I would like to begin my message by commemorating the late Mustafa V. Koç, the Chairman of Koç Group, whom we lost unexpectedly. We will all uphold his legacy and do our best to take it to new heights.
We closed another year during which developed countries achieved limited economic growth, while developing countries performed poorly. As a result, the IMF revised down its global growth forecast from 3.4% to 3.1% for the year 2015, while Turkey is expected to post real growth of 3.8%.
Crude Oil Prices and Developments In The Global Refining Industry
In 2015, the price of crude oil started the year at US$ 55/bbl, but then closed it at US$ 36/bbl, due to rising economic risk in China and developing countries, increased crude oil production and excess supply, as well as the removal of restrictions on U.S. crude oil exports, and the expectation that sanctions on Iran would be lifted.
As lower oil prices supported strong demand growth, consumption of crude oil rose significantly by 1.61 million barrels per day to 94.4 million bbl/d in 2015. Additionally, refining margins increased globally as gasoline, jet fuel and diesel price ratios rose with the increasing number of vehicles on the road and low oil prices supporting global consumption.
Developments In Turkish Petroleum Products Industry
Consumption of certain products has increased in line with the gradual rise in national income over the years and the growing youth population. According to EMRA (Energy Market Regulatory Authority) data, diesel consumption rose 15.8% to 20.2 million tons in 2015, mainly because of the positive effect of economic growth on consumption, large-scale infrastructure projects such as the Istanbul New Airport and the third Bosphorus Bridge, in addition to low oil prices, and the positive effects of new regulations.
Thanks to efficiency improvements in gasoline-fueled engines, and the increasing number of gasoline-powered vehicles, as well as oil prices supporting strong demand, gasoline consumption increased 9.1% in 2015.
Tüpraş In 2015
With the improvement in the Mediterranean refining margin and the RUP Facility commencing operations in May 2015, Tüpraş increased its capacity utilization by 27.6% over the previous year, reaching full capacity utilization within a period of 12 months.
In the 12-month period, Tüpraş’s total sales increased 32%, exceeding nationwide consumption increase. As a result of increased production and strong Mediterranean price ratios, the Company’s exports grew by 22% y-o-y, and total sales amounted to 28.7 million tons, up 29%.
Thanks to the increase in the Mediterranean refining margin and especially high capacity utilization rate, cost per charge declined in 2015, and as a result, Tüpraş’s operating profit increased. Hence, despite the decrease in oil prices and the rising Dollar, profit before tax rose by TL 2,042 million to TL 2,225 million.
With the positive impact of the deferred Tax Income arising from the RUP investment incentive, Tüpraş’s net profit amounted to TL 2,550 million.
Through its energy efficiency projects, Tüpraş aims to minimize energy consumption by eradicating any waste of energy, without compromising on quality and performance, and to have joined the ranks of refineries in Europe with the lowest emission levels by 2017.
To that end, Tüpraş decreased its average energy density index value (EII) from 119.1 in 2008 to 99.2 in 2015.
Our Company’s achievements and commitment to energy efficiency were once again confirmed with the awards we received at the 2015 “SENVER” Industrial Energy Efficiency Competition organized by the Ministry of Energy and Natural Resources. Tüpraş strives to minimize the environmental impact of its operations and production processes, and fulfills its duties and responsibilities to the environment through continuous improvement efforts and investments. Improvement efforts undertaken in 2015 yielded a reduction of 71.7 thousand tons in greenhouse gas emissions. The total amount of emission reductions achieved from 2010 to the present day reached 1.4 million tons of CO2 equivalent. This is equivalent to the amount of carbon dioxide that can be absorbed by a forest consisting of about 215 thousand trees. Tüpraş was once again included in the BIST Sustainability Index in 2015. Additionally, in 2015, Tüpraş’s Corporate Governance Score, an important rating that indicates the level of compliance with the CMB’s Corporate Governance Principles, rose to 9.44 from 9.31 in 2015, as a result of our Company’s positive progress and achievements in the area of corporate governance.
Residuum Upgrading Project Is Fully Commissioned, Dividend Distribution and Investments Will Continue
In 2015, our Company’s total investment spending amounted to US$ 344 million, including the expenditure made for the Residuum Upgrading Project and other ongoing capital investments.
After the commissioning of the Residuum Upgrading Facility, Tüpraş’s white product yield increased and the capacity utilization of all refineries reached 100%. High capacity utilization and increased product sales from production significantly contribute to Tüpraş’s profitability as well as industrial capacity utilization nationwide.
The total amount of dividends paid to our shareholders since privatization has reached about 65% of Tüpraş’s market value, in U.S. dollars. In addition to providing high return to its investors, our Company has also contributed significantly to the national economy through capital investments amounting to US$ 5.5 billion.
Through investments aimed at operating profitability and its dynamic cash management, Tüpraş can sustain its high earnings, and as it has been the case in the past, our Company will continue to share them with its investors in the future as well.
Tüpraş continues to complete investments that will carry the Company to the highest level of sustainable profitability, while also reducing our country’s current account deficit. Thanks to its strong workforce, and operational and financial achievements, our Company will continue to create added value for its shareholders, business partners, and our country.