Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tupras-Turkiye Petrol Rafineleri AS (IST:TUPRS, Financial) recorded the highest sales volumes in the last seven years during the second quarter of 2024, supported by strong operational and international sales.
- The company achieved a capacity utilization rate of 93.5% in Q2 2024, up from 83% in the same period last year, indicating high operational efficiency.
- Tupras maintained a strong cash-positive position, supported by reduced working capital requirements and effective cash management.
- The company initiated two major investment projects in its refineries with a total budget of USD 256 million, aimed at producing value-added products and reducing carbon footprint.
- Tupras expanded its zero-carbon electricity capacity to 416 megawatts, with additional projects in development, enhancing profitability from its zero-carbon electricity business line.
Negative Points
- The company experienced a year-over-year decrease in EBITDA, from TRY 26.9 billion in Q2 2023 to TRY 12.4 billion in Q2 2024, mainly due to inflation outpacing the depreciation of the lira.
- Crack margins remained slightly below last year, with a negative impact of TRY 0.4 billion on profit before tax.
- Narrower differentials and crude maintenance negatively impacted the cost of goods sold, affecting gross profit.
- Operational expenses were elevated due to project logistics expenses and FX loss from trade payables.
- The company revised its consolidated CapEx target for 2024 to USD 400 million, indicating some investments have been postponed.
Q & A Highlights
Highlights from Tupras-Turkiye Petrol Rafineleri AS (IST:TUPRS) Q2 2024 Earnings Call
Q: Could you provide some color on the different cracks that you expect now on the new margin expectation on the different products and the new CapEx?
A: (Dolan Corp Mas, CFO) We don't provide a breakdown of expectations on cracks. Regarding CapEx, the reduction is due to the postponement of a ship purchase by our subsidiary, Tire Side, as we decided to delay the acquisition to the following year.
Q: Despite the maintenance, you reported a strong utilization rate in the second quarter. Could you provide guidance on utilization rates for the rest of the year?
A: (Dolan Corp Mas, CFO) We increased capacity utilization throughout the second quarter to create intermediary products. The summer season also contributed to higher utilization. For the full year, we expect utilization rates to be within the 85% to 90% range.
Q: Could you provide more details on the investments in petrochemicals and the expected returns?
A: (Dolan Corp Mas, CFO) The investments will start production in 2026, focusing on high-value petrochemical precursors. These investments align with our sustainable refining targets and are expected to yield returns in line with our current operations.
Q: Could you give us guidance on the current unit refining operating costs in dollar terms per barrel of throughput?
A: (Dolan Corp Mas, CFO) Unfortunately, we are unable to provide details about operational expenses in terms of projects.
Q: Your cash position in dollar terms has decreased since the end of last year. Could you explain the key drivers behind this?
A: (Dolan Corp Mas, CFO) Our cash position remains strong, but working capital requirements have increased due to geopolitical developments and inventory management. We have mitigated these issues and improved our cash position since the end of Q1.
Q: Can you provide updates on the upcoming bond maturity and your plans?
A: (Dolan Corp Mas, CFO) The bond matures at the end of October. We are monitoring market conditions and may decide to renew the bond or pay it back, depending on interest rates and market developments.
Q: Do you expect any financial impact from the cargo situation in Iran?
A: (Dolan Corp Mas, CFO) The cargo was insured, so there would be no financial loss. Any additional costs incurred are covered by our marine cargo insurance, and the cargo was accounted for in inventory.
Q: What are your expectations for the refining operating costs in dollar terms per barrel of throughput?
A: (Dolan Corp Mas, CFO) We are unable to provide specific details about operational expenses in terms of projects.
Q: Could you provide more details on the investments in petrochemicals and the expected returns?
A: (Dolan Corp Mas, CFO) The investments will start production in 2026, focusing on high-value petrochemical precursors. These investments align with our sustainable refining targets and are expected to yield returns in line with our current operations.
Q: Could you give us guidance on the current unit refining operating costs in dollar terms per barrel of throughput?
A: (Dolan Corp Mas, CFO) Unfortunately, we are unable to provide details about operational expenses in terms of projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
