In 2014, Fluctuations in oil prices and the exchange rate has a negative impact in financial results

From a $108 starting crude oil price level, and after seeing $115 in June, the negative global economic developments in the second half of the year, the decrease in geopolitical risks, increased US tight oil production, combined with an OPEC decision not to cut supply, the year-end crude oil price dipped to $55 and the oil sector in general suffered high inventory losses.

Stable global demand for products, new refineries opening in the Middle East and Asia whilst US refineries taking full advantage of low cost of crude oil and energy with high capacity utilisation, continued to disrupt the product balance of the sector. However, in the fourth quarter, the global maintenance activities increased and a decrease in the supply of products with unplanned refinery shutdowns coupled with the impact of the rapid decline in crude oil prices, the Mediterranean complex refinery margin increased from 0.30$/bbl to 3.84 $/bbl in the 4th Quarter of 2014, in the year on average it increased from 0.28 $/bbl to 1.95$/bbl level.

In parallel, Tüpraş's Q4 net refinery margin was realized at 4.56 $/bbl. When compared with the 12-month period of the last year, the net refinery margin increased from 2.45 $/bbl to 3.21 dollars / barrel.

The capacity utilization stood at 74.9% in 2014, due to İzmit Refinery connection and planned shut downs for Residuum Upgrading Project, prior to the RUP in other refinery necessary maintenance work and weak demand in the first half of the year. Falling profitability due to decreased sales from imports and falling demand for asphalt, Tüpraş domestic sales decreased by 2.4 million tons (including 980 thousand tons of bitumen and 1,356 thousand tons diesel). Total sales were approximately 22.2 million tons due to the optimization of the production and decreased export sales by 490 thousand tons.

Despite the decline in sales volumes and in the Mediterranean product prices, Sales revenue was just 3.4% below 2013 due to the effect of the average annual exchange rate rising by 14.9%.

Operational and Financial Data

	2013	2014	Diff.
Total Volume Processed (ton*000)	22,240	21,050	-1,189
Domestic Sales (ton*000)	19,239	16,861	-2,378
Total Sales (ton*000)	24,083	22,194	-1,888
Total Sales Revenue (Million TL)*	41,200	39,817	-%3.4
Operating Profit (Million TL)*	842	359	-W
Profit/Loss Before Tax (Million TL)*	341	-82	-423
Net Profit (Million TL)*	336	-85	-422

Operating profit as defined by the Tax Accounting Standards decreased by 57% to TL 359 million due to rapid falls in international oil prices in the last two months, deepening negative conjuncture and the inventory losses. In addition, the profit was impacted by the imposition of a TL 309 Million administrative penalty paid to the Competition Board, for which the company launched legal action to overturn the decision and have the penalty repaid, in a court case that is continuing. The resulting Net loss was TL 85 million.

As of the end of December, total investment expenditure was $959 million, including the RUP investment during the period. Total investment on the Project, including financial expenses and related projects, which are expected to contribute one Billion dollar to the nation’s current account balance, had reached 3 Billion dollar.

Whilst striving to ensure guarantee of supply of the highest quality products to the Turkish market, by sustainably realizing operational and financial targets, we continue to generate greater value for our shareholders, other stakeholders and society in the future.

For the information of the public.
The Corporate Communications Department