ORLEN Spolka Akcyjna · GPW:PKN
ORLEN Spolka Akcyjna — PKN Orlen — Investor Day (July 2014)
34 slides from ORLEN Spolka Akcyjna's investor day presentation, Jul 23, 2014
Slide 1: PKN ORLEN Strategy 2014-2017
Strategia PKN ORLEN PKN ORLENna lata 2014-2017 Strategy 2014-2017 July 23rd 2014 „We discover and process natural resources to fuel the future” 1
Slide 2: Agenda
Agenda Strategic credo Pillars of value creation Supporting slides 2
Slide 3: Consistent implementation of strategic objectives approved in 2012
Consistent implementation of strategic objectives approved in 2012 Shareholders Value creation Systematic dividend payment: Record results in the Retail segment in 2013 PLN 1.5 per share for 2012 Acquisition of Canadian upstream companies PLN 1.44 per share for 2013 Macroeconomic environment below t
Slide 4: PKN ORLEN strategic vision
PKN ORLEN strategic vision Strong position on large and growing markets Retail Strong customer focus Integrated value chain Downstream Downstream Operational excellence Sustainable Upstream development Upstream Modern management culture 2008 … 2013… … 2017… 4
Slide 5: Pillars of PKN ORLEN Strategy for 2014-2017
Pillars of PKN ORLEN Strategy for 2014-2017 Value creation EBITDA: PLN 5.1 billion* Financial strength Dividend: DPS increase** People Values: ORLEN *The average annual EBITDA LIFO in 2014-2017 ** DPS, Dividend per Share - dividend per share paid by the company 5
Slide 6: Agenda
Agenda Strategic credo Pillars of value creation Supporting slides 6
Slide 7: Value creation: Downstream
Value creation: Downstream Integrated assets and strong market position Value creation levers Integrated value chain DOWNSTREAM Integrated value chain management comprehensive downstream value chain management Refinery product portfolio and conversion level Feedstock Products extension Sales & Energ
Slide 8: Value creation: Retail
Value creation: Retail Modern network off fuel station loyal customer base and strong brand Value creation levers Home fuel markets’ share increase*, % Modern network of fuel stations further development of both the 17.0 14.1 CODO channel and the DOFO channel increase of fuel sales per one station 2
Slide 9: Value creation: Upstream
Value creation: Upstream Increase of hydrocarbons’ production in stable and safe regions Hydrocarbons’ production, Value creation levers million boe/year 6.0 Organic growth in Poland focus on the most perspective areas of the unconventional upstream assets development of conventional upstream projec
Slide 10: Value creation: EBITDA
Value creation: EBITDA The average annual EBITDA LIFO growth of PLN 2 billion + PLN 2 billion* -0.1 0.2 EBITDA LIFO Downstream** Retail Upstream Corporate Average EBITDA LIFO 2013 functions 2014- 2017 * Including PLN 1.6 billion for Development & Efficiency and PLN 0.4 billion as the macro effect **
Slide 11: Value creation: CAPEX
Value creation: CAPEX Growing spending on development projects The increase of expenditure on CAPEX structure by the type of investment, development projects 2014-2017, PLN billion PLN billion Development Maintenance 3.2 Upstream and Regulatory 5.5 1.2 Retail 2.7 Downstream 10.8 • Refining 1.6 6.4 •
Slide 12: Financial strength
Financial strength Flexibility and resilience to crisis scenarios Foundations Objectives Guaranteed sources of funding (over EUR 4 billion) Financial ratios ― Rating - investment grade Optimal maturity ― Financial gearing - below 30% (average maturity 1Q 2019) ― Net debt/EBITDA LIFO– less than 2 Div
Slide 13: People: ORLEN's values
People ORLEN’s values as the foundation for modern management culture RESP ONSIBILITY We respect our customers, shareholders, the natural environment and local communities P ROGRESS We explore new opportunities PEOP LE Our advantages are know-how, teamwork and integrity ENERGY We are enthusiastic ab
Slide 14: People: Responsibility for people, the environment and our partners
People Responsibility for people, the environment and our partners Health & Safety Environmental protection Social responsibility Safety first: zero tolerance Strengthening the image of an Responsibility towards for accidents industry leader in the local communities, the Rigid HSE culture in the env
Slide 15: People: Development of human capital and innovation
People Development of the human capital and innovation Employees Leaders Innovations Investing in a continued Focusing on inspiring Systematic increase in development of employees’ Leaders – employees spending on Research and competencies working with passion, energy Development and engagement Consi
Slide 16: Strategy 2014-2017 Summary
Strategy 2014-2017 Summary Retail Leveraging the opportunities for further growth Value creation Downstream Profitability increase of the integrated value Financial strength chain People Upstream Consistent and balanced increase of upstream portfolio 16
Slide 17: Agenda
Agenda Strategic credo Pillars of value creation Supporting slides 17
Slide 18: PKN ORLEN – Company profile
PKN ORLEN – Company profile Business profile Shareholders, % TOP 10 products by revenue State Treasury Diesel The largest company in Poland Gasoline and the Central Europe, holding Heavy Fuel Oil 323rd position in the Fortune Global 27.5 Light Fuel Oil 500 list Jet-A1 Listed on the Warsaw Stock LPG
Slide 19: DOWNSTREAM: Value creation foundations
DOWNSTREAM: Value creation foundations High-class production assets Strong position on growing in-land markets Strong position on the wholesale market in Central Integrated, high-class refinery, petrochemical and Eastern Europe, %, 2013 and energy assets in Poland 99 60 30 Competitive refinery and p
Slide 20: DOWNSTREAM: Value creation levers (1/2)
DOWNSTREAM: Value creation levers (1/2) The main development goals of the Downstream sector: further integration of the value chain, construction of flexible power energy assets and constant improvement of sales models Sales and Logistics Production Energy Produkcja Energetyka Alignment of sales mod
Slide 21: DOWNSTREAM: Value creation levers (2/2)
DOWNSTREAM: Value creation levers (2/2) CAPEX, annual average, PLN billion Share in the Polish fuel market, +6 pp % Refining and Petrochemicals 60 1.7 1.2 0.7 Development*** 0.4 Utilization ratio - Maintenance/ 1.0 0.8 refinery**, % Regulatory 90 2013 2014-17 -4 pp average Energy 1.0 Utilization rat
Slide 22: DOWNSTREAM: Value creation results
DOWNSTREAM: Value creation results EBITDA LIFO, 2013-2017 EBITDA LIFO by segments, 2013-2017 PLN billion PLN billion 3.9 3.9 0.1 0.1 Energy 0.3 1.1 1.1 2.4 2.2 Petrochemicals 2.4 0.4 0 1.9 1.6 Refining 0.5 EBITDA LIFO Macro Development EBITDA LIFO EBITDA LIFO Refining Petrochemicals Energy EBITDA LI
Slide 23: RETAIL: Value creation foundations
RETAIL: Value creation foundations PKN ORLEN operates a modern and PKN ORLEN is an unquestionable leader the largest sales network in the region on a very attractive market Fuel stations in Poland, 2013 Retail market shares, 2013 Change in fuel demand in % Europe, CAGR 2013-17, % 1.778 35 Poland +2
Slide 24: RETAIL: Value creation levers and results
RETAIL: Value creation levers and results EBITDA LIFO 2013 2017 PLN billion +2.9 pp Share in home markets, % 14.1 0.2 1.5 1.3 +0.4 Sales per fuel station, 3.4 million liters +29 Non-fuel margin, index 100 EBITDA LIFO Development EBITDA LIFO CAPEX in the Retail, 2013 and efficiency 2014-2017 annual a
Slide 25: UPSTREAM: Value creation foundations
UPSTREAM: Value creation foundations Upstream development is based upon safe Organic exploration projects focused on Polish foundations licenses Production assets in Canada, 2013 Leader in the shale gas exploration: Oil and gas reserves (2P*), million boe 9 concessions and 2 frackings 2 conventional
Slide 26: UPSTREAM: Hydrocarbons exploration and production areas
UPSTREAM: Hydrocarbons exploration and production areas Production projects in Canada Exploration projects in Poland BALTIC SEA SIERAKÓW PROJECT KARBON PROJECT HRUBIESZÓW SHALE unconventional projects LUBLIN SHALE conventional projects 26
Slide 27: UPSTREAM: Value creation levers and results
UPSTREAM: Value creation levers and results 2013 2017 EBITDA LIFO Hydrocarbons’ PLN billion 6.0 production* million boe/y 0.1 54 Hydrocarbons’ reserves** 22 0.4 million boe Number of wells, 147 cumulatively, at the 14 0.4 end of the year 0 CAPEX in Upstream, annual average, PLN billion EBITDA LIFO D
Slide 28: Crude oil pipeline network in Europe
Crude oil pipeline network in Europe (70) Primorsk Kirishi (30) Ust-Luga Yaroslavi Sea terminal [handling capacity] (18) Ventspils BPS2 Crude oil pipeline [capacity] Planned crude oil pipelines Butinge DRUZHBA (14) Mazeikiai Naftoport (10.2; 10.3) Novopolotsk Rostock (30) (8.3; 7.7) Refinery of ORLE
Slide 29: PKN ORLEN in numbers, 2013
PKN ORLEN in numbers, 2013 Nameplate Fuel Fuel Other refining Downstream capacity, yield, sales, sales, million t Sales, million t % million t thousands t Refining 35.2 77% 15.5 7.7 Petrochemicals 5 174 Poland – Płock 16.3 78% 6.5 5.3 of which key products: Czech – Litvinov 5.5 polyethylene 450 79%
Slide 30: Macro assumptions
Macro assumptions Macroeconomic factor Unit 2013 2014-2017 Model Downstream margin USD / bbl 10.7 11.0 Brent/Ural differential USD / bbl 1.0 1.0 Model Refining margin and differential USD / bbl 4.4 4.4 Model Petrochemical margin EUR / t 730 767 Brent crude oil price USD / bbl 109 104 Edmonton crude
Slide 31: Definitions of the Key Performance Indicators
Definitions of the Key Performance Indicators Business segment Entity Definition Upstream million Production of hydrocarbons Annual volume of hydrocarbons production, i.e. oil and gas, expressed in barrels of oil equivalent (boe) boe/year Downstream Sales volume million t The volume of automotive fu
Slide 32: Glossary of Terms, Acronyms and Abbreviations
Glossary of Terms, Acronyms and Abbreviations Term / Acronym / Definition Abbreviation barrel – is an unit of fluid volume used in the oil trade. 1 barrel of oil = 42 U.S. gallons = 158.9683 l (~ 159 l). In Europe, the amount of oil is commonly bbl express in tones. boe barrels of oil equivalent – t
Slide 33: Disclaimer
Disclaimer This presentation (“Presentation”) has been prepared by PKN ORLEN S.A. (“PKN ORLEN” or “Company”). Neither the Presentation nor any copy hereof may be copied, distributed or delivered directly or indirectly to any person for any purpose without PKN ORLEN’s knowledge and consent. Copying,
Slide 34: ORLEN. WE FUEL THE FUTURE!
ORLEN. WE FUEL THE FUTURE! 34