Channel Infrastructure NZ Limited · NZX:CHI
Channel Infrastructure NZ — Refining NZ — HY18 Earnings Presentation
18 slides from Channel Infrastructure NZ's earnings presentation, Aug 23, 2018
Slide 1: Refining NZ Analyst Briefing
Refining NZ Analyst Briefing 23 August 2018 1
Slide 2: Disclaimer
DISCLAIMER • This presentation contains forward looking statements concerning the financial condition, results and operations of The New Zealand Refining Company Limited (hereafter referred to as “Refining NZ”). • Forward looking statements are subject to the risks and uncertainties associated with
Slide 3: Agenda: 2018 Performance, The Future
AGENDA 2018 PERFORMANCE THE FUTURE 3
Slide 4: First half numbers dominated by the shutdown
FIRST HALF NUMBERS DOMINATED BY THE SHUTDOWN 3 cps interim dividend HY 17 HY 18 Gross Refinery Margin (US$/barrel) 7.70 5.65 Free cash flow (NZ$m) [1] 39 (75) EBITDA 105 50 Net profit after tax – Group (NZ$m) 35.2 (2.8) TRCF [2] 0.94 0.75 Personal LTIF [2] 0.13 0.47 Tier 1 (>US$25k) [3] 0 2 Process
Slide 5: Shutdown completed
SHUTDOWN COMPLETED Major re-life • 1,700 work packs • 2,000 welds • 1,300 additional people on site (at peak) • 1,100 tonnes of scaffolding Complex brownfield retrofits • Hydrogen Manufacturing Unit • Mid-section replacement – High Vacuum Unit But… • Brownfield, emergent work and weather challenges
Slide 6: Underlying market fundamentals strong
UNDERLYING MARKET FUNDAMENTALS STRONG Refining margin adjusted for shutdown at US$8.25 per barrel UPLIFT US$/BARREL HY17 HY18 Δ Freight 1.59 2.16 0.57 Product quality 1.04 0.94 (0.10) Plant availability (0.27) (2.60) (2.33) Crude cost and yield 2.23 1.91 (0.32) TOTAL 4.59 2.42 (2.17)- * The Singapor
Slide 7: Impact of shutdown dominates
IMPACT OF SHUTDOWN DOMINATES NZ$m 7 See our Half Year Report for further detail, available at http://www.refiningnz.com/investor-centre.aspx
Slide 8: 2018 revised profit matrix
2018 REVISED PROFIT MATRIX USD/NZD 0.60 0.65 0.70 0.75 CAPEX NZD M *) H2 FY 10 2 (4) (10) 2018 2019 5.00 5.28 270 281 290 298 Retain 139 50/55 30 21 13 6 Was 139-144 80 6.00 5.85 GRM (USD/bbl) 250 259 266 276 Grow 18 20/25 49 39 30 22 7.00 6.41 Was 20 5 230 240 250 257 69 57 47 38 8.00 6.97 210 222
Slide 9: Agenda: 2018 Performance, The Future
AGENDA 2018 PERFORMANCE THE FUTURE 9
Slide 10: Strong macro continues
STRONG MACRO CONTINUES With IMO and Chinese export caveats kb/d 1,200 1,000 800 600 400 200 0 -200 -400 -600 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Incremental CDU Capacity * Incremental Refinery Product Demand 10 Source: FACTS Global Energy (July 2018)
Slide 11: Surplus capacity trending down to the Golden Age
SURPLUS CAPACITY TRENDING DOWN TO THE “GOLDEN AGE” With IMO and Chinese export caveats mmb/d 8.0 7.0 6.0 5.0 Golden Age 4.0 3.0 2.0 1.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 11 Source: FACTS Global Energy (July 20
Slide 12: IMO step change in bunker fuel demand from 2020
IMO STEP CHANGE IN BUNKER FUEL DEMAND FROM 2020 • Sulphur decrease from 3.5% to 0.5% • Expected impact • Price volatility in 2020 - 2023 • Lift in diesel demand and price Diesel • Depressed HSFO demand and price • Scrubber sales increasing • Large refineries installing conversion capacity HSFO 12 So
Slide 13: Growth agenda
GROWTH AGENDA SHORT PAYBACK DREDGING CONSENT JET IMPORT FACILITY PIPELINE CAPACITY SULPHUR FORMING PROJECTS DELIVERED GRANTED DELIVERED ON SCHEDULE REPHASED • Hydrogen optimisation • Resource consent • Studying tankage • 2019 completion • 2019 completion (6 USc/bbl) challenged August 2018 conversion
Slide 14: Climate change presents an opportunity
CLIMATE CHANGE PRESENTS AN OPPORTUNITY CO2 3 TE MAHI HOU 2 2 HYDROGEN BIO-FUELS 1 1 ENERGY SAVINGS BIO-FUELS 0 Near term Mid- to long-term 14
Slide 15: Climate change presents an opportunity: Te Mahi Hou
CLIMATE CHANGE PRESENTS AN OPPORTUNITY Te Mahi Hou TE MAHI HOU TOYOTA COROLLA 2017 – 2018 Small Car: Saloon 120,000 60,000 tonnes/year = Toyota Corollas CO2 reduction TESLA MODEL 3 $4.6 billion $365 million = spent on Tesla Model 3s 15 Note: based on NZTA mileage and CO2 emission statistics and pric
Slide 16: Key take-outs
KEY TAKE-OUTS • Shutdown completed • Current margin and forex environment favourable • Next shutdown in 2020 • Short payback projects agenda continues • Climate change presents an opportunity • Assets integral to a brownfield biofuels and H2 future re-lifed 16
Slide 17: Refining NZ Analyst Briefing
Refining NZ Analyst Briefing 23 August 2018 17
Slide 18: Appendix I: Glossary
APPENDIX I Glossary • LTIF - Lost time injury frequency (rolling 12 month per 200,000 hours) • TRCF - Total recordable case frequency (rolling 12 month per 200,000 hours) • Tier 1 Process Safety Event (API 754) - A tier 1 Process Safety Event (PSE) is an unplanned or uncontrolled release of any mate