PTT Global Chemical Public : Quarter 2/2022

PTT Global Chemical Public Company Limited

Management Discussion and Analysis Q2/2022

The only company in chemicals sector ranked as No.1 for three consecutive years

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	6-7
	2.3	Olefins and Derivatives Business Unit	8-9
	2.4	Performance Materials and Chemicals Business Unit	9-11
3.	Operating Performance	12-13
4.	Statement of Financial Position
	4.1	Balance sheet	14-15
	4.2	Cashflow statement	15-16
	4.3	Key Financial Ratios	17
5.	Project Progress	18
6.	Environment Social Governance	19
7.	Market and Business Outlook in H2/2022	20-21
8.	Appendix
	8.1	Production and Sales	22-23
	8.2	Planned Maintenance Shutdown Schedule	24

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Management Discussion and Analysis Q2/2022

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1. Executive Summary

In Q2/2022, PTT Global Chemical Public Company Limited ("the Company") had total sales revenue of Baht

196,397 million, increased by 12% from Q1/2022 and increased by 76% from Q2/2021. The revenue has grown continuously supported by the rise of petroleum products tracking with crude oil price and the demand recovery from easing of COVID-19 lockdown restrictions. Moreover, the tensions between Russia and Ukraine escalated into a wider energy and economic sanction from many countries. Petrochemical products prices also increased, following soaring feedstock costs as well as maintenance shutdown and the slowdown in production of some producers in the region. In term of sales volume, in this quarter, the Company's sales volume decreased mainly from planned maintenance shutdown of Olefins 3 plant and Aromatics 1 plant, including LDPE and LLDPE. However, the Company had Adjusted EBITDA of Baht 21,029 million in this quarter, increased from Q1/2022 and Q2/2021 by 47% and 29%, respectively. The Company had Net Operating Profit Recurring (excluding Stock Gain Net NRV, Foreign Exchange Loss and Gain from financial derivative, Loss from commodity hedging, and Extraordinary items) of Baht 13,703 million, increased from Q1/2022 by120% and increased from Q2/2021 by 31%. After considering the results of Stock Gain Net NRV of Baht 3,085 million, Loss from commodity hedging of Baht 12,734 million as the products spread was higher prices compared to the hedged prices of the commodity hedging which consists of realized loss of Baht 11,598 million and Unrealized loss of Baht 1,136 million, Foreign Exchange Loss of Baht 4,378 million, Gain from financial derivatives of Baht 1,712 million. As a result, the Company reported Net Profit in Q2/2022 of Baht 1,388 million (Baht 0.31/share), decreased by 67% from Q1/2022.

Table 1 : Performance Summary
(Unit: Million Baht)		Q2/2021	Q1/2022	Q2/2022	YoY	QoQ		6M/2021	6M/2022	YoY
					% +/(-)	% +/(-)				% +/(-)
Sales Revenue	111,793	175,554	196,397	76%	12%	213,657	371,951	74%
EBITDA
	16,810	10,588	11,380	-32%	7%	33,215	21,968	-34%
EBITDA Margin (%)		15%	6%	6%	-9%	0%	16%	6%	-10%
Share of profit of investments in		2,325	1,150	1,833	-21%	59%	4,225	2,983	-29%
JV and Associates
Net Profit	25,035	4,212	1,388	-94%	-67%	34,730	5,600	-84%
EPS (Baht/Share)	5.58	0.93	0.31	-94%	-67%	7.74	1.24	-84%
Adjusted EBITDA*	16,363	14,273	21,029	29%	47%	30,698	35,302	15%
Adjusted EBITDA Margin (%)	15%	8%	11%	-4%	3%	14%	9%	-5%

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

In Q2/2022, Olefins and Derivatives Business Unit's performance slowed down compared to previous quarter even the price of Polyethylene (PE) increased. However, the Company had planned maintenance shutdown of Olefin Plant 3 (Ethane Cracker Plant), which led to a decline in sale volumes while the proportion of naphtha increases to 28%. Additionally, the planned maintenance shutdown of LDPE and LLDPE led to a slightly decreased in PE sale volumes. This resulted to Adjusted EBITDA Margin of Olefins and Derivative Business Unit in this quarter at 9%, decreased from the previous quarter. Performance Materials & Chemicals Business Unit's performance decreased due to Phenol market was weak as the feedstock Benzene prices increased. However, allnex's performance continued the ability to deliver strong results. For the Aromatics business, the BTX P2F was at 117 USD per ton, increased from the

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Management Discussion and Analysis Q2/2022

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previous quarter but decreased from Q2/2021, due to the increase in products spreads both Paraxylene and Benzene. Moreover, the increase in byproducts spreads, especially Condensate Residue. For Refinery Business Unit, in Q2/2022, the Market GRM was at 21.09 USD per barrel, increased from the previous quarter and Q2/2021, followed the increase in products spread and demand recovery from easing of COVID-19 lockdown restrictions. Other factors included economic sanctions on Russia, which is one of the major oil and gas producers in the world, and the decrease in China's export growth. The Company had Share of Profit from Investments in JV and associates of Baht 1,833 million, increased from Q1/2022, mainly driven by the increased share of profit from VNT after the tender offer completion to increase the ownership from 24.98% to 37.82% at the end of Q1/2022, and the improved performance of Bioplastics business and Acrylonitrile (AN) business.

Table 2: Adjusted EBITDA Margin
	% Adj. EBITDA Margin		Q2/2021	Q1/2022	Q2/2022		6M/2021	6M/2022
Business Unit:
	Refinery and Shared Facilities	1	5	12	2	9
	Aromatics	14	-6	4	11	-1
	Olefins and Derivatives*	26	11	9	26	10
	Green Chemicals	5	11	11	6	11
	Performance Materials and Chemicals	30	15	10	29	12
	Average	15	8	11	14	9

Note: *If included PTA, PET %Adj. EBITDA in Q2/21, Q1/22, Q2/22, 6M/21 and 6M/22 are 22,10,9,22 and 9 respectively.

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Management Discussion and Analysis Q2/2022

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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)			Q2/2021			Q1/2022		Q2/2022			YoY		QoQ				6M/2021		6M/2022			YoY
								% +/(-)		% +/(-)							% +/(-)
Dubai Crude Oil	66.93		95.56	108.05			61%		13%		63.47	101.81			60%
	Gasoline-Dubai	9.90		17.77	34.97			>200%		97%			8.50	26.37			>200%
	Jet-Dubai	4.52		16.21	39.16			>200%		142%		3.90	27.68			>200%
	Diesel-Dubai	5.25		19.55	43.11			>200%		121%		5.00	31.33			>200%
	HSFO-Dubai	-5.82		-8.34	-3.20							-4.64	-5.77
				45%		62%				-24%
	LSFO-Dubai	11.24		21.11	33.18			195%		57%		12.34	27.14			120%

For Crude oil market situation in Q2/2022, 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 war between Russia and Ukraine which led to a decline of market supply. The sanctions on Russia, a major exporter of petroleum and crude oil in the world, by the European Union resulted in tight market supply, while the market demand was increased. However, Russia is in the process of rerouting oil and petroleum exports towards BRICS countries such as Brazil, India, China, and South Africa resulting in the average Dubai crude oil price in Q2/2022 stood at 108.05 USD per barrel and closed at 111.70 USD per barrel at the end of the period, increased from 97.61 USD per barrel at Q1/2022.

For petroleum products spread over Dubai crude oil price in Q2/2022, petroleum products were supported by the sanctions on Russia which is a major exporter of petroleum and crude oil in the world, by the European Union resulting in tight market supply. Also, market demand was increased due to the lowering trend of COVID-19 infections and the re-opening of cities in many countries. The average Diesel over Dubai crude oil spread increased from Q1/2022 and Q2/2021 to 43.11 USD per barrel. While Average Jet over Dubai crude oil spread increased from Q1/2022 and Q2/2021 to 39.16 USD per barrel. Average Low Sulfur Fuel oil (LSFO) over Dubai crude oil spread increased from Q1/2022 and Q2/2021 to 33.18 USD per barrel supported by tight supply in Singapore from the shift in production to Diesel and Gasoline, and tight supply in Asia due to shortage in Western countries due to demand to substitute for the import from Russia.

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Management Discussion and Analysis Q2/2022

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