IRPC Public : Management Discussion and Analysis Quarter 3 Ending 30 Sep 2020

IRPC Public Company Limited

Management Discussion and Analysis

Operating Results for the Third Quarter and Nine-Month period of 2020

Executive Summary

Performance

Financial Positions

Management Discussion and Analysis (MD&A) IRPC Public Company Limited and its subsidiaries

Operating Results for the Third Quarter and Nine-Month period of 2020 Executive Summary

	Unit				Quarter			Change			9 months			YoY
			3Q20		3Q19	2Q20		YoY	QoQ			2020	2019
Crude Intake	Million bbl	17.95	17.73	17.18		1%	4%			52.24	54.48		(4%)
Sales[1]	Million Baht	43,330	60,127	35,529		(28%)	22%			127,770	183,557		(30%)
Net Sales [2]	Million Baht	37,671	54,264	30,370		(31%)	24%			111,658	166,240		(33%)

Market GIM	Million Baht
	USD/bbl [3]
Accounting GIM	Million Baht
	USD/bbl
EBITDA	Million Baht
Net Profit	Million Baht

4,937	5,563	4,669	(11%)	6%	13,270	15,950	(17%)
8.74	10.15	8.46	(14%)	3%	8.03	9.30	(14%)
8,707	4,230	4,758	106%	83%	10,318	15,828	(35%)
15.41	7.72	8.63	100%	79%	6.25	9.23	(32%)
5,843	738	1,505	n.a.	288%	911	5,397	(83%)
1,556	(1,321)	(411)	218%	479%	(7,760)	(661)	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 third quarter of 2020 (3Q20) compared to those in the

second quarter of 2020 (2Q20): In 3Q20, the Company's net sales was Baht 37,671 million, increasing 24% from 2Q20, QoQ, including a 18% increase in average selling price following crude oil price and a 6% increase in sales volume. The average crude intake was 195,000 barrels per day, up by 4%.

Net Sales

								Unit: MB
		3Q20	24%				2Q20
29%					35%
37,671						30,370
69%			62%
2%			3%
		Petroleum		Petrochemical				Power & Utilities

The Market Gross Integrated Margin (Market GIM) was Baht 4,937 million (USD 8.74 per barrel), rose by 6% due mainly to higher petrochemical products spread particularly in Styrenics group such as ABS which driven by a surge in Chinese demand. While crude premium had risen and most

2	Management Discussion and Analysis and Operating Results for the Third Quarter of 2020 and Nine-Month period of 2020

Executive Summary

Performance

Financial Positions

petroleum products spread remained under pressure amid the COVID-19 outbreak.

In 3Q20, the average crude oil price increased from the previous quarter as a high compliance of output cut deal among OPEC and non-OPEC producers along with an increase in oil demand after the easing of restrictions during COVID-19 pandemic. These resulted in the net stock gain of Baht 3,770 million or USD 6.67 per barrel, attributing to the stock gain of Baht 2,752 million and realized gain on oil hedging of Baht 1,018 million. It rose by Baht 3,681 million. These led the Company had the Accounting Gross Integrated Margin (Accounting GIM) of Baht 8,707 million or USD 15.41 per barrel, improved by Baht 3,949 million or 83%. The operating expenses of Baht 3,120 million declined by 10%, mainly owing to lower maintenance cost. These contributed to the earning before interest, tax, depreciation and amortization (EBITDA) of Baht 5,843 million, increased by Baht 4,338 million.

The financial cost was Baht 454 million, similar to those in last quarter. The loss on foreign exchange from US Dollar - borrowings of Baht 129 million was owing to the Thai Baht depreciation opposed to gain on foreign exchange of Baht 353 million in the prior quarter. There was unrealized loss on oil hedging of Baht 1,134 million compared to unrealized gain on oil hedging of Baht 359 million in 2Q20. While there was gain on investments of Baht 95 million, up by 40%. There was corporate income tax amounting to Baht 366 million against corporate income tax benefit of Baht 39 million in the prior quarter. All mentioned above had led to the 3Q20 net profit of Baht 1,556 million, sharp increased by 479% from the net loss of Baht 411 million in 2Q20.

The operating results in the third quarter of 2020 (3Q20) compared to those in the

third quarter of 2019 (3Q19): The Company's net sales was down by Baht 16,593 million or 31%, attributed to a 25% decrease in average selling price as well as a 6% decrease in sales volume. The average crude intake was 195,000 barrels per day, slightly increased by 1%. The Market GIM declined by Baht 626 million or 11% (declined by USD 1.41 per barrel) as a falling in almost all products spread both petroleum and petrochemical businesses amidst the COVID-19 outbreak. The net stock gain was up by Baht 5,103 million. These led to the higher of Accounting GIM by Baht 4,477 million or 106%, YoY. Meanwhile, the operating expenses reduced by Baht 353 million or 10% under the cost reduction measure. Therefore, the EBITDA had improved by Baht 5,105 million, YoY.

The financial cost was down by Baht 43 million or 9% because of lower interest rate. The loss on financial derivatives was amounting to Baht 13 million contrary to the gain of Baht 11 million in 3Q19. The loss on foreign exchange from US Dollar - Borrowings was Baht 129 million as the Thai Baht depreciation while there was gain on foreign exchange of Baht 30 million in 3Q19. There was unrealized loss on oil hedging of Baht 1,134 million. These resulted in the net profit of Baht 1,556 million this period against the net loss of Baht 1,321 million at the same period last year.

3	Management Discussion and Analysis and Operating Results for the Third Quarter of 2020 and Nine-Month period of 2020

Executive Summary

Performance

Financial Positions

The operating results in the nine-month of 2020 (9M20) compared to those in the

nine-monthof 2019 (9M19): The Company reported net sales of Baht 111,658 million in 9M20, decreasing 33% from 9M19 of Baht 166,240 million. This attributed to a 25% decrease in average selling price following crude oil price together with a 8% decrease in sales volume amid the COVID-19 outbreak. The crude intake was 191,000 barrels per day, down by 4%. The Market GIM was Baht 13,270 million (USD 8.03 per barrel), decreasing by 17% as a drop in demand and products spread following the economic recession during the COVID-19 pandemic.

The Company had the net stock loss of Baht 2,952 million or USD 1.78 per barrel, including the stock loss of Baht 5,099 million, the reversal of LCM of Baht 162 million and realized gain on oil hedging of Baht 1,985 million. While there was net stock loss of Baht 122 million in 9M19. Hence, the Accounting GIM was Baht 10,318 million or USD 6.25 per barrel, comparing with the 9M19 Accounting GIM of Baht 15,828 million or USD 9.23 per barrel, decreased by Baht 5,510 million or 35%. However, other incomes were Baht 1,603 million, rising by 6%. The operating expenses were Baht 9,991 million, decreasing by 8%, mostly from the employee expenses. As a result, the EBITDA was amounting to Baht 911 million, dropped by Baht 4,486 million or 83%.

There were depreciation expenses amounting to Baht 6,711 million, increasing by 6%, mainly owing to the completion of the expansion and efficiency improvement projects such as the Catalyst Cooler project and Floating Solar project. The net financial cost was Baht 1,375 million, decreasing by 4% owing to lower interest rate. There was loss on financial derivatives amounting to Baht 597 million against the gain on financial derivatives amounting to Baht 587 million, YoY. Likewise, there was loss on foreign exchange from US Dollar - borrowings of Baht 276 million as the Thai Baht depreciation while there was gain on foreign exchange of Baht 370 million at the same period last year. Besides, the Company recorded 9M20 unrealized loss on oil hedging amounting to Baht 1,768 million in accordance with Thai Financial Reporting Standards No.9 Financial Instruments which effective on 1 January 2020. While there was gain on investments of Baht 212 million, fell by 30%. The Company had the corporate income tax benefit of Baht 1,919 million, increasing by Baht 1,585 million from a decline in operating results. All previously mentioned resulting the net loss of Baht 7,760 million in 9M20 versus the net loss of Baht 661 million in 9M19.

4	Management Discussion and Analysis and Operating Results for the Third Quarter of 2020 and Nine-Month period of 2020