Results

Bangchak Corporation pcl

11/08/2018 | Press release | Distributed by Public on 11/08/2018 09:59

Management Discussion and Analysis Quarter 3 Ending 30 Sep 2018

  • 03 Executive Summary

  • 05 Statement of Income

    Management Discussion & Analysis of Business Operation

    Table of

    Content

  • 07 Business Performance

    07 Refinery & Trading Business Group

    12 Marketing Business Group

    13 Power Plant Business Group

    16 Bio-Based Products Business Group

    18 Natural Resources Business Group

  • 20 Statement of Financial Position

  • 22 Cash Flows Statement

  • 24 Financial Ratios

  • 26 Environmental Management Accounting

Executive Summary

Summary of the Company and its subsidiaries' operating results for the quarter ended September 30th, 2018

Q3/2017

Q2/2018

Q3/2018

Unit: THB Million

YoYQoQ

(Restate)

Total Revenue

39,009

45,558

53,461

37%

17%

Accounting EBITDA

3,216

3,366

4,160

29%

24%

Refinery and Trading Business Group 1/

2,198

1,929

2,142

-3%

11%

Marketing Business Group 2/

474

509

468

-1%

-8%

Power Plant Business Group 3/

417

793

1,542

270%

95%

Bio-Based Product Business Group 4/

159

171

149

-6%

-13%

Natural Resource Business Group 5/

44

36

(81)

-284% -321%

Others 6/

(76)

(72)

(61)

Profit attributable to owners of the Company

1,060

1,007

1,856

75%

84%

Basic earnings per share (Baht)

0.77

0.73

1.35

9M2017

9M2018

YoY

(Restate)

125,832

143,244

14%

9,805

10,518

7%

5,340

5,349

0.2%

1,999

1,712

-14%

1,912

2,999

57%

397

624

57%

270

24

-91%

(113)

(190)

4,137

4,009

-3%

3.00

2.91

Note: 1/ EBITDA from Refinery Business of the Company, BCP Trading Pte. Ltd. and share of profit associated companies

2/ EBITDA from Marketing Business of the Company, Bangchak Green Net Co.,Ltd., Bangchak Retail Co., Ltd., and share of profit associated companies

3/ EBITDA from Power Plant Business of BCPG Plc., its subsidiaries, and share of profit from associated companies

4/ EBITDA from BBGI Plc., its subsidiaries, and share of profit from associated companies

5/ EBITDA from Natural Resources business of Nido Petroleum Limited, BCP Energy International Pte. Ltd. and BCP Innovation Pte. Ltd.

6/ Others items and elimination

As for the performance of the first 9 months of 2018, Bangchak Corporation Plc. ("The Company") and its subsidiaries recorded revenue from sale of goods and rendering of services THB 143,244 million (+14% YoY), with net profit of THB 4,710 million, attributable to the owners of the company THB 4,009 million (-3% YoY), or earning per shares of THB 2.91

As for Q3/2018 revenue from sale of goods and rendering of services was recorded THB 53,461 million (+37%

YoY, +17% QoQ), with net profit of THB 2,216 million, attributable to the owners of the company THB 1,856 million (+75% YoY, +84% QoQ), or earning per shares of THB 1. 35. The performance vastly improved mostly from the refinery business recorded high utilization rate and better GRM, as well as the power plant business realizing profit from the sales of their solar power plants assets into infrastructure fund. The performance for each business group are as follow:

The Refinery and Trading Business Group recorded an average production rate of 118.82 KBD (99% utilization rate) which is considered as a record all-time high for average production rate in any quarter in the history of the Bangchak refinery. Total GRM increased by 5% YoY and 17% QoQ from the improved Market GRM that rose due to significant increase of production after the turnaround maintenance ( TAM) , combined with crude cost that benefited from narrower DTD/DB spread. Within this quarter there was an inventory gain of THB 241 million from the increase in crude price, but there was a loss from the crude and product oil price hedging contract in the amount of THB 78 million.

As for BCP Trading Pte. Ltd., the company recorded more revenue from the amount of trade transaction and the significant increase in oil price.

Marketing Business Group sales volume slightly increased YoY, while was at the similar level QoQ. Retail sales declined due to its low season.The company still retained its second highest rank in retail market, with a growing market share. The cumulative market share from January to August 2018 was 15. 8% . The number of service station location was 1,154 stations at the end of September 2018. The company implemented various marketing programs to push thruput per station; within this quarter the new version of the membership card, "Bangchak Green Miles" debuted, and Bangchak Mobile Application which provide customers with convenience and swiftness was introduced. However, net marketing margin declined from the continuous increment in global crude price, leaving the retail price unable to keep up with the cost, in addition with government policy to peg the price of Diesel.

Power Plant Business Group recorded total electricity sales at a similar level from the previous year, but decreased from the previous quarter due to transitions into the rainy season, even with the commencement of commercial operation of the government solar project in collaboration with the war veteran organization (PPA 8.94 MW). The average irradiation hours of projects in both Thailand and Japan lowered due to the higher amount of clouds and rainfall in most projects' areas. Within this quarter, share of profit from associated companies was recorded at THB 114 million, these can be attributed into share of profit from the wind power plant business in the Philippines in the amount of THB 21 million, and share of profit from the geothermal power plant in the amount of THB 93 million which rose due to adjustment of value to coincide with fair value assessment.

Bio-based product business Group the Biodiesel business has shown improvements in performance compared to the same period of the previous year; sales volume of B100 product rose slightly, its mixture in Diesel fuel remains at 7% the entire quarter, Gross profit improved from the cost of crude palm oil that was used in manufacturing lowered at a faster pace than the price of B100 product. However, when compared to Q2/2018, there was a slight dip in sales, combined with repercussions from the movement of crude palm oil that was consistently in the low level, resulted in a reduced gross profit. As for the Ethanol Business, performance improved YoY from the amalgamation, when compared QoQ ethanol sales volume rose, as Bangchak Bioethanol (chachoengsao) Co., Ltd. resumed its production after TAM, and KSL Green Innovatioin Plc. recorded an increase in total sales. However, ethanol business gross profit was affected by the raw material cost, such as the rising molasses price and higher level of cassava price.

Natural Resources business Group Exploration and Production business recorded lower revenue, as sales volume was reduced to realize only Nido & Martinloc, after the company group had divested shares in Nido Production (Galoc) Pty. Ltd. which holds to 55.8% stake in the Galoc oil field. The transaction have been completed in Q3/2018, realizing profit from the provision of working capital settlement in the amount of USD 1. 3 million or approximately THB 42 million coming in this quarter.

Other important events in this quarter:

  • The company has issued a senior unsecured debentures to institutional investors or high net worth investors in the amount of THB 4,000 million with coupon rate of 2.13 to 3.42% and maturity of 2 to 7 years.

  • BCPG Plc. sold assets from Nikaho and Nagi project (combined installed capacity of 27.6 MW) to an infrastructure fund in Japan, completed on September 28th, 2018, profit from the sales was THB 795 million recorded as other income, and subject to corporate income tax expense in the amount of THB 136 million.

Statement of Income

Q3/2017

Consolidated Statement of Income

Q2/2018

Q3/2018

YoYQoQ

(Restate)

Revenue from sale of goods and rendering of services

39,009

45,558

53,461

37%

17%

Cost of sale of goods and rendering of services

(35,450) (41,699) (49,640)

40%

19%

Gross Profit

3,559

3,858

3,821

7%

-1%

Interest income and dividend income

45

12

11

-76%

-8%

Other income

238

181

891

274%

392%

Selling and administrative expenses

(1,773)

(1,785)

(1,782)

1%

-0.2%

Exploration and evaluation expense

(12)

(13)

(8)

-33%

-38%

Gain (loss) from crude and product oil price hedging contract

86

(136) (95)

Gain (loss) from foreign currency forward contracts

(259)

95 (28)

N/AN/A

N/A

N/A

Gain (loss) on foreign exchange

299

(39)

230

N/AN/A

(loss) from impairment of assets

(1,358)

(412)

(14)

N/AN/A

Share of profit of associate and JV

56

23

118

111%

413%

Profit before finance costs and income tax expense

880

1,784

3,143

257%

76%

Finance costs

(379)

(374)

(401)

6%

7%

Profit/(loss) before income tax expense

501

1,410

2,742

447%

94%

Income tax (expense) credit

630

(253)

(526)

183%

108%

Profit for the period

1,131

1,157

2,216

96%

92%

Owners of the Company

1,060

1,007

1,856

75%

84%

Non-controlling interests

70

150

359

413%

139%

Earnings per share (Baht per Share)

0.77

0.73

1.35

75%

85%

9M2017

9M2018

YoY

(Restate)

125,832

143,244

14%

(115,884) (132,237)

14%

9,948

11,007

11%

144

39

-73%

644

1,131

76%

(4,837)

(5,228)

8%

(37)

(31)

-16%

320

(304)

(242)

67

N/A

N/A

663

363

N/A

(1,441)

(425)

N/A

128

233

82%

5,290

6,852

30%

(1,073)

(1,140)

6%

4,217

5,712

35%

257

(1,002)

490%

4,474

4,710

5%

4,137

4,009

-3%

337

701

108%

3.00

2.91

-3%

Note: Restatement of financial statement 2018 due to the changes in the fair value of the interest acquired in Geothermal Power Plant project in Indonesia.

In Q3/2018, the company and its subsidiaries recorded a Net Profit of THB 2,216 million, compared to Q3/2017 which increased by THB 1,085 million (+96% YoY) , and when compared to Q2/2018, increased by THB 1,059 million (+92% QoQ) mainly due to the following reasons:

1. Total revenue from sales and rendering of services was THB 53,461 million, an increment of 37% and 17%

QoQ, primarily from revenue related to oil petroleum businesses following higher sales volume, as well as the increased selling price per unit. Moreover, BCP Trading's sales volume rose, and there was an additional revenue realization from the Ethanol business after the business amalgamation in Q4/2017.