PTT Global Chemical : Management Discussion and Analysis Quarter 1 Ending 31 Mar 2021

PTT Global Chemical Public Company Limited

Management Discussion and Analysis Q1/2021

Content

			Page
1.	Executive Summary	3-4
2.	Performance Analysis by Business Unit
	2.1	Refinery & Shared Facilities Business Unit	5-6
	2.2	Aromatics Business Unit	7-8
	2.3	Olefins and Derivatives Business Unit	9-10
3.	Operating Performance	11
4.	Statements of Financial Position
	4.1	Balance sheet	12
	4.2	Cashflow statement	13
	4.3	Key Financial Ratios	14
5.	Project Progress	15
6.	Market and Business Outlook in H2/2021	16
7.	Appendix
	7.1	Production and Sales	17
	7.2	Planned Maintenance Shutdown Schedule	18

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Management Discussion and Analysis Q1/2021

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1. Executive Summary

In Q1/2021, PTT Global Chemical Public Company Limited ("the Company") had total sales revenue of Baht

101,864 million, increased by 16% from Q4/2020 and increased by 9% from Q1/2020, supported by the rise of products price, especially Olefins and Derivatives led by demand recovery according to the economics condition, increasing of Crude oil price, and the Company had less maintenance shutdown than Q1/2020 which resulted to increasing sales volume. The Company had Net Operating Profit Recurring (excluding Stock Gain Net Reversal of NRV, Foreign Exchange loss, Loss from commodity hedging, and Extraordinary items) in Q1/2021 of Baht 8,769 million. The Company had Adjusted EBITDA of Baht 14,108 million in this quarter. After considering the results of Stock Gain Net Reversal of NRV of Baht 2,296 million, Loss from commodity hedging of Baht 226 million, and Foreign Exchange loss of Baht 1,144 million, the Company recorded Net Profit of Baht 9,695 million (Baht 2.16/share), increased from the previous quarter by 51%.

In Q1/2021, Olefins and Derivatives Business Unit's performance was improved supported by higher average price of Polyethylene (PE) by 19% from the previous quarter and by 45% from Q1/2020 resulted to Adjusted EBITDA Margin of Olefins and Derivative Business Unit at 26%, increased from both Q4/2020 and Q1/2020. For Refinery Business Unit, as market conditions continued to improve from the previous quarter due to the effectiveness of curbing the spread of COVID-19 in many countries, resulted in the recovery in global oil demand. The Company has continued to adjust production by reducing Jet Fuel production and producing more Diesel in line with lower Jet Fuel demand impacted by COVID-19 outbreak resulted to Refinery's Market GRM at 3.17 USD per barrel, increased from the previous quarter but decreased from Q1/2020 due to the lower Low Sulfur Fuel Oil (LSFO) over Dubai crude oil spread. For Aromatics Business Unit, Market P2F per ton BTX was 142 USD per ton, increased from Q4/2020 but decreased from Q1/2020 due to increase in condensate price, tracking with crude oil price, at higher rate than of product price. The Company had Share of Profit from Investments in JV and associates of Baht 1,900 million, increased from both Q4/2020 and Q1/2020, mainly driven by the overall performance of GC's JV and affiliates especially in petrochemical businesses.

Table 1: Performance Summary
	(Unit: Million Baht)			Q1/2020			Q4/2020		Q1/2021			YoY		QoQ
								% +/(-)		% +/(-)
Sales Revenue	93,036		87,555		101,864			9%		16%
EBITDA	(2,558)		10,539		16,404			>200%		56%
EBITDA Margin (%)	-3%		12%		16%
				19%		4%
Share of profit of investments in JV and Associates	576		1,073		1,900			>200%		77%
Net Profit	(8,784)		6,405		9,695			>200%		51%
EPS (Baht/Share)	(1.96)		1.43	2.16		>200%		51%
Adjusted EBITDA*	6,348		9,514		14,108			122%		48%
Adjusted EBITDA Margin (%)	7%		11%		14%			7%		3%

Note: * Adjusted EBITDA refers to EBITDA excluding Stock gain/(loss), NRV and Extra item

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Table 2: Adjusted EBITDA Margin
% Adj. EBITDA Margin	Q1/2020	Q4/2020	Q1/2021
Business Unit:
Refinery and Shared Facilities	5	-1	2
Aromatics	9	3	7
Olefins and Derivatives*	9	23	26
Green Chemicals	8	16	7
Performance Materials and Chemicals	4	26	28
Average	7	11	14

Note: *If included PTA, PET %Adj. EBITDA in Q1/20, Q4/20, and Q1/21 are 7%, 20%, and 23% respectively

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2. Performance Analysis by Business Unit

2.1 Refinery & Shared Facilities Business Unit

	Table 3: Crude Price & Petroleum Product Spreads
	(Unit: USD per bbl)			Q1/2020		Q4/2020			Q1/2021			YoY		QoQ
								% +/(-)		% +/(-)
	Dubai Crude Oil	50.70	44.62		60.01			18%		34%
	Gasoline-Dubai	6.66	4.10		7.10			7%		73%
	Jet-Dubai	8.51	2.42		3.28			-61%		36%
	Diesel-Dubai	10.98	3.69		4.74			-57%		29%
	HSFO-Dubai	-7.38	-0.58		-3.46			53%		<-200%
	LSFO-Dubai	19.36	9.86		13.45
				-31%		36%

For Crude oil market situation in Q1/2021, Dubai crude oil price was higher compared with the previous quarter and the same period of last year. Crude oil price was supported by the high compliance rate of OPEC alliances on an agreement to maintain production cut include Saudi Arabia decreased production by 1 Mbbl as an agreement. Also, crude oil market was supported by the $1.9 trillion economic stimulus plan of the United States, the progress on vaccination against COVID-19 in many countries, including the Unites States and European countries. However, the impact of the Polar Vortex in the United States, associated with outbreaks of coldest temperatures in more than 30 years, resulted in the decreased in U.S. crude oil production. However, with the new wave of Covid-19 infections, several countries in Europe and Asia are extending or reintroducing lockdown measures to limit the travelling and prevent the entry and spread of COVID-19. Additionally, the side effects that occur after vaccination in many countries led to the slowdown of vaccination. As a result, crude oil market remains under pressure. The average Dubai crude oil price in Q1/2021 stood at 60.01 USD per barrel and closed at 63.31 USD per barrel at the end of the period.

For petroleum products spread over Dubai crude oil price in Q1/2021, petroleum products were affected by strain on the supply due to the U.S. Polar Vortex. The average Diesel over Dubai crude oil spread increased from Q4/2020 but decreased from Q1/2020 to 4.74 USD per barrel due to the Lockdown easing in many countries, especially in Asia. In addition, Diesel supply is decreasing as the maintenance shutdown period of many producers are scheduled from the beginning of the second quarter of the year. While Average Jet over Dubai crude oil spread increased from Q4/2020 but decreased from Q1/2020 to 3.28 USD per barrel due to the recovery of global Jet Fuel demand and the increased in demand from power plant in Japan and Korea as the unusual cold waves. Average Low Sulfur Fuel oil (LSFO) over Dubai crude oil spread increased from Q4/2020 but decreased from Q1/2020 to 13.45 USD per barrel supported by shipping activities in the region and supporting factor from the demand of Power plants in North Asia for substitute the higher prices of substitute fuels as LNG, caused by as the unusual cold waves.

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