 3 days from the end of 2019.
Other current assets: decreased by Baht 304 million or 4%. This was mainly attributed to a
decrease in refundable value-added-tax of Baht 1,094 million whereas cash and cash equivalents
increased by Baht 628 million.
Non-current assets decreased by Baht 83 million due to a decrease in fixed assets and
investment properties of Baht 2,702 million which mostly declined by an increase of the accumulated
depreciation. While deferred tax asset increased by Baht 2,156 million, due to the corporate income tax
credit, right-of-use assets increased by Baht 257 million and intangible assets rose by Baht 198 million.
134,120 134,203
7,247 7,551
19,345 25,995
6,772 10,100
72,582 83,402
5,291 4,860
54,728 52,071
7,273 5,745
17,410 24,871 10,200 6,900
167,484
Account receivables S/T loans
Other current assets
177,850
Non-current assets
Other non-current liabilities
Shareholders’ Equity
As of 31 Dec 19 As of 30 Jun 20
L/T Borrowing (incl. due within 1 yr)
6%
Inventory Account payables
Other current liabilities
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
23
Executive Summary Performance Financial Positions
Liabilities
As of June 30, 2020, the Company had total liabilities of Baht 94,902 million, increasing by Baht
454 million compared to the end of 2019. It was due to the following reasons:
Short-terms loans from financial institutions: rose by Baht 3,300 million or 48% for
cash flow used in operating activities as well as liquidity management during the COVID-19 crisis.
Account payables: decreased by Baht 7,461 million or 30%. It was mainly due to a decrease in
crude oil price while an increase in crude oil payable volume. The average payment period was 41 days,
increased by 2 days from the end of 2019.
Other current liabilities: increased
by Baht 1,528 million or 27% due to an
increase in short-term loan and interest
payables from related parties of Baht
2,002 million, an increase in other
payables of Baht 653 million while a
decrease in accrued bonus expense of
Baht 1,290 million.
Long-term borrowing including
current portion within one year:
increased by Baht 2,657 million, mainly
due to long-term loans drawdown by Baht 6,050 and recording of unrealized foreign exchange loss by
Baht 145 million while there was long-term loans repayment to financial institutions by Baht 3,550
million.
The details of long-terms borrowing are shown below;
(Unit: Million Baht)
Jun 30, 2020 Dec 31, 2019 Change
Thai Baht Bonds 6,889 6,888 1
USD Loan 5,249 6,021 (772)
Thai Baht Loan 42,590 39,162 3,428
Total 54,728 52,071 2,657
less current portion of long-terms borrowing
(15,309) (8,190) (7,119)
Net Outstanding Borrowing 39,419 43,881 (4,462)
Other non-current liabilities: were up by Baht 431 million.This resulted from an increase in
financial derivatives liabilities by Baht 201 million and lease liabilities by Baht 129 million following the
3,747 6,444 6,943 7,369
18,087
926 -
1,235 1,235
1,852
-
6,889 - -
-
4,673
13,333
8,178 8,604
19,940
2020 2021 2022 2023 >2023
Maturity of long-term borrowing
THB Bond
USD Loan
THB Loan
(Unit : Million Baht)
Note : Long-term borrowing as of 30 June 2020
-
Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
24
Executive Summary Performance Financial Positions
recording of leasing transactions in accordance with Thai Financial Reporting Standard No.16 Leases which
effective on 1 January 2020.
Shareholders’ Equity
As of 30 June 2020, shareholders’ equity was amounted to Baht 72,582 million, which was
lower than what was stated as at 31 December 2019 by Baht 10,820 million. This was mainly from net
loss amounted to Baht 9,316 million, dividend paid by Baht 2,041 million. However, there was retained
earnings adjustment by Baht 546 million owing to the recognition of unrealized gain from derivatives
contracts, in accordance with Thai Financial Reporting Standards No.9 Financial Instruments.
Statement of Cash Flow
(Unit : Million Baht)
Jan.-Jun. 2020 Jan.-Jun. 2019
1 EBITDA (4,932) 4,659
2 Change in operating assets and liabilities 3,631 619
3 Net cash flows from (used in) operating activities (1,301) 5,278
4 Net cash flows from (used in) investing activities (2,435) (2,831)
5 Net cash flows from (used in) financing activities 4,364 (2,870)
6 Net increase (decrease) 628 (423)
7 Cash at beginning 3,036 2,338
8 Cash at ending 3,664 1,915
As of 30 June 2020, the ending cash was Baht 3,664 million. Net cash flow increased by Baht
628 million, which was mainly contributed from the following items;
Net cash outflow from operating activities of Baht 1,301 million. The cash outflow from
loss on EBITDA of Baht 4,932 million and a decrease in account payables of Baht 7,458 million.
Nevertheless, the cash inflow from a decrease in inventory of Baht 6,714 million, a decrease in account
receivable of Baht 3,306 million and a decrease in refundable value-added-tax of Baht 1,094 million.
Net cash outflow from investing activities of Baht 2,435 million, mainly from disbursement
for projects such as Floating Solar project, RDCC Catalyst Cooler project amounting to Baht 2,071
million and payment for increasing capital of ordinary shares in IRPC Clean Power Co.,Ltd. by Baht 137
million.
Net cash inflow from financing activities of Baht 4,364 million, cash inflow were mainly
from long-term loans drawdown of Baht 6,050 million and short-term loans drawdown of Baht 5,300
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
25
Executive Summary Performance Financial Positions
million. Nevertheless, there were cash outflow included long-term loans repayment of Baht 3,550
million, dividend payment of Baht 2,041 million, interest payment of Baht 953 million and loss from
financial derivatives contracts of Baht 354 million.
Key Financial Ratios
Unit Quarter
2Q20 2Q19 1Q20
Profitability Ratios
EBITDA Margin % 4.24 3.62 (13.16)
Net Profit Margin % (1.16) 0.80 (18.21)
Earnings per share Baht/share (0.02) 0.02 (0.44)
Return on Equity* % (23.93) 1.52 (45.63)
Liquidity Ratios
Current Ratio time 0.66 0.91 0.77
Quick Ratio time 0.21 0.27 0.35
Financial Policy Ratios
Net IBD to Equity time 0.88 0.63 0.74
Net IBD to EBITDA* time (6.05) 5.88 (2.13)
Note: *Annualized
Liquidity and Capital structure
In 2Q20, current ratio was 0.66 times, decreasing by 0.11 times compared with 1Q20 of 0.77
times. This was due to a decrease in cash and account receivable. The Company has sufficient liquidity
for its operations.
At the end of 2Q20, net interest bearing debt to equity ratio was 0.88 times, increasing by 0.14
times from 1Q20 of 0.74 times. This was mainly due to a decrease in cash. The Company could complete
all payments on due date and comply with all of the Financial Covenants.
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Management Discussion and Analysis and Operating Results for the Second Quarter of 2020 and the First Six Months of 2020
26
Executive Summary Performance Financial Positions
Note:
Account receivable turnover = Sales / Average account receivable before doubtful account
Collection period = 360 / Account receivable turnover
Inventory turnover = Cost of Goods Sold / Average Inventory
Inventory period = 360 / Inventory turnover
Account payable turnover = Cost of sales / Average account payable
Payment period = 360 / Account payable turnover
EBITDA margin = EBITDA / Revenue from Sales
Profit margin = Net Profit / Revenue from Sales
Return on equity = Net Profit / Average shareholders’ equity
Current ratio = Current assets / Current liabilities
Quick ratio = (Cash + Marketable Securities + Account Receivable) / Current Liabilities
Net Interest bearing Debt to Equity = (Interest bearing Debt – Cash) / Total Equity
Net Interest bearing Debt to EBITDA = (Interest bearing Debt – Cash) / EBITDA