3Q15 Results - Investor Presentation

PETKİM PETROCHEMICAL HOLDING CORPORATION

6 November 2015

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Ethylene – Naphtha spread averaged US$ 670/ton in 3Q15 – 8% narrowing on q-o-q basis

• A lower oil price, tightened steam crackers availability and the weakness of local currency have helped profit

margins.

• Ethylene supply tightness is due to higher than expected outages globally.

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PLATT’s Index averaged US$ 896 per ton in 3Q15 – down by 17% q-o-q

•Benefited from lower raw material prices due to the crude oil price decrease and improved demand, together with

positive currency exchange.

•The European İndustry, mainly naphtha based, is now seeing levels of profitability comparable with those seen for

Middle East or US ethane based producers.

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• Feedstock vs. Product Prices in 3Q15

• Improved margins across most product lines on the back

of lower naphtha and natural gas prices.

• Upon the completion of Ethylene capacity expansion and

efficiency investments as well as major maintenance

outages in 2014, for 2015 management had a strategy

of maximum production and pacey sales.

• With this maximum production and pacey sales strategy

Petkim was able to utilize positive market conditions at

peak level in 2015.

• In 3Q15 production performance in terms of both

volume and efficiency was even better than 2Q 2015.

• Unpredictable environment on FX side strengthened

Petkim hand as a local producer.

• In line with the uncertainty at economy Petkim

concentrated on SME as customers whom are more

adaptive to market conditions and profitable.

Costs and Operational Efficiency in 3Q15

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• PETKIM 3Q15 – In 3Q15 Petkim recorded TL1.3mn sales via 468k ton volume

• PETKIM 3Q15 Income Statement

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TL mn 3Q14 3Q15 Sales 3.306,0 3.375,1 Cost of sales (3.198,0) (2.814,0)

Gross Profit 108,0 561,1 Gross profit % 3,3% 16,6%

Marketing and sales expenses (19,6) (22,0) General admin. Expenses (77,4) (86,0) R&D Expenses (9,6) (8,4)

Operating profit 1,4 444,8 Other income / (expenses) 0,7 (38,2) Financial income 107,8 351,5 Financial expense (106,0) (312,0)

Profit before tax 3,8 446,1 Income tax - (8,0) Deferred tax (1,2) 65,1

Net Profit / (loss) 2,6 503,2 Net profit % 0,1% 14,9%

Severance 7,3 (13,0) Depreciation 65,0 84,8

EBITDA 73,6 516,5 EBITDA % 2,2% 15,3%

• PETKIM 3Q15 Balance Sheet

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TL mn 9M14 12M14 9M15 Cash and cash equivalents 354,7 702,2 1.414,0

Trade receivables 512,7 522,3 674,9

Inventory 490,1 432,0 393,1

Other receviables 94,2 21,3 266,4

Other current assets 81,0 90,0 87,8

Current assets 1.532,8 1.767,7 2.836,2

Non current assets 1.778,3 2.020,5 2.557,4

Total Assets 3.311,1 3.788,3 5.393,6

Short term borrowings 196,8 396,0 625,6

Trade payables 920,8 669,0 995,4

Other payables 64,2 71,7 107,9

Current liabilities 1.181,8 1.136,8 1.728,9

Long term borrowings 331,9 324,6 844,0

Other non-current liabilities 134,4 143,7 150,6

Shareholders’ equity 1.663,1 2.183,3 2.670,0

Total liabilities 3.311,1 3.788,3 5.393,6

Net debt position -174 -18 -56

Working Capital 176 307 339

Days sales outstanding 42 46 59

Days payable outstanding 78 60 99

Days sales of inventory 41 39 39

PETKIM – Debottlenecking Investments are completed as of November 2014

In addition to c.50% capacity increase, PETKİM will

also benefit on energy cost.

Capacity (tons /year) : 105,000

Project finance (E/D ratio) : 100% Debt

Investment amount : US$ 20mn

Ethylene Capacity Increase PTA Capacity Increase

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With the completion of the project ethylene

production capacity increased by 13%

Capacity (tons /year) : 587,600

Project finance (E/D ratio) : 20:80

Investment amount : US$ 118mn

PETLIM – Goldman Sachs has purchased 30% stake in Petlim for a total consideration of US$ 250mn

• PETLIM Port Project has 1.5 million TEU container handling capacity, 42

hectare main port area, 8 hectare off-dock service area terminal port.

• APMT and Petkim’s 100% subsidiary PETLIM has a revenue sharing agreement

for the 28 years (+4 years option) of the operational period.

• Our partner in port operations, APMT (group company of Maersk Group) paid

US$ 25mn in July 2013, as the first installment of US$ 65mn upfront fees for

the Operation Rights.

• The infrastructure investment is carried out by Petlim. Petlim’s part of

investment is US$ 276mn, of which around US$ 70mn will be equity and the

remaining will be financed by project financing.

• Goldman Sachs has purchased 30% stake in Petlim for a total consideration of

US$ 250mn

• Phase 1 will be operational in 2015 and Phase 2 in 2016.

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Petkim - Wind Power Plant

• Petkim is setting up a wind power plant with a total capacity of 51MW

at the Petkim Peninsula

• The WPP is planned to generate 200GWh electricity per annum.

• PETKİM signed an agreement with ALSTOM RENOVABLES ESPAÑA S.L.U

and ALSTOM Power ve Ulaşım A.Ş (Alstom Türkiye) consortium on

28/03/2014 amounting to €55 million which will be covering a full range

of basic and detailed engineering study, material procurement,

construction, electric work and installation and commissioning.

Picture above is presented for only representative purposes

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STAR Refinery

• STAR Refinery will have 10 million tons /year crude oil refining capacity.

• Petkim signed a 20-year off-take agreement with STAR Rafineri A.Ş to offtake

270,000 tonnes mixed-xylene and 1,600,000 tonnes naphtha annually.

• Naphtha price will be set as the Platts’ FOB MED spot market price plus

US$ 6 margin per tonne and mixed-xylene price will be based on ICIS’s

Rotterdam Paraxylene Spot Price multiplied by 0.74.

• It is expected that PETKIM’s feedstock cost will be reduced US$ 30 per

tonne as a result of this agreement. The offtake pricing terms in the

agreement are in line with the market prices.

• Other than the logistics cost savings, as a result of the synergies

created by the refinery and the petrochemicals integration, there will

be significant cost benefits for Petkim including quality standardization

and stabilization, and the reduction in inventory costs.

• The aggregate investment amount will reach US$ 5.7bn.

• On May 30th 2014, US$ 3,290 million project finance portion of the STAR

Refinery investment has been signed with a number of 23 local and

international financial institutions including Export Credit Agencies (ECAs),

commercial banks and development banks.

• US$ 2,690 million of the project finance has a maturity of 18 years with 4 years

grace period, while the remaining US$ 600 million has a maturity of 15 years

with 4 years grace period.

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PETKOJEN - Cogeneration Plant Project

• PETKOJEN is a co-generation plant

project of SOCAR Power which aims

to replace PETKIM’s aged steam and

electricity generation plant with

new clean coal-fired steam

generators.

• Total installed capacity to be 1,660

t/h steam and up to approximately

295 MW of electricity.

• Project will provide Petkim with

competitive advantage in terms of

reducing its energy costs.

• Petkim acquired 10% of the Petkojen

Project.

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PETKİM

PLANTS

PETKİM Port

Min. 1,5 million TEU

Container Handling

Terminal Capacity

WIND

ENERGY

Min 25 MW

Energy

Production

STAR Refinery

Capacity: 10

MMTPA

PETKİM Port

Min. 1,5 million TEU Container

Handling Terminal Capacity

STAR Refinery

(SOCAR’s

investment)

Capacity: 10 MMTPA

Capacity Increase of Current Plants;

PTA, 600.000 MTPA Ethylene

Production

STEP Power Plant

(SOCAR’s investment) 672

MW Energy Production

Capacity

Petkim 2014 versus Petkim 2023

PETKİM

PLANTS

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Naphtha

Ethylene

Propylene

Aromatics

Ethylene Plant

LDPE

(337.000 ton/year)

HDPE

(96.000ton/year)

MEG

(89.000ton/year)

VCM

PVC

(150.000ton/year)

PP

(144.000 ton/year)

Bag, greenhouse covers, film, cable, toys, pipes, bottles, hose,

packaging

Construction and water pipes, packaging film, toys, bottles,

soft drink crates, barrels

Polyster fiber, polyester film, antifreeze

Pipe, window shades, cable, bottles, building

materials, packaging film, floor tiles, serum bags

ACN

(90.000 ton/year)

Knitting yarn, ropes, tablecloths, napkins, doormats,

hoses, radiator pipes, fishing nets, brushes

Textile fibers, artificial wool, ABS resins (acrylonitrile

butadiene)

Benzene

(144.000 ton/year)

Toluen

(16.000 ton/year)

PA

(49.000 ton/year)

P-X

(92.000 ton/year)

PTA

(105.000 ton/year)

Detergent, solvents, explosives, pharmaceuticals,

cosmetics, parts of white goods

Polyester fiber, polyester resin, films, plasticizers,

synthetic chemicals

Polyester industry

LPG

(320.000 ton/year) C4

(140.000ton/year)

C5 Mixtures

(80.000 ton/year)

Appendix 1. Petrochemical Complex Flow Chart

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Appendix 2. PETKIM’s Ownership Structure

Petkim Stock Performance

Closing Price as of 30 September 2015 (TRY/Share) 4.00

Market Cap (TRY mn) 4,00

Free Float (%) 43.7

State Oil Company of Azerbaijan

Republic

SOCAR Turkey Energy

SOCAR Turkey

Petrochemicals

ISE Ticker: PETKM

Free Float : 43.7%

Petlim Port

87%

100%

51%

5.3%

43.7%

70%

SOCAR Turkey Yatırım A.Ş.

(RHAŞ 60%)

(MED 40%)

Refinery Holding

(RHAŞ)

100%

STAR Refinery

100%

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At the end of examination of 401 criteria under the headings of Shareholders,

Public Disclosure and Transparency, stakeholders and the Board of Directors as

specified in the CMB’s Corporate Governance Principles and of assessment the

Corporate Governance Compliance Rating of PETKİM is determined as 9.03 out of

10.00

Dividend Policy:

In line with the determination of Profit Distribution Policy in 2013 and in the

forthcoming years; the Company, in principle, accepts to distribute profits in cash

to shareholders at the maximum level without disregarding its medium term and

long term strategies, investment and financial plans, market conditions, and

economic developments.

Appendix 3. Corporate Principles and Dividend Policy

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Corporate Principles Breakdown

2009 2010 2011 2012 2013 2014 2015

Shareholders 7.21 8.00 8.40 8.61 8.94 9.01 9.09

Public disclosures and transparency 8.81 9.04 9.36 9.33 9.46 9.36 9.37

Stakeholders 8.83 9.27 9.51 9.23 9.56 9.49 9.59

Board of directors and executive 6.01 6.54 6.86 7.66 8.40 8.53 8.52

Compliance to corporate principles 7.71 8.19 8.52 8.72 8.97 9.01 9.03

We welcome your questions, comments and suggestions. Our corporate headquarters office address is:

Petkim Petrochemical Holding Corp. PO. Box.12

Aliağa, 35800 İzmir/ TURKEY

To contact us with respect to shareholding relations for individual and corporate investors, please call directly or send an e-mail to:

Also, please visit our web site at www.petkim.com.tr for further information and queries.

Semih ATALAY

SOCAR Turkey Investor Relations Manager

Direct: +90212 305 0142

semih.atalay@socar.com.tr

Erdem ÜNLÜER

SOCAR Turkey Investor Relations Senior Associate

Direct: +90212 305 0018

erdem.unluer@socar.com.tr

Mustafa ÇAĞATAY

Petkim Internal Audit & Investor Relations Coordinator

Tel :+90 232 616 1240 (Ext:2501)

Direct :+90 232 616 6127

E-mail :mcagatay@petkim.com.tr

Investor Relations

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