Bangchak Group Reports First Quarter 2022 Performance
published : 13 May 2022 at 06:11
Quarterly EBITDA Exceeds 10,000 Million Baht for the First Time
Benefitting from Portfolio Diversification while Focusing on Energy Security and Leading the Way to Low-Carbon Society
Bangchak Group reported its first-quarter 2022 performance, with revenues from sales and services of THB 69,055 million, EBITDA of THB 13,714 million, and net profit attributable to the parent company of THB 4,356 million, making this the first quarter to see EBITDA over THB 10,000 million, representing earnings per share of THB 3.12. The quarter recorded a Net Inventory Gain of THB 2,900 million from the management of oil reserves to stabilise energy security following the Russia-Ukraine conflict, the recording of revenue from Natural Resource Business, OKEA, and record-breaking crude run at 122.1 KBD, while addressing its energy transition through the operation of fuel pipeline and logistics businesses since 1 January 2022.
Chaiwat Kovavisarach, President and Group Chief Executive Officer, Bangchak Group revealed that the performance in the first quarter of 2022, Bangchak and its subsidiaries generated THB 69,055 million, increasing by 3% from the previous quarter, and by 67% from the same period in 2021, equivalent to an EBITDA of THB 13,714 million, increasing by 48% from the previous quarter, and by 189% from the same period in 2021, and recording a net profit attributable to the parent company of THB 4,356 million, increasing by 148% from the previous quarter, and by 91% from the same period in 202, representing earnings per share of THB 3.12.
The increased performance was, in part, the result of the change to the consolidated method for OKEA subsidiary since the second-half of 2021, and the Refinery and Trading Business Group benefitting from significant increase in global crude oil and finished products prices from tight energy supply conditions following Russian-Ukraine tensions, as well as demand growth following the progress of COVID-19 vaccinations and the gradual easing of social restrictions around the world. As a result, average Dubai crude oil in the first quarter increased to USD 96.21 per barrel, an increase of USD 17.95 per barrel from the previous quarter, and USD 36.00 from the same period in 2021. The Group had gradually increased its reserve inventory, resulting in a Net Inventory Gain (Gross inventory margin adjusted by crude and product price hedging contracts) of about THB 2,900 million in the first quarter.
These conditions improved operating GRM leading Bangchak Refinery to increase and maintain its highest record crude run. Simultaneously, the Natural Resources Business and New Business Development Group also benefitted from significantly higher energy prices, especially natural gas which increased 367% from 2021.
First quarter 2022 performance results for each business group, are as follow:
Refinery and Trading Business Group saw 63% performance increase from the previous quarter, and 108% from the same period in 2021, with an Inventory Gain of THB 3,566 million (Net Inventory Gain of THB 2,350 million), operating GRM increased to USD 6.84 per barrel, increasing by USD 3.6 per barrel from the same period in 2021, due to widening crack spreads for all products in the global market. This is especially significant for the Diesel and Dubai crack spread (GO-DB), which is Bangchak refinery’s largest product yield, prompting the refinery to increase its production to 122,100 KBD or 102% utilisation rate, which also supported the expansion of Unconverted Oil (UCO) exports.
The Oil Trading Business by BCPT, improved as profit per unit for low sulphur fuel oil products group increased reflecting fuel oil demand recovery from the marine transport segment following global economic recovery. The fuel pipeline and logistics business by Bangkok Fuel Pipeline and Logistics Company Limited (BFPL) commenced operating the fuel pipeline systems, Bangkok – Bang Pa-In, to increase revenue channels, reduce costs and losses from conventional transportation, and reduce carbon emissions into the atmosphere.
Marketing Business Group saw 338% performance increase from the previous quarter, mainly from oil price increasing at higher rates, resulting in greater Inventory Gain, and an increase in sales volume by 2% from the previous quarter, 14% from 2021, following the immunity boost from widespread COVID-19 vaccinations, and the aviation industry starting to recover as the international travel restrictions are lifted. Furthermore, although the marketing business continues to be affected by the latest net marketing margin, pressured by the global market higher cost of finished products prices, and the Company cooperating with the government to peg domestic diesel retail prices at no more than THB 30 per litre to help reduce cost of live for consumers, its costs management policies along with the promotion of lubricant sales, which have higher marketing margins, was able to increase net marketing margins by 9% from the previous quarter, despite a 22% decrease from the same period in 2021.The Company continues to emphasise the expansion of non-oil business, with Inthanin able to increase coffee sales to a record new high in March 2022.
Power Plant Business Group by BCPG Public Company Limited saw 196% performance improvement from the previous quarter, and 214% from the same period in 2021, mainly from the recognition of gains from the disposal of the whole investment in Star Energy Group Holdings Pte. Ltd. (“SEGHPL”) at THB 2,031 million, as well as higher solar irradiation, and the commercial operation (COD) of solar rooftop projects in Thailand, and the full-quarter recognition of electricity generation from Chiba 1 solar power plant in Japan. Moreover, in March, BCPG commence COD of a solar power plant in Komagane, Japan with a power purchase agreement (PPA) of 25 MW, increasing its Japanese commercial operations to 59.7 MW.
Bio-Based Products Business Group benefitted from the ongoing price increase of B100, despite remaining affected by the reduction B100 blend to peg the price of retail diesel prices in Thailand, resulting in a 35% increase in its quarterly performance, and gross margin increase by 41% from the previous quarter. It also recorded revenue from High Value Products (HVP) such as from health supplements under the “B nature+” brand though online channels, 50 Inthanin coffee outlets, as well as pharmaceutical grade alcohol hand sanitisers. During the quarter, BBGI saw selling and administrative expenses increased by 2% from the previous quarter, from the expenses related to the issuance and initial public offering (IPO) and listing on the Stock Exchange of Thailand (SET) on 17 March 2022.
Natural Resource Business Group and New Business Development recorded a 12% decrease from the previous quarter, but an increase of more than 1,000% from the same period in 2021 from the rising trend of energy prices mainly from OKEA’s performance which recorded an EBITDA increase of 401% from the same period in
2021 despite lower sales volume following no sales from Ivan Assen and scheduled maintenance of Gjøa, but supported by the increase in the average price of oil and especially natural gas, which increased 367% from 2021. Moreover, the Group changing its recording method of investment in OKEA to subsidiary which resulted in recording of performance with the consolidated method since 1 July 2021, is expected that OKEA will maintain production range of 18,500 - 20,000 boepd, including the increased ownership in Ivar Assen field from 0.554% to 2.777% since 31 March 2022.
Chaiwat added that the second quarter of 2022, oil prices will continue to be supported by extremely tight crude supplies from the Russia-Ukraine tensions. Finished product prices are supported by continuous demand recovery as countries around the world lift restriction on travel, which should be a positive factor for the Refinery and Oil Trading Business Group, and the Natural Resources Business and New Business Development Group. Furthermore, operational GRM is expected to remain at a high level which will support the refinery to maintain high crude run levels. The Marketing Business Group is expected to remain pressured by rising global market costs of finished products. The Company is closely monitoring the situation in order to respond appropriately, accelerating investments to maintain a balance between national energy security and clean energy transition, committed to being the leader of the low-carbon society, promoting ESG (economic, environmental, and corporate governance for all stakeholders.