10 May 2023
Bangchak Group Reports Sales Revenue Growth of 16% from Last Year, Exceeding THB 80,000 Million
Record-High Production Capacity, and Record-High Revenue from Upstream Business OKEA
Bangchak Group disclosed its performance in first quarter of 2023, which earned a sales and services revenue of THB 80,380 million, EBITDA of THB 10,992 million, net profit attributable to owners of the parent was THB 2,741 million, representing earning per share of THB 1.91. The Refinery and Oil Trading Business Group recorded the highest-ever production of 124.7 KBD, while the Natural Resources Business and New Business Development Group, via OKEA ASA, recorded a new-high revenue, with sales volume exceeding the production according to the contract due to the lifting of 2 cargoes from Draugen field and full-quarter revenue recognition from Brage field, which was acquired from Wintershall Dea. The Company is committed to moving forward with investments in creating a balance between energy security and transitioning to clean energy.
Chaiwat Kovavisarach, Group Chief Executive Officer and President, Bangchak Corporation Public Company Limited, announced that the performance of the first quarter of 2023 was on track and reflected the business strategy of Bangchak Group which emphasizes quality business growth. In the first quarter of 2023, Bangchak Group had a sales and service revenue of THB 80,380 million, which decreased by 5% from the previous quarter, but rose 16% from the same period in 2022, and EBITDA of THB 10,992 million, a 58% increase from the previous quarter, decreasing 20% from the same period the previous year. Net profit attributable to owners of the parent was THB 2,741 million, an increase of more than 100% from the previous quarter, decreasing 37% from the same period in 2022, representing earnings per share of THB 1.91.
The key operating results of each business group in the first quarter of 2023 are as follows:
The Refinery and Oil Trading Business Group recorded an EBITDA of THB 4,029 million, an increase of 83% from the previous quarter, but down 20% from the first quarter in 2022. Bangchak Refinery has maintained high production levels, which recorded a new high of 124.7 KBD. During the first quarter, it recognized gains from the forward contracts of crude oil and oil products (including gains on fair value measurements per the accounting standards) improved from the previous quarter, since crack spreads of contracted products tended to decline.
Operating GRM decreased from US$ 14.68/BBL in the fourth quarter of 2022 to US$ 11.44/BBL, representing a decrease of US$ 3.24/BBL, due mainly to the lower crack spreads of diesel products in line with global market developments. Diesel is a product with the highest yield for Bangchak Refinery. In this quarter, there was an inventory loss of US$ 4.41 per barrel or equivalent to THB 1,687 million, decreasing from the previous quarter due to a global crude oil price adjustment at a lower rate.
The Marketing Business Group recorded an EBITDA of THB 737 million, an increase of more than 100% from the previous quarter but a decrease of 34% compared to the first quarter of 2022. In This quarter saw an increase in marketing margin per unit based on the adjustment of the new appropriate market prices for fuel oil and the reduction of contributions to the diesel fuel fund, as resolved by the policy of the Energy Policy and Planning Office (EPPO). The sales and administrative expenses decreased from the last quarter of the year, which is a period with promotional expenses. Additionally, the overall sales volume decreased due to seasonal factors.
The Power Plant Business Group had an EBITDA of THB 852 million, representing a decrease of 15% compared to the previous quarter and a decrease of 72% compared to the first quarter of 2022. During the first quarter of 2023, electricity sales volume of solar power plants in Japan and Thailand recorded an increase (17% and 4% from the previous quarter respectively) due to the higher irradiation from a seasonal factor. Similarly, wind power projects in Thailand saw an increase in electricity production by 38% compared to the previous quarter, attributed to higher wind capacity. Additionally, the share of profit from Combined Cycle Gas Turbine (CCGT) power in the United States of America, started to be recognized in March 2023. However, the hydroelectric power plants in Laos have temporarily halted electricity production in this quarter to prepare for selling electricity to Vietnam Electricity (EVN).
The Bio-Based Product Business Group recorded an EBITDA of THB 107 million, a decrease of 26% from the previous quarter, and a 69% decrease from the first quarter of 2022. The production and distribution of ethanol recorded revenue decreased, mainly due to a decrease in sales volume in accordance with the sales management plan. Nevertheless, there are supporting factors for the production and distribution of biodiesel business (B100), where the costs of raw materials, energy, and chemicals have decreased.
The Natural Resources Business and New Business Development Group recorded an EBITDA of THB 5,414 million, an increase of 44% from the previous quarter, and 27% from the first quarter of 2022, due to sales volume of OKEA significantly expanded over 100% from the previous quarter, owing to 2 lifting cargoes from Draugen field and full-quarter revenue recognition from Brage field, which was acquired from Wintershall Dea. As a result, OKEA achieved its highest revenue record in this quarter while continuing to seek opportunities for continuous business expansion. Most recently, OKEA signed an agreement to acquire to acquire 28% of the working interest in Statfjord petroleum field on the Norwegian Continental Shelf (NCS). This acquisition is expected to increase the combined production capacity to 40,000 barrels of oil equivalent per day, compared to the previous level of 20,000-25,000 barrels of oil equivalent per day. The transaction is expected to be completed by the end of the fourth quarter of 2023.
Chaiwat added that “For the second quarter of this year, crude oil price is expected to continue facing pressure due to concerns that the economy is heading for a recession, particularly in Europe. However, it was also driven by growing supply tightness concerns after OPEC+’s decision to cut oil production. Furthermore, the refining margin of cracking refineries in Singapore is expected to decline from the first quarter. Nevertheless, given volatile energy prices and looming concerns over the global economy slowdown, which could affect oil consumption, Bangchak Group continues to closely monitor energy prices and implements efficient management and operational enhancements.
Throughout its business operations, Bangchak places importance on fostering growth while balancing energy security for the country. It is committed to conducting business operations with a focus on sustainability in all dimensions, including environmental stewardship, social responsibility, and good governance.
The company has gained international recognition as a leader in sustainability which is reflected in its MSCI ESG Ratings, which have consistently been at the highest level of AA for five consecutive years, making it the top-rated Thai organization in its industry group. Additionally, in 2022 the company was assessed by S&P Global, the assessor of the Dow Jones Sustainability Indices (DJSI), placing the company among the Top 3 companies globally in the Oil & Gas Refining and Marketing industry, receiving best scores in 11 of the 21 assessment criteria.