ORLEN Spolka Akcyjna · GPW:PKN
ORLEN Spolka Akcyjna — PKN Orlen — Investor Day (December 2016)
34 slides from ORLEN Spolka Akcyjna's investor day presentation, Dec 15, 2016
Slide 1: PKN ORLEN Growth Strategy
PKN ORLEN Growth Strategy ORLEN. FUELLING THE FUTURE Warsaw, 15th December 2016 @PKN_ORLEN | #StrategiaORLEN
Slide 2: Agenda
Agenda 1 PKN ORLEN today 2 PKN ORLEN of the future 3 Summary 4 Supporting slides 2
Slide 3: PKN ORLEN results exceeded strategic targets for 2014-2017
PKN ORLEN results exceeded strategic targets for 2014-2017 Target Actual Higher profit EBITDA LIFO* 7.4 generation before impairments, 5.1 PLN bn Value Avg. 2014-17 Avg. 2014-16 creation Growth program CAPEX 4.8 PLN bn 4.1 execution Avg. 2014-17 Avg. 2014-16** Further Financial strengthening of gear
Slide 4: PKN ORLEN became the most valuable company on the Warsaw Stock Exchange
PKN ORLEN became the most valuable company on the Warsaw Stock Exchange for the first time on 21 November 2016 Strategy 2014-2017 21st November 2016 announcement* Share price 43.1 75.4 +75% PLN Market value 18.4 32.2 PLN +13.8 bn PLN bn Dividend 2014: PLN 0.6 bn payments 2015: PLN 0.7 bn PLN 2.2 bn
Slide 5: PKN ORLEN has a strong position for further growth
PKN ORLEN has a strong position for further growth Integrated 30 m tons downstream assets throughput in three countries of various types of in Central Europe crude oil Over 50 products from refinery & petrochemicals sold in more than 60 countries around the world Over 1.4 m transactions per day 2 70
Slide 6: The future demands a multidimensional perspective and periodic revision of goals
The future demands a multidimensional perspective as well as periodic revision and communication of goals Vision 2030+ Strategy for 2017-2021 Targets for 2017-2018 Macro assumptions Macro trends Energy sources Financial & investment plan Business plans Consumer behavior Implementation of growth Long
Slide 7: Agenda
Agenda 1 PKN ORLEN today 2 PKN ORLEN of the future Vision 2030+ Strategy for 2017-2021 Targets for 2017-2018 3 Summary 4 Supporting slides 7
Slide 8: Changes in the world have accelerated and new trends are harder to predict
Changes in the world have accelerated and our lives are impacted by new trends, which are more difficult to predict Future Economy Smart Everything Product Innovation Internet of Things Advanced New Business Models Robotics Communication Big Data and Digitalization Autonomous Vehicles Social Behavio
Slide 9: Economic development will affect crude oil usage, but its role remains important
The world’s economic development will affect crude oil usage, however its role will remain important Share of crude oil in global Oil consumption by sector energy mix m boe/d % 113 16 Petrochemicals +33% 95 12 33% 30% Transport* +19% 63 53 30 34 Other** +13% 2015 2035 2015 2035 * Transport: passenge
Slide 10: PKN ORLEN will adjust its business model to changes in the world
PKN ORLEN will consistently adjust its business model in response to changes in the world Digital world Innovative culture Fuel station of Ecology the future Agile Use organization of Big Data Alternative Energy storage fuels Petrochemicals of the future 10
Slide 11: Agenda
Agenda 1 PKN ORLEN today 2 PKN ORLEN of the future Vision 2030+ Strategy for 2017-2021 Targets for 2017-2018 3 Summary 4 Supporting slides 11
Slide 12: Pillars of PKN ORLEN's Strategy for 2017-2021
Pillars of PKN ORLEN’s Strategy for 2017-2021 Integrated assets and strong market position in Downstream Value Development of offer and high customer satisfaction in creation Retail Cautious continuation in Upstream Innovations creating value People Focus on safety and the environment Commitment to
Slide 13: Value creation in 2017-2021: Downstream
Value creation in 2017- 2021: Downstream Integrated assets and strong market position Feedstock security Crude oil supply diversification DOWNSTREAM Securing natural gas supply Operational excellence Integrated management of production assets in Refinery Poland, Czech Republic and Lithuania Increasi
Slide 14: Value creation in 2017-2021: Retail
Value creation in 2017- 2021: Retail Development of offer and high customer satisfaction Modern network of fuel stations Further development of own and franchise network Quality fuels implementation Adaptation to sell alternative fuels Unique customer experience New products and services implementat
Slide 15: Value creation in 2017-2021: Upstream
Value creation in 2017- 2021: Upstream Cautious continuation Production increase in Poland and Canada Production level and 2P reserves increase Focus on the most profitable projects Cautious continuation Flexible response to changes in crude oil and gas markets Level of investment adjusted to macro
Slide 16: Innovations creating value
People Innovations creating value Development of knowledge-based organization Innovation Release of internal potential culture Promotion of employee initiative Technological and organizational processes Internal improvements innovation R&D project portfolio development Harnessing synergies within th
Slide 17: People: Focus on safety and the environment
People Focus on safety and the environment Work safety Environmental protection TRR* Continuous adaptation to >6 new environmental TRR* requirements =4 TRR* =1,5 TRR* ≤0,9 Previously 2008 2013 2017+ Reducing environmental impact Zero tolerance for the threat of accidents No accidents at work Develop
Slide 18: Commitment to PKN ORLEN values
People Commitment to PKN ORLEN values 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 about what we do DEPE NDABILITY Yo
Slide 19: Financial strength
Financial strength Flexibility and readiness for market challenges Investment grade rating Solid fundamentals Financial gearing below 30% Diversified funding Secured financing Possibility of inorganic growth Steady dividend per share increase Dividend payment Dividend level depends on financial situ
Slide 20: Agenda
Agenda 1 PKN ORLEN today 2 PKN ORLEN of the future Vision 2030+ Strategy for 2017-2021 Targets for 2017-2018 3 Summary 4 Supporting slides 20
Slide 21: Increase of yearly average EBITDA LIFO by PLN 0.5 bn in 2017-2018
Increase of yearly average EBITDA LIFO by PLN 0.5 bn in 2017- 2018 EBITDA LIFO by segment PLN bn PKN ORLEN* Downstream 7.6 7.1 6.0 8.8 8.3 7.0 5 1.7 1.8 1.5 Retail 4 2 Average 2016 Average 2014-2015 2017-2018 Upstream 0.1 0.2 0.3 Average 2016 Average 2014-2015 2017-2018 *Change in EBITDA LIFO avg 20
Slide 22: CAPEX dedicated to growth
CAPEX dedicated to growth CAPEX by type of investment CAPEX average for 2017-2018, PLN bn PLN bn Growth 1,6 Other 0.2 Upstream Maintenance 0.8 and Obligatory 2.1 0,8 0.4 Retail Downstream*** 3.3 • Refining 0.8 1.9 3,8 • Petrochemicals 0.8 5.4 • Energy 0.3 5.1 4.6 CAPEX by country average for 2017-20
Slide 23: Downstream Targets for 2017-2018
DOWNSTREAM Targets for 2017-2018 EBITDA LIFO SALES & LOGISTICS* PLN bn Fuel market share: increase by over 5 pp Utilization of grey zone reduction 0.5 7.6 7.1 Petrochemical sales: increase by over 1.2 m tons Energy sales: over 3,4 TWh Unit logistics cost : improvement by 6% PRODUCTION* Investment re
Slide 24: Retail Targets for 2017-2018
RETAIL Targets for 2017-2018 MODERN NETWORK OF FUEL STATIONS* EBITDA LIFO Organic growth of fuel stations network: increase by PLN bn ~100 new stations 0.1 1.8 1.7 Fuel market share: increase by over 1pp Fuel stations adaptation to sell alternative fuels UNIQUE CUSTOMER EXPIERENCE* Improvement of sh
Slide 25: Upstream Targets for 2017-2018
UPSTREAM Targets for 2017-2018 PRODUCTION INCREASE IN POLAND AND CANADA* EBITDA LIFO PLN bn Increase in production level to 15.7 th. boe/d, i.e. by 2.4 th. boe/ d Poland: 0.3 th. boe/ d 0.3 Canada: 2.1 th. boe/ d 0.2 0.1 Increase in hydrocarbon 2P reserves to 113 m boe, i.e. by 9.3 m boe Poland: by
Slide 26: Agenda
Agenda 1 PKN ORLEN today 2 PKN ORLEN of the future 3 Summary 4 Supporting slides 26
Slide 27: Summary
Summary Effective realization of the Strategy for 2014-2017 is as a strong base for further growth Higher generated profit Growth program execution Strong financial fundamentals and increase in dividend payments Dynamic changes in business environment and increasing uncertainty require consistency a
Slide 28: ORLEN. Fuelling the Future
ORLEN. FUELLING THE FUTURE 28
Slide 29: Agenda
Agenda 1 PKN ORLEN today 2 PKN ORLEN of the future 3 Summary 4 Supporting slides 29
Slide 30: PKN ORLEN macro assumptions
PKN ORLEN macro assumptions Macroeconomic factor Unit Avg. 2014-16 Avg. 2017-18 Model Downstream margin USD / bbl 12.2 11.3 Brent/Ural differential USD / bbl 2.1 2.2 Model Refining margin and differential USD / bbl 7.5 7.5 Model Petrochemical margin EUR / t 906 793 Brent crude oil price USD / bbl 65
Slide 31: Definitions of the Key Performance Indicators (KPI)
Definitions of the Key Performance Indicators (KPI) Business segment Unit Definition Upstream Production of hydrocarbons boe/d Daily volume of hydrocarbons production, i.e. oil and gas, expressed in barrels of oil equivalent (boe) 2P Reserves boe Proven and probable reserves CAD/ Average realized pr
Slide 32: Glossary of abbreviations and acronyms
Glossary of abbreviations and acronyms Term / Acronym / Definition Abbreviation R&D Research & Development 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 expressed in tonnes boe barrels
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 witht PKN ORLEN’s knowledge and consent. Copying, ma
Slide 34: ORLEN. Fuelling the Future
ORLEN. FUELLING THE FUTURE 34