Performance of the first 9 months of 2022, Bangchak recorded a profit of THB 12,103 million, with the third quarter of 2022 recording a profit of THB 2,470 million, amidst a global decline in crude oil and refine product prices, boosted by outstanding adaptations of the Refinery Business, and upstream investments in Norway via OKEA ASA, adopting the Norwegian exploration and production business model, prioritizing energy security and low-carbon business operations by balancing the energy trilemma, namely Energy Security, Energy Affordability, and Environmental Sustainability.
Chaiwat Kovavisarach, Group Chief Executive Officer and President, Bangchak Corporation Public Company Limited revealed that Bangchak Group’s first nine-month performance for 2022 generated revenue of THB 227,619 million from sales and rendering of services, increasing 72%, EBITDA of THB 37,773 million, increasing 128%, and net profit attributable to the owners of the parent at THB 12,103 million, increasing 106% compared to the previous year, representing earnings per share of THB 8.64. The increased EBITDA was partially supported by consolidation of OKEA since quarter 3 of 2021, and increases from each business group as follows.
The Refinery and Trading Business Group recorded EBITDA of THB 15,658 million, increasing 149% from the same period of the previous year, supported by significant increase in global crude oil and refined product prices as a result of demand recovery following the easing of COVID-19 restrictions prompting rebound in economic activity and travel. Oil supply remains tight due to the ongoing Russia-Ukraine conflict. Nevertheless, crude oil prices began to decline in the third quarter of 2022 following concerns over the likelihood of a global recession, and ongoing issues with inflation, but was supported by the late September decision of OPEC+ to support crude prices by cutting production. The nine-month average Dubai crude oil price was USD 100.29/BBL, increasing USD 33.93/BBL, increasing 51%, from the same period the previous year, resulting in Bangchak Group’s inventory gain of THB 5,754 million, which is higher than the previous year.
Additionally, this is the result of efficiency improvements, product diversification, significantly increasing operating GRM, and further supporting Bangchak refinery’s high average crude run during the first nine-month period of 2022 of 122,600 barrels per day, equivalent to 102% of its operating capacity.
Marketing Business Group recorded EBITDA of THB 2,789 million, increasing 18% from the same period of the previous year, supported by increased sales volume due to the improvement in COVID-19 situation, and higher total net marketing margin per unit following the easing of government diesel price ceilings to better align with global prices prompting service station retail prices this quarter to better reflect the costs of refined products. Furthermore, diesel demand from power plants and industrial facilities to replace the high price of liquefied natural gas (LNG) increased both the sales volume and marketing margin of the industrial market.
Power Plant Business Group recorded EBITDA of THB 5,396 million, increasing 71% from the same period of the previous year, from increased revenue from the sale of electricity, mainly from the commercial operation (COD) of three solar power plant in Japan, with total PPA of 65 MW, and hydropower project in Lao PDR, supported by the appreciation of the US dollar against the Thai baht. Moreover, it recorded profit of THB 2,031 million from the disposal of all investments in Star Energy Holding Pte. Ltd.
Bio-Based Products Business Group recorded EBITDA of THB 471 million, declining 71% from the same period of the previous year, from a decline in B100 sales volume following the Committee of Energy Policy Administration (CEPA) resolution to reduce the B100 blending mandate in high speed diesel from B10 during the first nine months of the previous, to B5 during the same period this year. Furthermore, ethanol sales volume also declined due to sales plan management. Moreover, the third quarter of the previous year recognized gains from fair value adjustment of investments.
Natural Resource Business Group and New Business Development recorded EBITDA of THB 13,856 million, increasing 305% from the same period of last year, supported by upstream business investments in Norway, with OKEA ASA recording twice as much revenue from crude oil and gas sales than the first nine-month of the previous year, as a result of a significant increase in energy prices, especially natural gas, which rose as much as 153% from the same period of last year. Nevertheless, the performance was dampened by the THB 220 million impairment of the Yme field (net after tax and in the proportion of the group’s equity share).
Bangchak Group’s continued recovery following the continued improvement of the COVID-19 situation, and its significantly improved financial status, prompted TRIS Rating Co., Ltd. to upgrade the company’s credit rating to “A” from “A-” on 27 October 2022. BCPG, a main subsidiary, and BBGI, a strategically important subsidiary, were upgraded to “A” (from A-) and “A-” (from BBB+), respectively. Outlooks for all companies remain “Stable”.
The performance in Q3 of 2022, the company and its subsidiaries, generated revenues from sales and rendering of service totaling THB 74,767 million, and EBITDA of THB 11,487 million, a decrease from the previous quarter. This is attributable to the drop in global crude oil and refined products prices, resulting in an Inventory Loss of THB 2,698 million, and the Refinery and Trading Business Group’s operating GRM declined in line with Crack Spread and the increase in crude premium. The Natural Resources Business Group helped to lessen the aforementioned impacts, with OKEA’s revenue recorded an all-time high sale of crude oil and gas in this quarter, an increase of 136% from the previous quarter. As a result, the quarter net profit attribute to owners of the parent is THB 2,470 million, representing THB 1.73 earnings per share.
Chaiwat concluded that the fourth quarter is the annual High Season, with numerous factors to accelerate demand, including domestic travel season, the government announcement to classify COVID-19 as a “communicable disease under surveillance”, and ongoing easing of inbound travel restrictions, which will help increase the number of foreign travelers. Furthermore, power plants continue to use diesel fuel to replace the high cost of liquefied natural gas (LNG).
Bangchak Group prioritizes energy security and low-carbon business operations towards addressing its targets of Carbon Neutrality in 2030, and Net Zero in 2050 by balancing the Energy Trilemma, namely, Energy Security, Energy Affordability, and Environmental Sustainability.