Tüpraş Continued Successfully Meeting Energy Demand of Turkey During the Third Quarter of 2020

Tüpraş, Turkey’s leading industrial company, has announced its financial results for the third quarter of 2020. In the third quarter of the year, production and sales of Tüpraş were as 6.4 and 6.7 million tons, respectively, while total investments realized as 680 million TL.
While the global impact of the Coronavirus (Covid-19) Outbreak persisted during the third quarter of the year, Tüpraş continued meeting Turkey’s fuel demand without any interruption on the back of its efficiency oriented production approach as well as its solid and strict financial policies. Tüpraş had a capacity utilization rate of 88.5% with 6.4 million tons of production in the third quarter of 2020 while domestic and total sales of Tüpraş realized as 6.0 and 6.7 million tons for the same period, respectively.

Consumption of oil products started to recover with reopening economies
After the second quarter, when historical lows were seen, the global demand for oil products has recovered partially with the mitigation of measures against the outbreak and reopening of economies as well as support from seasonal dynamics. Road fuel demand had the lead in this normalization trend. On the other hand, despite the fact that domestic flights in quite a number counties were almost back at last year’s level, the recovery in jet fuel demand was slower mainly due to the limited number of international flights. Diesel crack margins fell significantly as refineries shifted their production yield from jet fuel to diesel against the ongoing feebleness in jet fuel crack margins -even at negative levels for long while- and the stocks, which were already quite packed at the beginning of the year, started to enter the market. This resulted in pressure on refining profitability.

The input cost of complex refineries as heavier crude oil grades have become relatively more expensive with respect to Brent mainly due to lower heavy crude supply driven by the recent OPEC+ supply cuts and the rising crude oil demand from Asia. The falling sales profit margin and the disappearance of cost advantage caused even the gross margin of complex refineries, which were put under operation after great investments, float in the negative territory.

Brent price, which had started the third quarter at 43 $/bbl, has averaged at 43 $/bbl and 45 $/bbl in July and August, respectively, floating within a narrow range after the volatile first half. Brent crude oil price decreased to an average of 41 $/bbl in September due to the increasing concerns with the increasing number of cases on a global scale and the negative effects of changing seasonal factors on demand.

Tüpraş İzmir Refinery Resumed Production With Demand Recovery
Tüpraş İzmir refinery, which had stopped production on May 5th, to minimize the adverse impact of demand decline due to the Covid-19 outbreak, returned to production as of July 1, as anticipated with the recovery in domestic demand. Due to the ongoing weakness in jet fuel demand in this quarter, the production planning was optimized to minimize jet fuel output.

Due to decrease in sales with weaker demand and falling product prices Tüpraş’ revenues materialized at 17 billion TL in the third quarter.

While considerably weaker crack margins and narrower heavy-crude price differentials had affected the operational profitability of Tüpraş adversely, the inventory gain due to the increase in Brent price had contributed positively; as a result Tüpraş has ended up with an operational profit of 199 million TL in the third quarter of 2020. Tüpraş recorded a net loss of 420 million TL In the third quarter of 2020 due to the higher foreign exchange expenses as a result of TL depreciation.

Tüpraş has maintained its strong balance sheet through these volatile times with its effective financing policies.

Tüpraş Continues to Meet Turkey’s Fuel Demand with its Safe Operation Approach
Since the early days of the outbreak, Tüpraş has been implementing the necessary measures based on the recommendations of the competent authorities such as the World Health Organization and the Ministry of Health and the directives of Koç Holding Crisis Management Center.

Tüpraş, placing human and occupational safety at the center of business processes in its production journey with the priority of "My Future is My Safety", has completely fulfilled the infection prevention and control procedures determined by the Turkish Standards Institute (TSE), and became the owner of “TSE COVID-19 Safe Production Certificate”. Tüpraş always prioritizes the safe production approach; the company successfully continued to perform its duty to meet the fuel needs of Turkey with strong measures taken, without letting any setback.

Being aware of its strategic importance for fulfilling Turkey’s energy demand, Tüpraş has continued its projects on modernization and energy efficiency in the third quarter of 2020 and made a total investment of 680 million TL in the first 9 months of the year.
Operational and Financial Results
  Q3 2020 Q3 2019 Diff (%) 9M 2020 9M 2019 Diff (%)
(Thousand Tons)
Total Production 6,352 7,537 -16 17,304 21,195 -18
6,678 7,839 -15 18,192 22,210 -18
(Million TL)
Sales Revenue 17,035 23,309 -27 43,254 67,970 -36
Operating Profit 199 608 -67 -1,239 2,169 -157
Profit Before Tax -556 -146 -280 -3,683 127 -2,995
Net Profit -420 -155 -170 -2,870 340 -945

We use cookies in our website for technical purposes. To learn more about cookies, you can refer to Tupraş Cookie Policy.

If you consent to the use of these cookies please click "Accept cookies"

xAccept cookies