PKN ORLEN Capital Group

PKN ORLEN Capital Group
February 2013
1
Agenda
PKN ORLEN – history and growth strategy
Refining / Petrochemical / Retail – core business
Upstream / Energy – growth segments
Summary
2
From domestic leader to international player
Domestic Business to 2002
„Internationalization” 2002-2005
Estonia
Estonia
Estonia
Latvia
Latvia
Latvia
Poland
PKN was created as a merger of
Petrochemia Plock (Polish largest
refinery) with CPN (Polish largest
retailer).
Poland
Germany
2002
Expansion into German retail market.
Joint venture with Basell Orlen
Polyolefins.
2000
Second public offering on WSE and
LSE increasing free float up to 72%.
Czech Republic
2006 +
Acquisition of Lithuanian refinery - Mazeikiu
Nafta (from 2009 ORLEN Lietuva).
Implementation of segmental management.
Implementation of two-tier branding
strategy in retail in Poland and the Czech
Republic.
IPO on Warsaw Stock Exchange and
London Stock Exchange - 30% equity.
Introduction of the new brand ORLEN.
Poland
Germany
Czech Republic
Czech Republic
1999
Lithuania
Lithuania
Lithuania
Germany
Regional Business 2006+
2005
Acquisition of majority stake in Unipetrol
(Czech holding).
Implemantaion of PKN ORLEN Retail
Sales Development Plan for Poland.
CAPEX, OPEX, working capital and
headcount optimization.
Launch of petrochemical PX/PTA complex.
Strategy of ORLEN Capital Group for 20132017.
3
Leading refining & petchem company operating in the biggest market in CEE
PKN ORLEN – POLISH KEY PLAYER IN CEE
LEADING DOWNSTREAM COMPANY
Strategic location: on key pipeline network with an access to the
crude oil sea terminals in Gdańsk (Poland) and Butinge (Lithuania).
7 refineries: Poland (the largest and highly advanced in Plock),
Lithuania and the Czech Republic.
Processing REBCO crude oil (the most economic), but capable to
process any kind of crude oil in all refineries.
Petrochemical assets fully integrated with the refining.
Ca. 2 700 filling stations: Poland, the Czech Republic, Germany
and Lithuania.
SHAREHOLDERS STRUCTURE
KEY DATA
State Treasury
27,52%
OPERATIONAL (mt/y):
Throughput capacity
Petrochemical production
FINANCIAL (PLN bn ):
Free float
72,48%
ca. 31.0
ca. 6.2
2010
2011
2012
83.5
107.0
120.1
EBITDA
5.5
4.4
4.3
EBIT
3.1
2.1
2.0
Net profit
2.5
2.0
2.2
Revenues
4
PKN ORLEN vision
Upstream
Energy
Downstream
PKN ORLEN
in 2008…
… 2012…
… 2017…
… and in 2022
5
Pillars of PKN ORLEN strategy 2013 - 2017
Shareholders
Value creation
up to 5%
over 40%
Systematic dividend yield increase
Cash flow from operations increase*
Financial standing
below 30%
Maintaining gearing at safe level
ORLEN. Fuelling the future.
* Increase in average cash flow from operations in 2013-2017 comparing to 2008-2012
6
Agenda
PKN ORLEN – history and growth strategy
Refining / Petrochemical / Retail – core business
Upstream / Energy – growth segments
Summary
7
Refining
HIGH-CLASS ASSETS
COMPETITIVE ADVANTAGES
Refinery in Plock classified as a super-site (acc. to
WoodMackenzie) considering the volume and depth of processing,
integration with petrochemical operations.
Modernized refining assets in Lithuania and
in Litvinov.
Prepared for regulatory and market trends changes thanks to
investment projects execution.
KEY DATA
UTILISATION RATIO %
Processing capacity: 31.0 mt/y (Plock refinery – 16.3 mt/y, ORLEN
Lietuva – 10.2 mt/y, Unipetrol – 4.5 mt/y).
88
89
90
2010
2011
2012
Market share*: gasoline (PL: 60%, CZ: 38%, LT: 92%) ; diesel (PL:
55%, CZ: 31%, LT: 95%).
Flexibility to process many kinds of crude oil. Ca. 90% of processed
crude oil in 2011 was REBCO.
Fuel production in line with 2009 Euro standards in all refineries.
* Data as of 31.12.2012
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Petrochemical
INTEGRATED ASSETS
COMPETITIVE ADVANTAGES
The largest petrochemical company in Central Europe*.
New units, including PX/ PTA, polyolefins, butadiene.
Integration with refinery giving a good position on the cost curve.
ANWIL – CHEMICAL COMPANY
KEY DATA
PKN ORLEN production capacity: 6.2 mt/y.
Depending on the product we have 40% up to 100% market share in
domestic consumption.
Polyolefins sales within Basell network.
Launch in 2Q11 the most advanced in Europe petrochemical complex
PX/PTA with 600 kt/y of PTA production capacity.
Fertilizers and PVC producer.
PKN ORLEN S.A. has 100% stake in Anwil S.A.
Limited synergies with refining activity.
Analysis of potential business lines split.
* Poland, Lithuania, the Czech Republic
9
Retail
ASSETS
COMPETITIVE ADVANTAGES
The largest retail network ~2 700 of fuel stations in Central Europe.
Leader on the retail market in Poland, strong position in the Czech
Republic and regionally in Germany.
ORLEN brand – strong, recognizable and the most valuable in Poland
(PLN 3,8 bn).
Successful rebranding of fuel stations strengthening increase of
market share.
Implementation of modern concept of Stop Cafe and Bistro Cafe.
Confirmed by consumer research the highest quality of service
among fuel stations customers in Poland in 2012.
EBIT (PLN m)
KEY DATA
No of filling stations*: Poland - 1767, Germany - 559, the Czech
Republic - 338, Lithuania - 35.
Market share*: Poland - 34%, the Czech Republic - 14%, Lithuania 4%, Germany - 6%.The largest group of loyal customers in Poland 2,5 m of active customers VITAY and FLOTA programs.
Market share (%)
+ 52%
825
647
426
4
2010
2011
2012
Sales volumes (kt)
Germany
Czech Rep.
Lithuania
Poland
5
4
5
6
4
14
14
14
+ 2%
* Data as of 31.12.2012
7 025
7 345
7 467
31
32
34
2010
2011
2012
2010
2011
2012
10
Agenda
PKN ORLEN – history and growth strategy
Refining / Petrochemical / Retail – core business
Upstream / Energy – growth segments
Summary
11
„Multi-utility” is a foundation for further PKN ORLEN value growth
STRATEGIC RATIONALES
PKN ORLEN faces serious barriers for the
further dynamic growth in the oil sector...
The dynamic growth through acquisitions and
geographic expansion in 2002-2006
CONCEPT OF „MULTI- UTILITY”
New
segments
Focus on organic development and efficiency
improvement
Higher profitability
Stable cash flows
Operational synergies and diversification of activities
PKN ORLEN’s security
Electric power
generation
Refining
Strong competitive pressure and high volatility in
margins
…hence the perceived growth opportunities
in the new areas of growth…
Upstream (E&P)
Current PKN
ORLEN’s
areas of
activities
Petrochemicals
Logistics
Sales of fuel and
petrochemicals
Integrated fuel - energy
company
12
UPSTREAM
Conventional and unconventional projects
ASSETS
COMPETITIVE ADVANTAGES
Organic projects in exploration phase.
Stable geopolitical regions: focus on Central Europe and
optionally North America.
Potential strategic partnerships.
Access to production assets through optional M&A projects.
Advanced unconventional gas project on ‘Lublin Shale’
concessions.
KEY DATA
10 unconventional gas concessions on the area of ca. 9 th km2
5 wells finished (3 vertical and 2 horizontal)
In 2013, we plan hydraulic fracturing treatment of the horizontal
section and production test as well as further seismic, drilling and
analytical works.
10
3 conventional projects (crude oil and gas) in Poland and Latvia
(off-shore).
9
1 appraisal well is finished (Polish Lowland)
In 2013, we plan to drill 3 vertical wells and conduct additional
analysis, including acquisition and processing of seismic data
Data as of 22.02.2013
13
ENERGY
New projects and improvement of efficiency of held assets
ASSETS
COMPETITIVE ADVANTAGES
Power plant in Plock (345 MW, 1970 MWt) – the biggest industrial
block in Poland.
Heating oil, refining gas and natural gas - fuels used for energy
and heat production in Plock and Wloclawek plants.
PKN ORLEN the biggest gas consumer in Poland and active
participant for natural gas market liberalization.
Favorable perspectives for energy market eg. increase of
electricity demand not addressed by new projects, increasing
supply-demand gap resulting from closures of old units and lowemission of gas.
KEY DATA
Building a gas fired power plant 463MWe in Wloclawek
Start-up in 1Q16. CAPEX PLN 1,4 bn.
Plans for blocks closures
# block as a % of total, 2012-2040
78%
Energy produced in cogeneration with steam also for Anwil Group
and PKN ORLEN needs.
50% of energy will be sold on the market.
Concept of building CCGT plant in Plock
80
43%
24%
29%
25
30
2017
2025
44
Concept analysis of the selected option was finished.
Feasibility study of the selected option (450-600 MWe) completed.
2030
2040
Data as of 31.12.2012
14
Agenda
PKN ORLEN – history and growth strategy
Refining / Petrochemical / Retail – core business
Upstream / Energy – growth segments
Summary
15
PKN ORLEN competitive advantages
Refining
Integrated, high-class assets and strong position on competitive
market
Petchem
New units and attractive portfolio of products offered on
developing markets
Retail
Modern and the largest sales network in the region with
strong and recognizable brand
Energy
Best locations and synergies of gas-fired power generation
with other segments
Upstream
Perspective licenses and advanced unconventional gas
projects
Further PKN ORLEN growth
16
Mission and Corporate Values
„We discover and process natural resources to fuel the
future”
RESP
ONSIBILITY
We respect our customers, shareholders, the natural environment and local communities
P
ROGRESS
We explore new possibilities
L
PEOP E
We are characterized by our know-how, teamwork and integrity
ENERGY
We are enthusiastic about what we do
DEPE
NDABILITY
You can rely on us
17
Thank You for Your attention
For more information on PKN ORLEN, please contact
Investor Relations Department:
telephone: + 48 24 256 81 80
fax:
+ 48 24 367 77 11
e-mail:
[email protected]
www.orlen.pl
18
Agenda
Supporting slides
19
Supply Routes Diversification
Sea Oil Terminals in Gdansk and Butinge Guarantee Alternative Supply Routes
Sea terminal [capacity]
Oil pipeline [capacity]
Projected Oil pipeline
(70) Primorsk
[Ca
60
]
(30) Ust-Luga
Yaroslavi
[Ca 78]
(18) Ventspils
Butinge
(14)
[Ca 30]
[Ca 45]
Novopolotsk
(8.3; 7.7)
[C
a2
5]
0]
a5
Leuna
(11.0; 7.1)
[Ca 22]
Rostock
Holborn
Gdansk
(3.8; 6.1) Schwedt
(10.7; 10.2) (10.5; 10.0)
Harburg
(4.7; 9.6)
[Ca 27]
[Ca 18]
Mazeikiai
(10.2; 10.3)
DRUZHBA
[Ca
34]
[C
Naftoport
(30)
BPS2
DRUZHBA
Plock
(16.3; 9.5)
Mozyr
(15.7; 4.6)
[Ca 55]
]
[Ca 80
]
Litvinov (5.5, 7.0)
34
a
TrzebiniaJedlicze
[C
Kralupy
Drogobich
(0,1)
Brody
(0,5)
(3.4; 8.1)
Ingolstadt IKL
(3.8; 3.0)
[C a
[Ca 10]
22]
(5.2; 7.5)
Bratislava
DRUZHBA
[Ca
9]
[Ca
20]
Burghausen
(6.0;
12.3)
Bayernoil
(3.5; 7.3)
[Ca 9]
(12.8; 8.0)
[Ca 3,5] Tiszaojvaro
Schwechat
s
Duna
(10.2; 6.2)
Petrotel
Rafo
(8.1, 10.6) (2.6; 7.6)
ADRIA
(3.4; 9.8)
Yuzhniy
(ex 4)
Petrobrazi
Odessa
Triest Rijeka
Novi Sad
(3.4; 7.3)
ADRIA
(4.4; 5.7)
(3.8; 3.5)
Arpechim
Sisak
(4.0; 4.6)
(ex 12)
(3.6; 7.3)
(3.9; 4.1)
Pancevo
Petromidia
(4.8; 4.9)
(5.1; 7.5)
[Ca 120]
Kremenchug
(17.5; 3.5)
[ Ca 29]
[ Ca 24]
Refinery of PKN ORLEN Group
Refinery (capacity m tonnes p.a.;
Nelson complexity index)
Kirishi
Kherson
(6.7; 3.1)
Novorossiys
k
(ex 45)
Neftochim
(5.6; 5.8)
Izmit
(11.5; 6.2)
Thessaloniki
(3.2; 5.9)
Elefsis
(4.9; 1.0)
Aspropyrgos
(6.6; 8.9)
Corinth
(4.9; 12.5)
Lisichansk
(8.5; 8.2)
Izmir
(10.0; 6.4)
Kirikkale
(5.0; 5.4)
Batman
(1.1; 1.9)
Source: Oil & Gas Journal, PKN Orlen own calculations, Concawe,Reuters, WMRC, EIA, NEFTE Compass, Transneft.ru
20
ORLEN Lietuva - maximizing the possessed potential
ASSETS
Sea terminal
Ventspils
(14
,3 m
(20,0 mt/y)
Latvia
t/y)
Pump station
Sea terminal
Butinge
(14,0 mt/y)
(14
,,0
m
t/y
)
Illukste
(16,4 mt/y)
Joniskis
Orlen Lietuva
Refinery
Mažeikių
Nafta
Biržai
Terminal
Polock
Klaipeda
Klaipeda
Storage depot
Crude pipeline
Products pipeline
(9,0 mt/y)
Lithuania
Rail transport
KEY FACTS
ORLEN Lietuva manages ca. 500 km of pipelines in the territory of Lithuania (both crude oil and product pipelines).
Crude oil deliveries via sea from Primorsk to Butinge.
Products supply within Lithuania is managed by use of railway or tankers.
The potential product pipeline to Klaipeda would improve logistics of final products.
Long-term contract until the end of 2024 for reloading of petroleum products with Klaipedos Nafta was signed in 2011.
Costs optimization and improvement of operating parameters.
21
Unipetrol – continuation of operating efficiency improvement
ASSETS
ethylene
Litvínov
5.5 mt/y
IKL
Pipeline
Kralupy
Pardubice
3.2 mt/y
1.0 mt/y
10 mt/y
Druzhba
pipeline
KEY FACTS
9 mt/y
Mero Crude oil pipelines
CEPRO production pipelines
CEPRO depots
Ongoing strict cost control including staff reduction.
Growing market share in the Czech retail from below 10% in 2005 to over 14% in 2012.
Negative free cash flow due to weaker profitability caused by unfavourable macro environment and higher capital
expenditures dedicated mainly to maintenance as well as development projects during the cyclical turnaround in 2011.
22
Relatively low rate of energy consumption per capita and need for new power
plants indicates high potential for growth in the energy generation sector
ELECTRICITY CONSUMPTION IN EUROPE, 2000-2010
Developed
countries 1
PKN ORLEN’s
markets 2
FORECAST FOR SUPPLY AND DEMAND FOR PEAK
POWER IN POLAND, 2005-2020, GW
Rest
Demand
Supply
38
36
34
32
30
28
Electricity consumption
CAGR 2000-2010, %
3,2
1,9
1,1
Electricity consumption
per capita, 2010, th. kWh
6,5
3,5
2,5
26
24
2005
2010
2015
2020
Currently energy consumption per capita on PKN ORLEN’s market is by ~ 40% lower than in developed countries 1. Forecasts indicate 2-3% increase in
the electricity demand in Poland until 2030 p.a.
The profitability of the sector is increasing in the result of the expected imbalance between supply and demand
44% of existing power plants in Poland is over 30 years. Old units of 11-15 GW (~30-40% existing capacity) have been planned to be closed. Power
capacities increase planned until 2020 of ~20 GW (includes both modernization of existing and construction of new plants). Top Polish energy companies
(i.e. PGE, Tauron, Enea, Energa) have announced plans of extensive capital investments into increase of capacities, summing up to ~90 bn PLN
Despite the current economic slowdown, an increase in the wholesale electricity prices is expected in the coming years
1)
Developed countries comprise: EU-15, Norway, Switzerland and Slovenia. 2) PKN Orlen’s markets comprise: Poland, Czech Republic, Baltics
Source: EIA, IMF, PWC, PKN ORLEN analysis
23
New power plants are mostly required in the northern Poland
EXISTING AND PLANNED GENERATION CAPACITY UNTIL 2015
Cable from
Sweden
Brown coal power stations
Power Plant Gdańsk (Lotos, PGNiG, Energa)
(200 MW)
Hard coal power stations
Planned capacity
El. Szczecin
(800-1000 MW)
Planned LNG terminal
El. Opalenie
(1600 MW)
PGE (800 MW)
Dolna Odra
PGE ZEDO
Energa
Ostroleka
Ostrołęka
Włocławek
PAK
PAK
PGE
Turów
(500 MW)
PGE Turów
Concentration of
generation sources
Jamal gas pipeline
PKN ORLEN
Płock refinery
PGE
(833 MW)
PGE Belchatów
Bełchatów
BOT
Energa
(1000 MW)
Enea
Kozienice
KozieniceEnea
(2000 MW)
Electrabel
Polaniec
Połaniec
Northern Poland has a
historical power deficit.
PGE
(1600 MW)
Tauron Tauron
Tauron Wola
(2000 MW)
PKE PKE
(400 MW)
Blachownia
Blachownia Łagisza
Tauron
Lagisza
PGEOpole
Siersza
Siersza
Halemba
Halemba Jaworzno
(920 MW)
Stalowa Wola
Jaworzno
Łaziska
Laziska
EdFRybnik
/EnBW
CEZ Skawina
Rybnik
Rybnik
CEZ
Skawina
(900-1000 MW)
(400 MW)
RWE
(800 MW)
PGE Opole
The current production capacity
is concentrated mainly in the
south of the country.
Some of the planned
greenfield capacities are
located north, near Anwil plant
in Włocławek.
24
Dividend policy
Focus on creating solid financial standing forced no
dividend payout in 2008 – 2012 …
… but in coming years cash flow from operations
will secure cash for both growth and for Shareholders …
Gearing decrease
dividend yield
increase up to 5%
Refinancing
Rating improvement
2008 - 2012
2013 - 2017
… based on clear dividend policy.
Gradual increase in dividend payout up to 5% dividend
yield
With reference to average share price from previous year
We assume dividend payouts at
levels recognized as good market
practice
Taking into account strategic targets achievement,
financial standing and macro environment
25
Effective execution of two-tier branding strategy as a response to market
polarization
PKN ORLEN branding strategy
PREMIUM
Poland
ECONOMICAL
Successful rebranding of heritage network of
mixed brands into premium ORLEN and
economical BLISKA networks.
Market research is to help to determine the final
branding strategy.
Czech Republic
Building a solid foundation for the future
development of high quality ORLEN network.
Lithuania
Focus on economical STAR network with
competitive prices and superior customer service.
Germany
26
Disclaimer
This presentation (“Presentation”) has been prepared by PKN ORLEN S.A. (“PKN ORLEN” or “Company”). Neither the Presentation nor any copy hereof may be copied,
distributed or delivered directly or indirectly to any person for any purpose without PKN ORLEN’s knowledge and consent. Copying, mailing, distribution or delivery of this
Presentation to any person in some jurisdictions may be subject to certain legal restrictions, and persons who may or have received this Presentation should familiarize
themselves with any such restrictions and abide by them. Failure to observe such restrictions may be deemed an infringement of applicable laws.
This Presentation contains neither a complete nor a comprehensive financial or commercial analysis of PKN ORLEN and of the PKN ORLEN Group, nor does it present its
position or prospects in a complete or comprehensive manner. PKN ORLEN has prepared the Presentation with due care, however certain inconsistencies or omissions might
have appeared in it. Therefore it is recommended that any person who intends to undertake any investment decision regarding any security issued by PKN ORLEN or its
subsidiaries shall only rely on information released as an official communication by PKN ORLEN in accordance with the legal and regulatory provisions that are binding for PKN
ORLEN.
The Presentation, as well as the attached slides and descriptions thereof may and do contain forward-looking statements. However, such statements must not be understood as
PKN ORLEN’s assurances or projections concerning future expected results of PKN ORLEN or companies of the PKN ORLEN Group. The Presentation is not and shall not be
understand as a forecast of future results of PKN ORLEN as well as of the PKN ORLEN Group.
It should be also noted that forward-looking statements, including statements relating to expectations regarding the future financial results give no guarantee or assurance that
such results will be achieved. The Management Board’s expectations are based on present knowledge, awareness and/or views of PKN ORLEN’s Management Board’s
members and are dependent on a number of factors, which may cause that the actual results that will be achieved by PKN ORLEN may differ materially from those discussed in
the document. Many such factors are beyond the present knowledge, awareness and/or control of the Company, or cannot be predicted by it.
No warranties or representations can be made as to the comprehensiveness or reliability of the information contained in this Presentation. Neither PKN ORLEN nor its directors,
managers, advisers or representatives of such persons shall bear any liability that might arise in connection with any use of this Presentation. Furthermore, no information
contained herein constitutes an obligation or representation of PKN ORLEN, its managers or directors, its Shareholders, subsidiary undertakings, advisers or representatives of
such persons.
This Presentation was prepared for information purposes only and is neither a purchase or sale offer, nor a solicitation of an offer to purchase or sell any securities or financial
instruments or an invitation to participate in any commercial venture. This Presentation is neither an offer nor an invitation to purchase or subscribe for any securities in any
jurisdiction and no statements contained herein may serve as a basis for any agreement, commitment or investment decision, or may be relied upon in connection with any
agreement, commitment or investment decision.
27
For more information on PKN ORLEN, please contact
Investor Relations Department:
telephone: + 48 24 256 81 80
fax
+ 48 24 367 77 11
e-mail: [email protected]
www.orlen.pl
28