10 November 2021
Bangchak Records THB 1,820 million Third Quarter Profits Strengthening group businesses, accelerating environmentally-friendly investments and becoming a beyond 100-year sustainable organization,
Performance of the first 9 months of 2021, Bangchak recorded a profit of THB 5,868 million, with Q3/21 recorded a profit of THB 1,820 million supported by economic recovery and the expansion of oil demand, the incorporation of large exploration and production business OKEA revenue in Norway, with plans to move forward into becoming a sustainable organization of over 100 years, accelerating environmentally-friendly investments, supporting Energy Transition through carbon credit trading via the Carbon Markets Club, targeting Carbon Neutrality by 2030 and Net Zero GHG Emissions by 2050, as well as developing non-oil businesses to reflect modern consumer lifestyles, focusing on stakeholder health and safety amidst the ongoing COVID-19 situation.
Chaiwat Kovavisarach, President and Chief Executive Officer, Bangchak Corporation Public Company Limited revealed that Bangchak Group performance during the first 9 months of 2021 of the company and its subsidiaries recorded revenue from sale of goods and rendering of services in the amount of THB 132,655 million, a 28% increase (YoY), with an EBITDA of THB 16,537 million, an increase of 1,121% (YoY) (attributable to change in recording method of OKEA investments from associated to subsidiary company). This was supported by economic recovery and the expansion of oil demand following progress in the global COVID-19 vaccine rollout driving up crude oil and finished product prices. The average Dubai crude price for 9M/2021 was USD 66.36/BBL, a USD 24.91/BBL increase, or 60% (YoY), leading the Group to record an inventory gain of THB 5,159 million. Furthermore, the Refinery Business had a stabilized Operating GRM with a positive trend and increased its crude run and UCO (Unconverted Oil) product yield to support refinery margin.
The Power Plant Business saw improved performance from increased electricity sales, attributable from the hydro power business in Lao PDR, geothermal power business in Indonesia, and solar power business in Thailand. Conversely, the Marketing Business, and Bio-Based Product Business was affected by the worsening COVID-19 Delta variant outbreak domestically, significantly reducing oil consumption demands, coupled with low net marketing margin resulting from restrictions preventing the adjust of retail prices to reflect the increasing costs of finished products and Biodiesel (B100) following the global market.
Additionally, the performance incorporates the change in recording method of its OKEA investments from associated company to subsidiary as of 1 July 2021. In the consolidated financial statement, OKEA EBITDA was about THB 3,000 million, as well as the reversal from impairment of investment in OKEA of THB 400 million, and gain from fair value adjustment of investment in Ubon Bio Ethanol Public Company Limited (UBE) THB 616 million due to UBE initial public offering (IPO). This resulted in the first 9 months of 2021 to realized net profit attributable to owners of the parent at THB 5,868 million, a 181% increase (YoY), or equivalent to THB 4.05 /share.
The performance in Q3 of 2021, the company and its subsidiaries recorded revenue from sale goods and rendering of services in the amount of THB 47,649 million, a 9% increase (QoQ), with an EBITDA of THB 7,531 million, a 76% increase (QoQ), mostly from the change in recording method of investment in OKEA and an Inventory Gain of THB 1,386 million. Performance was impacted by Refinery and Oil Trading Business where Operating GRM was pressured by an increase in crude premium over Dated Brent, as well as Marketing Business Group decreased net marketing margin and sales volume as a result of the third wave of the COVID-19 outbreak.
Nevertheless, this quarter recorded profit gain from the fair value adjustment of investment in Ubon Bio Ethanol Public Company Limited resulting in the quarter’s net profit attributable to owners of the parent at THB 1,820 million, a 3% increase (QoQ), or equivalent to THB 1.25 /share, mainly due to the following reasons.
1. Refinery and Oil Trading Business Group
- Performance declined by 4% (QoQ) but increased by 212% (YoY) as global crude prices continue to increase amidst a weakening baht, resulting the quarter recording an inventory gain of THB 1,261 million.
- Increased product yield of UCO (Unconverted Oil) to improve refining margins and satisfy increasing product demands boosting quarterly average production rate to 111.4 KBD, or a 93% utilization rate.
2. Marketing Business Group
- Performance declined by 32% (QoQ) and 27% (YoY), mainly from the decline in total sales volume following the third wave of the COVID-19 outbreak. The cumulative retail sales volume market share between January – September 2021 was 16%, a 15.6% increase (YoY), able to retain its second place market share ranking (Department of Energy Business data).
- Installation of EV Chargers in 40 service stations in 27 provinces across the country, and emphasizing non-oil business expansion, that by the end of the quarter, there were 739 branches of Inthanin coffee, 12 branches of DAKASI – Bubble Tea Store, and the development of 5 locations for “Bangchak Food Truck.”
3. Power Plant Business Group by BCPG Public Company Limited (BCPG)
- Performance improved by 18% (QoQ) and 4% (YoY), mainly from increased electricity sales from the hydro power plant in Lao PDR, and the realization of share of profit from investments in associated companies totaling THB 150 million, mainly from the Geothermal Power Plant business in Indonesia.
- Impact Energy Asia Development Limited (IEAD), a BCPG associate company, signed a 600 MW 25-year PPA with Vietnam Electricity at the Lao-Vietnam border.
- Issued Green Bonds in the value of THB 12,000 million to raise funds through the bond market for the first time.
4. Bio-Based Product Business Group by BBGI Public Company Limited (BBGI)
- Performance improved 201% (QoQ) and 128% (YoY), mainly from recognized profit gain from fair value adjustment of investment in UBE and its IPO.
- Biodiesel business impacted by decreased B100 sales volume, while retaining the previous quarter’s gross profit margin. For ethanol business recorded decline in gross profit at 48% (QoQ) and 82% (YoY) from lower ethanol sales volume. High Value Products (HVP) business began the retailing consumer nutritional supplements under the “B Nature Plus” brand.
- Submitted IPO prospectus to the Securities and Exchange Commission for offering 216.60 million shares, which represented 30% of common shares and paid up capital with par value per share of 5.00 baht.
5. Natural Resources Business Group
- Profit gain from sales of BCP Energy International Pte. Ltd. (BCPE) investment in the amount of THB 112 million.
- EBITDA improved by 158% (QoQ) and 622% (YoY), from higher revenue from crude oil and gas sales.
- YME project began production in October 2021, strengthening OKEA’s production and cash flow. In the first year, OKEA’s production will increase by 5,600 barrels per day, and is estimated that for the rest of 2021 it production will be 15,500 – 16,500 barrels per day.
The improving COVID-19 situation following progress in the vaccine rollout steadily decreasing the number of infections has prompted Bangchak to introduce Hybrid Workplace measures, allowing employees to balance between working from home and offices to improve efficiency and agility in response to the situation. Continually emphasizing the importance of safety and health of all employees and customers, the company procured COVID-19 vaccines, so that a high majority has received two jabs, and has proceeding to procure the third booster shot, and regularly disinfects office spaces. The company has also provide antigen test mobile units for employees, including those at service stations and Inthanin coffee shops, on a weekly basis, to boost consumer confidence in the service.
Moreover, it has also drafted strategic plans and restructured the organizations for sustainability, financially securing sufficient working capital for continued operations and investments, and recently successfully issued and sold THB 7,000 million of debentures, allowing the company to better handle the COVID-19 situation, and on track to becoming a strong, stable and sustainable organization of 100 years.