Interim report
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PTT Global Chemical Public Company Limited Management Discussion and Analysis FY2024 The only company in chemicals sector ranked as No.1 for six consecutive years
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 2 Content Page 1. Executive Summary 3-7 2. Performance Analysis by Business Unit 2.1 Upstream Business Unit 8-10 2.2 Intermediates Business Unit 10-11 2.3 Polymers and Chemicals Business Unit 11-12 2.4 Bio & Circularity Business Unit 12-13 2.5 Performance Chemicals Business Unit 13 3. Operating Performance 14-16 4. Statement of Financial Position 4.1 Balance sheet 17-18 4.2 Cashflow statement 19 4.3 Key Financial Ratios 20 5. Project Progress 21 6. Market and Business Outlook in 2024 22-23 7. Sustainability Management (Environment Social Governance) 24-25 8. Appendix 8.1 Production and Sales 26-27 8.2 Detail of Adjusted EBITDA by Business Unit 28 8.3 Planned Maintenance Shutdown Schedule 29
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 3 1. Executive Summary In Q4/2024, PTT Global Chemical Public Company Limited (“the Company”) had total sales revenue of Baht 132,372 million, decreased by 11% from Q3/2024 and decreased by 18% when compared to the same period last year due to the decline in the Upstream business from the decrease in the prices of petroleum products, which aligns with the decrease in average global crude oil prices, along with a significant drop in Aromatics p rices this quarter. Additionally, the petrochemical market continues to face challenges due to economic pressure from the slow recovery, resulting in most petrochemical prices remaining at low levels despite the announcement of stimulus measures in China. In Q4/2024, the Company had Adjusted EBITDA of Baht 2,663 million, decreased by 68% from Q3/2024, primarily due to the continued weakness in the overall petrochemical business, pressured by factors such as the economic slowdown, which has affected the downstream demand for petrochemical products, and the addition of new production capacities in the market, particularly from China. As a result, the average selling price of polyethylene has declined, along with the decrease in the spread of Aromatics products . For Refinery business, the Gross Refining Margin (GRM) slightly increased compared to the previous quarter, with the GRM in Q4/2024 at 3.7 USD/barrel. The performance of Performance Chemicals business declined due to Vencorex Group and seasonal ity during the fourth quarter, which includes long holiday periods, especially in Europe and the Americas, leading to a decrease in sales volume for allnex. Additionally, the Company recognized the impact in Q4/2024 from the retrospective adjustment of the ethane feedstock purchase agreement with PTT Public Company Limited, effective from January 2024 as the higher natural gas price. The Company recognized non-recurring items, including stock loss net NRV reversal for a total gain of Baht 941 million, gain from commodity hedging of Baht 253 million, net loss from foreign exchange and financial derivatives of Baht 1,033 million. Additionally, the Company recognized a share of loss from investments totaling Baht 725 million this quarter, due to the continued weak performance of petrochemical joint ventures, specifically, the polypropylene business. In this quarter, as part of the Company's portfolio management strategy (Portfolio transformation) aimed at strengthening the business amidst industry competition challenges, which the Company has communicated impacts from the restructuring of Vencorex Group and PTT Asahi Chemical Company Limited (PTTAC), which had already been partially recognized in Q3/2024. In Q4/2024, the Company made further progress in assessing related expenses, recognizing a provision for restructuring expenses of Vencorex Group amounting to Baht 1,455 million. Additionally, on November 15, 2024, the extraordinary general meeting of PTTAC shareholders app roved the PTTAC’s business withdrawal plan, resulting in the Company recording a provision for PTTAC’s restructuring expenses of Baht 2,836 million. Considering these impacts, the Company reported net loss of Baht 11,738 million in Q4/2024.
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 4 Table 1 : Performance Summary (Unit: Million Baht) Q4/20232 Q3/2024 Q4/2024 YoY % +/(-) QoQ % +/(-) 2023 2 2024 YoY % +/(-) Sales Revenue 162,264 149,431 132,372 -18% -11% 616,635 604,045 -2% EBITDA 12,585 4,755 3,786 -70% -20% 40,449 33,755 -17% EBITDA Margin (%) 8% 3% 3% -5% 0% 7% 6% -1% Share of profit /(loss) of investments in JV and Associates 11 (279) (725) <-200% -160% (725) (1,462) -102% Net Profit/(Loss) (exclude impairment/restructuring cost) Loss from Impairment in Business Restructuring (one-time) - - (1,801) (17,511) (7,448) (4,291) 100% 100% <-200% 75% 999 - (8,009) (21,802) <-200% 100% Net Profit/(Loss) 5,081 (19,312) (11,738) <-200% 39% 999 (29,811) <-200% EPS (Baht/Share) 1.13 (4.28) (2.61) <-200% 39% 0.22 (6.62) <-200% Adjusted EBITDA 1 9,912 8,387 2,663 -73% -68% 38,117 31,766 -17% Adjusted EBITDA Margin (%) 6% 6% 2% -4% -4% 6% 5% -1% Note: 1) Adjusted EBITDA refers to EBITDA excluding Stock gain/(loss),NRV, Gain/(loss) from commodity hedging, and Extra item. 2) Retroactively Adjusted EBITDA by excluding gain from bond buy-back in 2023 In 2024, the Company had total sales revenue of Baht 604,045 million, decreased by 2% compared to the previous year. This decline was primarily due to lower revenues from Upstream business, driven by a decrease in the prices of petroleum products and Aromatics. This occurred despite an increase in petrochemical sales volume, particularly in Intermediate products, as there were planned maintenance shutdowns in 2023 at the Monoethylene Glycol (MEG) plant during the first half of the year and Phenol plant 2. In 2024, the Company reported an Adjusted EBITDA of Baht 31,766 million, decreased by 17% from the previous year. This decline was primarily due to weaker performance in the Refinery business, driven by a lower Gross Refining Margin (GRM), mainly resulting from the narrowing Diesel spread. Additionally, the petrochemical business continued to face pressure from the sluggish economic recovery, leading to subdued demand and an increase in petrochemical supply throughout the year. Moreover, the Company recogni zed non-recurring items, including a loss of Baht 2,457 million from stock loss net NRV, net gain from foreign exchange and financial derivatives of Baht 383 million. The Company also reported a share of loss from investments of Baht 1,462 million for the year, higher than the previous year, mainly due to weaker performance in the petrochemical business, particularly in the Polyvinyl Chloride (PVC) business, which was affected by a decline in PVC product price spreads. In 2024, the Company progressed on its portfolio transformation strategy to strengthen its business, aiming to mitigate risks and enhance long-term competitiveness. As part of this initiative, the Company restructured two entities, 1) Vencorex Group, a producer of HDI and HDI derivatives, in which the Company holds 100% shares, and 2) PTT Asahi Chemical Company Limited (PTTAC), a joint venture in the Acrylonitrile and Methyl Methacrylate business, in which the Company holds 50% shares. • On September 6, 2024, Vencorex France and Vencorex TDI filed a petition to enter into the judicial reorganization proceedings with the Commercial Court in Lyon, France. On September 10, 2024, the
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 5 Commercial Court accepted the petition, with the proceedings initially expected to take approximately 3–4 months. On November 7, 2024, the court extended the process until March 2025. Nonetheless, in 2024, the Company has fully recognized the estimated provisions related to the entire business restructuring process. This includes impairment losses on Vencorex Group's assets and provision for restructuring expenses, totalling Baht 10,028 million. Additionally, Vencorex’s operations in Thailand and the United States are in the process of bidders selection, with the transaction expected to be completed in the first half of 2025. • On November 15, 2024, the extraordinary general meeting of PTTAC’s shareholders approved PTTAC’s business withdrawal plan. As a result, in 2024, the Company recognized a total loss of Baht 11,773 million from asset impairment losses through equity method from PTTAC and provision for restructuring expenses. Taking these impacts into account, the Company reported net loss of Baht 29,811 million in 2024 (Baht -6.62/share). For the overall Adjusted EBITDA performance this year, the Upstream business performance experienced a decline, mainly due to lower performance in petroleum products. This was driven by a sharp decrease in the Gross Refining Margin (GRM), which fell by mor e than half from 9.4 USD/barrel in 2023 to 4.7 USD/barrel in 2024, primarily due to the narrowing Diesel spread . While the Aromatics business remained stable. However, the performance of Olefins significantly improved compared to the previous year, driven by a higher spread between Ethylene and Naphtha, mainly due to a partial supply cut in the market in the first half of the year . Despite this, the market faced continued pressure from new production capacity and weak downstream demand. Additionally, the performance was offset by the impact of the retrospective adjustment of the Ethane feedstock purchase agreement with PTT Public Company Limited, effective from January 2024 as the higher natural gas price. This year, the Upstream petrochemical business also experienced planned maintenance shutdowns, particularly at Olefins Plant 2/2 during the first and third quarters. Intermediates business performance significantly improved compared to the previous year, primarily due to an increase in total sales volume following planned maintenance shutdowns in 2023 at the Monoethylene Glycol (MEG) plant during the first half of the year and Phenol plant 2. The overall product spread for the Intermediate petrochemical business slightly decreased, except for MEG, which showed an increase in spread. In 2024, the Company had fewer planned maintenance shutdowns in the Intermediate petrochemical business compared to 2023, with maintenance activities scheduled between February and April 2024 at the MEG plant. Polymers & Chemicals business reported a decline in performance compared to the previous year, primarily due to the weakening of polymers spreads, driven by an increase in Ethylene feedstock prices. This occurred despite a slight 4% increase in the average price of Polyethylene (PE) and a 2% rise in total sales volume compared to the previous year. Bio & Circularity business performance decreased compared to the previous year, due to a 10% decrease in Methyl Ester sales volume. Additionally, the government’s policy adjustment to reduce the biodiesel blend from B7 to B5, effective from November 21, 2024, led to a decline in overall Methyl Ester demand. Furthermore, Fatty Alcohol (FA) faced pressure from rising Crude Palm Kernel Oil (CPKO) prices as most buyers accelerated their inventory stocking in advance, although FA demand improved. Performance Chemicals business experienced a decline in performance compared to the previous year, primarily due to the performance of Vencorex, a producer of HDI derivatives, which continued to face pressure from
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 6 intense price competition in the market and weakened customer demand amid the economic downturn. Additionally, Vencorex’s sales volume in 2024 declined by 19% compared to the previous year. However, allnex reported a 10% increase in performance in 2024 compared to the previous year, driven by higher sales volumes, primarily supported by growth in the Asian market. Table 2 : Adjusted EBITDA by Business Unit Note 1) Adjusted EBITDA refers to EBITDA excluding Stock gain/(loss),NRV, Gain/(loss) from commodity hedging, and Extra item. 2) Retroactively Adjusted EBITDA by excluding gain from bond buy-back in 2023 Adjusted EBITDA1 Margin by Business Unit Q4/20232 Q3/2024 Q4/2024 YoY % +/(-) QoQ % +/(-) 20232 2024 YoY % +/(-) Adjusted EBITDA (Million Baht) Upstream 6,547 4,204 2,147 -67% -49% 24,364 20,154 -17% Intermediates 192 236 (15) -108% -106% (359) 1,523 >200% Polymers & Chemicals 1,181 2,037 (201) -117% -110% 6,178 3,300 -47% Bio & Circularity 185 150 69 -63% -54% 673 352 -48% Performance Chemicals 1,783 1,856 664 -63% -64% 7,006 6,945 -1% Service and Others 24 -95 -0 -101% 100% 255 -508 <-200% Total 9,912 8,387 2,663 -73% -68% 38,117 31,766 -17% Adjusted EBITDA margin (%) Upstream 7 5 3 (4) (2) 7 6 (1) Intermediates 1 1 0 (1) (1) (1) 2 3 Polymers & Chemicals 5 8 -1 (6) (9) 6 3 (3) Bio & Circularity 5 4 1 (4) (3) 4 2 (2) Performance Chemicals 8 8 3 (5) (5) 7 8 1 Average 6 6 2 (4) (4) 6 5 (1)
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 7
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 8 2. Performance Analysis by Business Unit 2.1 Upstream Table 3: Price, Product Spreads and performance of Upstream Note: 1) Diesel 500 ppm market price is based on EURO4 standard 2) Diesel 10 ppm market price is based on EURO5 standard stipulated since January 1, 2024 3) There was a reclassification of natural gas expenses, which are fuel costs in the refinery business segment and the aromat ics business segment, from feedstock costs to variable costs. This led to a retrospective adjustment of BTX P2F for comparative analysis purposes, but i t did not affect the Market GRM and Adjusted EBITDA as reported by the company. 4) Adjusted EBITDA refers to EBITDA excluding Stock gain/(loss),NRV, Gain/(loss) from commodity hedging, and Extra item In Q4/2024, Upstream business had Adjusted EBITDA of Baht 2,147 million, decreased by 49% from the previous quarter, and Adjusted EBITDA Margin of 3%. Petroleum product sales volume was 15.6 million barrels, impacted by the preventive shutdown of some refinery units, and the Petrochemical product sales volume was 1.4 million tons. The factors supported decrease in the performance are as follows: 1. Refinery performance slightly increased from the previous quarter resulting from a decline in crude oil prices due to the economic recession in China, which weakened market demand, along with the continued addition of new capacity from the United States. Petroleum product spreads were supported YoY QoQ YoY % +/(-) % +/(-) % +/(-) Dubai Crude Oil ($/bbl) 83.6 78.3 73.6 -12% -6% 82.1 79.6 -3% Diesel 500 ppm-Dubai ($/bbl)1 21.1 12.7 14.7 -30% 16% 21.9 15.7 -28% Diesel 10 ppm-Dubai ($/bbl)2 24.4 13.6 15.1 -38% 11% 24.3 16.7 -32% LSFO-Dubai ($/bbl) 14.1 13.6 12.9 -8% -5% 11.5 12.5 8% Gasoline-Dubai ($/bbl) 12.5 11.1 11.4 -9% 3% 16.7 13.4 -20% Jet-Dubai ($/bbl) 23.6 13.1 14.8 -37% 13% 22.5 15.6 -31% Market GRM ($/bbl) 9.0 3.5 3.7 -59% 7% 9.4 4.7 -50% Condensate ($/ton) 687 651 614 -11% -6% 679 660 -3% Paraxylene (FECP)-Condensate ($/ton) 330 294 228 -31% -22% 359 304 -15% Benzene-Condensate ($/ton) 201 336 283 41% -16% 218 324 49% BTX P2F ($/ton)3 253 241 186 -26% -23% 259 239 -8% Naphtha (MOPJ) ($/ton) 659 672 652 -1% -3% 649 674 4% Ethylene (SEA) ($/ton) 937 962 936 0% -3% 889 963 8% Propylene (SEA) ($/ton) 807 875 839 4% -4% 858 864 1% Hedging Gain/(Loss) (MB) 831 280 253 -70% -10% (626) 1,467 >200% Stock Gain/(Loss) และ NRV (MB) (2,592) (3,439) 268 110% 108% (2,584) (2,624) -2% Adjusted EBITDA4 (MB) 6,547 4,204 2,147 -67% -49% 24,364 20,154 -17% Adjusted EBITDA (%) 7% 5% 3% -4% -2% 7% 6% -1% Petroleum Product Sales Volume (million bbl ) 18.1 16.7 15.6 -14% -7% 64.8 64.0 -1% Petrochemical Product Sales Volume (million ton ) 1.3 1.3 1.4 8% 3% 5.1 5.3 4% Q4/2023 Q3/2024 2023 2024Q4/2024
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 9 by the reduction of China’s tax rebate, which led to lower exports from the country, as well as seasonal refinery turnarounds. Diesel spreads increased due to higher demand during the winter, while Gasoline spreads remained stable despite the end of the driving season in the U.S., supported by the reduction of China's tax rebate. However, Low Sulfur Fuel Oil spread declined due to higher market supply, driven by increased exports from the Middle East. The Company’s Market GRM was 3.7 USD/barrel in the quarter. 2. Aromatics performance decreased from the previous quarter. Paraxylene spread decreased caused by the economics recession and a slower-than-expected recovery in demand, particularly in the polyester and textile markets, despite continued production control by Paraxylene producers. Benzene spread decreased, driven by sluggish demand recovery and the restart of production after the completion of a maintenance shutdown in South Korea. These factors resulted to a decrease in Market P2F of this quarter to 186 USD/ton. 3. Olefins performance slightly decreased from the previous quarter due to a one-time adjustment from the revised Ethane contract with PTT Public Company Limited, effective January 2024. Olefins over Naphtha spreads were slightly decreased from the previous quarter. Meanwhile, the costs of LPG feedstock increased as the winter season . Petrochemical demand was sluggish during the holidays in China, including the New Year festival, despite China's stimulus package in Q4/2024. For Upstream Business in 202 4, the Adjusted EBITDA was Baht 2 0,154 million, which decreased from the previous year by 17%, and the Adjusted EBITDA Margin was at 6%. The Company’s petroleum product sales volume declined to 64.0 million barrels due to the preventive shutdown of some refinery units in Q4/2024 . The Petrochemical product sales volume increased to 5.3 million tons, in line with the increased utilization rates of Aromatics and Olefins at 88% and 82%, respectively. In 2023, there were planned maintenance shutdown of Aromatics Plant 2 in Q3/2023, Olefins Plant 2/2 in Q1 /2023, and Olefins Plant 1 in Q4 /2023. In 2024, the Company only had planned maintenance shutdowns for Olefins Plant 2/2 in the first and third quarters. The performance decreased as a result of the following: 1. For the Refinery business in 2024, the performance decreased from 2023 resulting from economic recession. Especially in China, where full reopening began early in the year, economic indicators reveal a contraction in activity, signaling a slower than expected recovery . Despite cut run by OPEC, Saudi Arabia and Russia , petroleum product spreads, including Diesel, Jet, and Gasoline, declined from 2023 as the economic recession pressured demand in many countries. However, Low Sulfur Fuel Oil spreads increased from 2023 due to higher energy consumption in the Middle East in Q3/2024 . The Company’s Market GRM in 2024 decreased to 4.7 USD/barrel. 2. For the Aromatics business in 202 4, the performance decreased from the previous year resulting from a decrease in Paraxylene over Condensate spread caused by the economic recession and a slow recovery in demand, particularly in the polyester and textile markets throughout the year. Despite the increase in Benzene over Condensate spread due to several plants on planned maintenance turnaround in 1H2024, along with the increase in by-products spreads, the Market P2F in 2024 decreased to 239 USD/ton.
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 10 3. For the Olefins business in 202 4, the performance increased from 202 3 resulting from an increase in the Olefins over Naphtha spread, driven by a decline in Naphtha prices in line with crude oil prices . Also, new capacity additions in Asia were lower than in 2023, and Asian Ethylene producers maintained production controls. However, the downstream market remained weak due to a slower-than-expected demand recovery in China amid the economic recession. In Q1/2024, supply was tight due to maintenance shutdowns and reduced supply from other regions, impacted by geopolitical tensions in the Middle -East, leading to an increase in Ethylene prices. Meanwhile, Propylene prices declined in Q2 and 2H/2024 due to the expans ion of Propylene capacity and continued economic recession. The utilization rate for Olefins in 2024 was 82%. 2.2 Intermediates Table 4: Price, Product Spreads and and performance of Intermediates Note : Phenol spread derives from Phenol-0.878 BZ-0.474Propylene+0.616 Acetone and BPA spread derives from BPA-0.853 Phenol-0.273 Acetone In Q4/2024, Intermediates business had Adjusted EBITDA of Baht -15 million, decreased by 106% from the previous quarter mainly driven by product prices. Overall sales volume was approximately 0.76 million tons, remaining consistent with the previous quarter. In this quarter, the performance decreased from the previous quarter resulting from a decline in Phenol product spread, which was impacted by new supply entering the Chinese market in Q4/2024. Meanwhile, the BPA spread improved as feedstock prices declined . For MEG business, the spread increased due to the lower inventory and tight supply in China during Q4/2024. However, Purified Terephthalic Acid (PTA) spread decreased due to YoY QoQ YoY % +/(-) % +/(-) % +/(-) Mono-ethylene glycol (MEG -ACP) 477 543 550 15% 1% 488 538 10% MEG - 0.53 Ethylene (18) 35 55 >200% 58% 18 29 61% Phenol 952 1,055 944 -1% -11% 977 990 1% Phenol spread* 293 285 186 -37% -35% 252 233 -7% Bisphenol A (BPA) 1,279 1,326 1,251 -2% -6% 1,272 1,289 1% BPA spread** 243 200 257 6% 29% 230 216 -6% Propylene Oxide (PO) 946 1,014 972 3% -4% 1,053 1,001 -5% Purified Terephthalic Acid (PTA) 753 712 633 -16% -11% 779 721 -7% PTA - 0.67PX 72 79 71 -1% -10% 83 76 -9% Acrylonitrile (AN) 1,235 1,196 1,195 -3% 0% 1,310 1,235 -6% AN - Propylene 428 321 356 -17% 11% 452 371 -18% Methyl Methacrylate (MMA) 1,561 2,203 1,719 10% -22% 1,562 1,925 23% MMA - Naphtha 902 1,531 1,067 18% -30% 912 1,251 37% Adjusted EBITDA (MB) 192 236 (15) -108% -106% (359) 1,523 >200% Adjusted EBITDA (%) 1% 1% 0% -1% -1% -1% 2% 3% Sales Volume (Kton ) 676 757 757 12% 0% 2,602 2,952 13% Share of gain/(loss) from investment (MB) (272) (235) 0 100% 100% (1,014) (512) 49% 2024Q4/2024 2023Q3/2024Q4/2023(Unit : USD per ton)
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 11 stagnant demand in the textile industry (Filament and Staple Fiber) as the destock ing during the Chi nese national holiday. Additionally, the downstream polyethylene terephthalate (PET) bottle segment remained oversupplied, with slowdown in demand due to seasonal ity. The industry outlook remains under pressure from the economic recession and the addition of new capacity in China and Asia , although China’s stimulus package supports the construction industry which is expected to drive downstream demand for phenol and BPA. For Intermediates business in 2024, the Adjusted EBITDA was Baht 1,523 million, which increased from the previous year more than 200%, and the Adjusted EBITDA Margin was at 2%. The overall product sales volume was approximately 2.95 million tons which increased from 2023 by 13%. In 2023, there was planned maintenance shutdown of MEG plant in the first half of the year and Phenol plant 2, while there was less planned maintenance shutdown in 2024 of MEG plant from February to April 2024. The overall market of Intermediates product in 202 4 continued to face weakened demand due to the global economic slowdown and the addition of new production capacities for phenol, BPA, and purified terephthalic acid (PTA) from Chinese producers. 2.3 Polymers & Chemicals Table 5: Price, Product Spreads and and performance of Polymers & Chemicals In Q4/2024, Polymers and Chemicals Business had Adjusted EBITDA of Baht -201 million, which decreased by 110% from the previous quarter, resulting in Adjusted EBITDA Margin of -1%. The decline was primarily due to lower YoY QoQ YoY % +/(-) % +/(-) % +/(-) Average Polyethylene(PE) 1,001 1,084 1,056 6% -3% 1,033 1,074 4% High-Density Polyethylene (HDPE) 1,023 995 968 -5% -3% 1,044 1,014 -3% HDPE-Ethylene 86 33 32 -62% -1% 155 51 -67% Linear Low-Density Polyethylene (LLDPE) 975 1,010 999 2% -1% 1,013 1,026 1% LLDPE-Ethylene 38 48 63 65% 32% 124 63 -49% Low-Density Polyethylen (LDPE) 1,005 1,248 1,201 19% -4% 1,041 1,182 13% LDPE-Ethylene 69 286 265 >200% -7% 152 219 44% Polyethylene Terephthalate (PET) 880 873 817 -7% -6% 925 877 -5% Polypropylene (PP) 968 1,017 1,015 5% 0% 1,008 1,033 3% PP- Naphtha 309 346 363 18% 5% 358 359 0% Polyvinyl chloride (PVC) 760 778 740 -3% -5% 814 766 -6% PVC-0.5Ethylene 291 297 272 -7% -8% 370 285 -23% Polyols 1,258 1,277 1,240 -1% -3% 1,366 1,277 -7% Polyols-0.92PO 388 343 346 -11% 1% 397 357 -10% Adjusted EBITDA (MB) 1,181 2,037 (201) -117% -110% 6,178 3,300 -47% Adjusted EBITDA (%) 5% 8% -1% -6% -9% 6% 3% -3% Sales Volume ( Kton ) 590 567 620 5% 9% 2,331 2,385 2% Share of gain/(loss) from investment (MB) (202) (41) (318) -58% <-200% (553) (273) 51% Q4/2024(Unit : USD per ton) Q4/2023 Q3/2024 20242023
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 12 market prices of polyethylene. Overall, total sales volume was 0.62 million tons, reflecting a 9% increase from the previous quarter. The price of polyethylene in Q4/2024 declined by 28 USD/ton from the previous quarter. Although China announced economic stimulus package at the beginning of Q4/2024, demand in end-market remained subdued. The National Day holiday and New Year celebrations in China also pressured the manufacturers to control their production level and delay capacity addition in Asia , resulting to the drop in the performance of Polymers due to lower average selling prices. For the full year 2024, Polymers and Chemicals Business reported Adjusted EBITDA of Baht 3,300 million, a decrease of 47% from the previous year, with Adjusted EBITDA Margin of 3%. The decline was mainly driven by weaker product spreads due to rising ethylene feedstock costs, despite total sales volume increasing by 2% from last year to approximately 2.39 million tons. The overall market situation for the Polymers and Chemicals Business in 2024 continued to face pressure from the economic slowdown, which limited consumption and product demand. The supply additions, particularly from China, also entered the market in 2024. By mid-2024, geopolitical conflicts in the Middle East caused shipping delays to Asia, with LDPE being the most affected polymer product. The supply constraints led to a significant increase in LDPE prices in Asia during the first half of 2024. The average price of polyethylene increased by 4% from last year. 2.4 Bio & Circularity Table 6: Price, Product Spreads and and performance of Bio & Circularity In Q4/2024, Bio and Circularity business had Adjusted EBITDA of Baht 69 million, decreased by 54% from the previous quarter, and Adjusted EBITDA Margin of 1% resulting from the slowdown of demand for methyl ester as the biodiesel mandatory reduction from B7 to B5 effective from November 21, 2024. However, the government has extended the Oil Fuel Fund Act B.E. 2562 (2019) to support biofuel prices and maintain the high-speed diesel price at 33 Baht/liter, despite the policy’s scheduled end in October 2024. Meanwhile, fatty alcohol P2F increased in Q4/2024 driven by a tight supply caused by production shutdowns among major producers in Indonesia, China, and Thailand, as well as additional shutdowns by key producers in Malaysia. This supply constraint led to increased demand for short-chain fatty alcohols. Also, there is an improved demand for long-chain fatty alcohols during the winter season. For Bio and Circularity Business in FY2024, the Adjusted EBITDA was Baht 352 million, which decreased from the previous year by 48%, and the Adjusted EBITDA Margin was at 2%. This was impacted by the decrease in methyl YoY QoQ YoY % +/(-) % +/(-) % +/(-) Methyl Ester (ME) P2F (THB per Kilogram) 4.3 4.3 4.3 -1% 0% 4.3 4.3 -1% Fatty Alcohol (FA) P2F 394 365 379 -4% 4% 434 341 -21% Adjusted EBITDA (MB) 185 150 69 -63% -54% 673 352 -48% Adjusted EBITDA (%) 5% 4% 1% -4% -3% 4% 2% -2% ME Sales Volume ( Kton ) 73 67 67 -8% 0% 320 289 -10% FA Sales Volume ( Kton ) 29 27 27 -7% 0% 97 104 6% Share of gain/(loss) from investment (MB) (71) (222) (510) <-200% -130% (204) (1,368) <-200% 20242023Q4/2023(Unit : USD per ton) Q4/2024Q3/2024
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 13 ester sales volume due to the biodiesel mandatory reduction from B7 to B5 effective from November 21, 2024 which led to weakened demand despite government support through tourism and energy policies. Additionally, fatty alcohol P2F decreased due to crude palm kennel oil (CPKO) price increased, despite a recovery in demand as buyers stockpiled towards the end of 2024 over concerns about potential trade barriers. 2.5 Performance Chemicals Table 7: Performance of Performance Chemicals For Performance Chemicals Business in Q4/202 4, the Adjusted EBITDA was Baht 664 million, which decreased from the previous quarter by 64%, and the Adjusted EBITDA Margin was at 3% due to the lower demand resulting in the drop in sales volume of allnex from the previous quarter. The main factor behind this decline was the performance of the Vencorex group, as HDI derivatives prices remained under pressure due to sluggish customer demand. Furthermore, after Vencorex France and Vencorex TDI entered a restructuring process through co urt proceedings in Lyon, France, there was significant decrease in both production and sales volumes of Vencorex in this quarter. In addition, in Q4/2024, allnex's sales volume decreased by 6% from the previous quarter due to lower customer demand, which largely driven by the business seasonality , particularly long holidays in Europe and the Americas, as well as the normal destocking effects seen at year -end. Despite these impacts, allnex still maintained cost-control measures and kept its profit margin per unit stable. For Performance Chemicals Business in 2024, the Adjusted EBITDA was Baht 6,945 million, which decreased from the previous year by 1%, and the Adjusted EBITDA Margin was at 8%. Vencorex, a producer of HDI derivatives, continued to face pricing pressures due to intense market competition and weak customer demand caused by the economic downturn. In addition, sales volumes for 2024 declined by 19% year-over-year, following the restructuring of Vencorex France and Vencorex TDI in Q4 /2024. However, allnex's Adjusted EBITDA increased by 10% from the previous year, driven by a 4% rise in sales volume. This growth was mainly supported by higher sales in Asia, particularly in China and I ndia, as well as in Europe. Moreover, allnex maintained a stable profit margin per unit compared to the previous year. YoY QoQ YoY % +/(-) % +/(-) % +/(-) Adjusted EBITDA (MB) 1,783 1,856 664 -63% -64% 7,006 6,945 -1% Adjusted EBITDA (%) 8% 8% 3% -5% -5% 7% 8% 1% Sales Volume ( Kton ) 188 202 187 0% -7% 788 808 3% Share of gain/(loss) from investment (MB) (75) (12) (28) 63% -120% (205) (107) 48% Q4/2023 Q3/2024 Q4/2024 20242023
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 14 3. Operating Performance Note: 1) Starting 2024, there was a reclassification of natural gas expenses, which are fuel costs in the refinery business segment and the aromatics business segment, from feedstock costs to variable costs. This led to a retrospective adjustment of the aforementioned items for comparative analysis purposes, without impacting other items and net profit as reported by the company. 2) Adjusted EBITDA refers to EBITDA excluding Stock gain/(loss),NRV, Gain/(loss) from commodity hedging, and Extra item. and Adjusted EBITDA in 2023 was retroactively adjusted by excluding gain from bond buy-back in 2023 Q4/2023 1 Q3/2024 Q4/2024 YoY % + /(-) QoQ % + /(-) 20231 2024 YoY % + /(-) 1 Sales Revenue 162,264 149,431 132,372 -18% -11% 616,635 604,045 -2% 2 Feedstock cost (126,544) (114,590) (104,096) 18% 9% (470,770) (467,275) 1% 3 Product to Feed Margin 35,720 34,841 28,276 -21% -19% 145,865 136,770 -6% 4 Variable Cost (12,506) (12,816) (12,015) 4% 6% (55,475) (49,994) 10% 5 Fixed OH (9,654) (7,927) (8,043) 17% -1% (33,666) (32,591) 3% 6 Stock Gain/(Loss) and NRV (2,413) (3,912) 941 139% 124% (2,756) (2,457) 11% 7 Gain/(Loss) on Commodity Hedging 831 280 253 -70% -10% (627) 1,467 >200% 8 Other Revenue 7,841 1,492 1,574 -80% 5% 13,931 9,286 -33% 9 SG&A Expenses (7,234) (7,203) (7,200) 0% 0% (26,823) (28,726) -7% 10 EBITDA 12,585 4,755 3,786 -70% -20% 40,449 33,755 -17% 11 Depreciation & Amortization (6,533) (7,598) (7,971) -22% -5% (27,504) (30,995) -13% 12 Extra items 547 - - -100% - (86) - 100% 13 EBIT 6,599 (2,843) (4,185) -163% -47% 12,859 2,760 -79% 14 Net financial expense (2,683) (2,814) (2,680) 0% 5% (10,707) (10,863) -1% 15 FX Gain(Loss) 2,288 2,941 (1,033) -145% -135% 790 383 -52% 16 Share of gain/(loss) from investment 11 (279) (725) <-200% -160% (725) (1,462) -102% 17 Corporate Income Tax (1,199) 1,000 1,163 197% 16% (1,352) 969 172% 18 Net Profit/(Loss) after Tax (exclude impairment/restructuring cost) 5,016 (1,995) (7,460) <-200% <-200% 865 (8,213) <-200% Net Profit/(loss) attributable to: 19 Non-controlling interests (65) (194) (12) 81% 94% -134 -204 -52% 20 Net Profit/(Loss) after Tax (exclude impairment/restructuring cost) 5,081 (1,801) (7,448) <-200% <-200% 999 (8,009) <-200% 21 Loss from impairment of assets (Vencorex) - (7,960) 62 100% 101% - (7,898) -100% 22 Provision for business restructuring (Vencorex) - (614) (1,516) -100% -147% - (2,130) -100% 23 Share of loss from JV from impairment of assets (PTTAC) - (8,937) - - 100% - (8,937) -100% 24 Provision for business restructuring (PTTAC) - - (2,836) -100% -100% - (2,836) -100% 25 Net Profit/(Loss) after Tax to Owners of the Company (include impairment/resturcuring cost) 5,081 (19,312) (11,738) <-200% 39% 999 (29,811) <-200% 26 Adjusted EBITDA 2 9,912 8,387 2,663 -73% -68% 38,117 31,766 -17% Unit : MB
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 15 ▪ In Q4/2024, the Company had total sales revenue of Baht 132,372 million, decreased by 11% from Q3/2024 and decreased by 18% when compared to the same period last year due to the decline in the Upstream business from the decrease in the prices of petroleum products, which aligns with the decrease in average global crude oil prices, along with a significant drop in Aromatics prices this quarter. Additionally, the petrochemical market continues to face challenges due to economic pressure from the slow recovery, resulting in most petrochemical prices remaining at low levels. ▪ Variable Costs in Q4/2024 decreased by 6% from the previous quarter and by 4% the previous year. This was primarily due to lower production capacity utilization at Vencorex following its business restructuring and business seasonality at allnex in Q4/2024. ▪ Fixed overhead and SG&A expense in Q4/2024 were largely unchanged from Q3/2024, as the Company maintained its fixed cost -control initiatives. However, it decreased by 17% from previous year, primarily due to restructuring costs incurred by allnex in Q4/2023. ▪ Other Revenue in Q4/2024 increased by 5% from the prior quarter, but dropped by 80% from the previous year. This was due to the recognition of a Baht 4,017 million gain from the sale of shares in GC Logistics Solutions (GCL) and a Baht 1,422 million gain from repurchasing U.S. bonds in Q4/2023. ▪ Depreciation expenses in Q4/2024 rose by 5% from the previous quarter and by 22% the previous year, following the depreciation of assets recognized after completion of projects. ▪ Financial expenses declined by 5% from the prior quarter, in line with the Company’s deleveraging plan. In addition , the average interest rate for the fourth quarter decreased following the market downtrend. ▪ The Company recognized a net foreign exchange loss of Baht 1,033 million in Q4/2024, reflecting the depreciation of Thai baht against USD comparing with the end of Q3/2024. ▪ The Company recorded a share of loss from investments of Baht 725 million in Q4/2024, an increase from the previous quarter. This was mainly attributed to the performance of joint ventures in the polypropylene business. However, the Company discontinued recognizing PTTAC’s financial results in this quarter, after fully recording impairment losses. ▪ As part of portfolio transformation initiative, the Company recognized estimated provisions for restructuring expenses for Vencorex and PTTAC of Baht 1,455 million and Baht 2,836 millio n in Q4/2024 respectively. In 2024, the Company had total sales revenue of Baht 604,045 million, decreased by 2% compared to the previous year. This decline was primarily due to lower revenues from Upstream petrochemical products, driven by a decrease in the prices of petroleum products and Aromatics. This occurred despite an increase in petrochemical sales volume, particularly in Intermediate products, as there were planned maintenance shutdowns in 2023 at the MEG plant during the first half of the year and Phenol plant 2. Variable costs decreased from the previous year, mainly due to lower utility costs, while fixed overhead and SG&A expenses remained stable, supported by ongoing fixed cost-control measures. In addition, the Company recorded stock loss net NRV totaling Baht 2,457 million, partially offset by Baht 1,467 million gain from commodity hedging. Depreciation expenses in 2024 were higher than in 2023, primarily due to a one-time accelerated depreciation charge of approximately Baht 399 million at allnex in
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 16 2024, related to its European plant efficiency enhancement plan (Footprint Optimization). On the contrary, there were reversals of depreciation in 2023, including: (1) asset management initiatives involving sale-and-leaseback transactions of some production facilities and (2) the sale of obsolete polyethylene products that had been previously written off due to a warehouse incident in 2022. Beyond cost-control efforts, the Company remained committed to its strategic portfolio transformation plan. As part of this, the Company recognized impairment losses and provisions for restructuring expenses for Vencorex and PTTAC, totaling Baht 21,802 million in 2024.
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 17 4. Statements of Financial Position 4.1 Balance sheet Assets As of December 31, 2024, the Company had total assets of Baht 645,844 million, decreased by Baht 73,161 million or 10% from December 31, 2023 and variance of the assets are described as follows: ▪ Total current asset s decreased by Baht 30,740 million mainly due to decrease in cash and cash equivalents, and current financial assets by Baht 13,139 million (refer to cash flows analysis). There was a decrease in account receivables by Baht 10,008 million, driven by a decline in petroleum sales volume as the preventive shutdown of some refinery units in Q4/2024 as well as a lower product price in line with the decline in Dubai crude prices . Inventories decreased by Baht 3,295 million as lower Refinery and Performance Chemical inventories , primarily driven by a decline in HDI products as Ve ncorex entered judicial reorganization proceedings, leading to reduced production and sales volume . Other current assets decreased by Baht 4,298 million mainly due to other accounts receivable. ▪ Property, plant and equipment decreased by Baht 18,090 million mainly due to higher accumulated depreciation by Baht 19,463 million and impairment for Vencorex, despite the completion of projects by Baht 10,266 million, including maintenance shutdown and allnex’s China hub. ▪ Non-current assets decreased by Baht 24,331 million from the loss on impairment for Vencorex and PTTAC, as well as decreased in shares of PTT Digital Solutions Company Limited. Additionally, the fair value measurements of the investment in Global Power Synergy Public Company Limited (GPSC) declined, aligned with the lower share price. Liabilities As of December 31, 2024, the Company had total liabilities of Baht 377,251 million, decreased by Baht 45,573 million from December 31, 2023 and movements of liabilities were as follows: ▪ Interest-bearing debt (including Lease liabilities) decreased by Baht 32,171 million from bond repayments of Baht 11,500 million, bond buybacks of USD 749 million, and the repayments of long-term loans by Baht 6,036 million and EUR 186 million. Meanwhile, the Company made drawdown of the long- term borrowings of Baht 15,000 million, EUR 13 million, and USD 100 million. Lease liabilities increased by Baht 3,692 million. Cash & Cash equivalents + Current investments in financial Assets Other Current Assets PPE Non-Current Assets Other Liability Interest Bearing Debt Shareholder’s Equity Unit: Billion Baht 31 December 2024 646 Billion Baht 31 December 2023 719 Billion Baht
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 18 ▪ Trade accounts payable decreased by Baht 9,009 million mainly due to lower Refinery sale volume from the preventive shutdown of some refinery units in Q4/2024 and lower propane purchases. ▪ Other current liabilities decreased by Baht 4,233 million due to decline in other payable and payables to contractors. Shareholder’s Equity As of December 31, 2024, the Company had total shareholder’s equity of Baht 268,593 million, which decreased by Baht 27,588 million from December 31, 2023 as a result from change in Other components of equity, which included the loss from fair value measurements in financial assets and the fair value measurements of GPSC, net of the issuance of a subordinated perpetual bond.
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 19 4.2 Cashflow statement Cashflow (Unit: Million Baht) For the year Ended 31 December 2024 Net cash flows provided by operating activities 32,322 Net cash flows used in investing activities (3,889) Net cash flows used in financing activities (33,737) Net increase (decrease) in cash and cash equivalents, before effect from foreign exchange rate (5,305) Effects of exchange rates on cash and cash equivalents 731 Net decrease in cash and cash equivalents during the period (4,574) Cash and cash equivalents at the beginning of the period 37,319 Cash and cash equivalents at the end of the period 32,745 Current investments in financial assets at the end of the period 365 Net cash and cash equivalent and investment at the end of the period 33,110 For the period ended December 31, 2024, the Company had cash flow activities as follows: ▪ Cash flows received from operating activities of Baht 32,322 million due to operating activities and change in net working capital. ▪ Cash flow used in investing activities of Baht 3,889 million. The Company had cash paid for property, plant, and equipment, and intangible assets amounting to Baht 15,760 million. The Company had cash received from investment in debt instruments of Baht 9,063 million, interest received of Baht 1,419 million and dividends received of Baht 1,314 million. ▪ Cash flow used in financing activities of Baht 33,737 million mainly due to cash paid for the bond buybacks by Baht 23,318 million, the repayment of bond by Baht 11,500 million, the repayment of borrowings from financial institutions by Baht 27,177 million, cash paid for lease liabilities and finance costs by Baht 15,282 million and cash paid for dividend payment by Baht 3,503 million. Meanwhile, the Company had cash received from borrowings from financial institutions of Baht 29,994 million and the issuance of a subordinated perpetual bond of Baht 16,927 million. As a result, as of December 31, 2024, the Company had total cash and cash equivalents of Baht 32,745 million, along with current investments in financial assets of Baht 365 million. Hence, the Company had total cash and cash equivalent and investment of Baht 33,110 million. The Company had Net interest-bearing debt to equity at 0.84 times and Net interest-bearing debt to EBITDA at 6.66 times.
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 20 4.3 Key Financial Ratios Financial Ratios Q4/2023 Q3/2024 Q4/2024 Current Ratio (Times) 1.48 1.26 1.37 EBITDA to Sales Revenue (%) 6.56% 6.71% 5.59% Net Profits to Sales Revenues (%) 0.16% -2.05% -4.94% Return on Total Assets (%) 1.94% 2.58% 0.44% Return on Equity (%) 0.34% -4.76% -10.83% Interest Bearing Debt to Equity (Times) 0.98 1.02 0.96 Net Interest Bearing Debt to Equity (Times) 0.82 0.92 0.84 Interest Bearing Debt to EBITDA (Times) 7.17 6.42 7.64 Net Interest Bearing Debt to EBITDA (Times) 6.03 5.81 6.66 Remarks: Current Ratio = Current Assets divided by Current Liabilities EBITDA to Sales Revenue = EBITDA divided by Sales Revenue Net Profit to Sales Revenue = Profits attributable to Owners of the Company to Sales Revenue Return on Total Assets = Earnings before Interest and Tax divided by Average Total Assets Return on Equity = Profits attributable to Owners of the Company divided by Average Equity attributable to Owners of the Company Interest Bearing Debt to Equity = Interest Bearing Debt divided by Shareholder’s Equity Net Interest Bearing Debt to Equity = Interest Bearing Debt net Cash and Cash Equivalent and Current Investments in financial assets divided by Shareholder’s Equity Interest Bearing Debt to EBITDA = Interest Bearing Debt divided by EBITDA Net Interest Bearing Debt to EBITDA = Interest Bearing Debt net Cash and Cash Equivalent and Current Investments in financial assets divided by EBITDA
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 21 5. Projects Progress Estimated Annual CAPEX of PTTGC Group for the next 5 years CAPEX of PTTGC group Total Estimated Annual CAPEX (M.USD) 2025-2029 2025 2026 2027 2028 2029 1) PTTGC group excluding allnex 183 163 20 - - - 2) allnex expansion & growth Capex 657 126 141 160 138 92 total 840 288 161 160 138 92 Notes: 1. Group annual maintenance ~ 400 M.USD (including allnex Holding GmbH) and are excluded from the table. 2. Other projects such as IT & digital, new office facility, operational excellence etc. 3. allnex expansion & growth Capex based on capex plan, including committed and uncommitted projects but excludes any large M&A projects. 4. FX assumption for USD/EURO is 1.12 for allnex CAPEX plan.
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 22 6. Market and Business Outlook in 2025 The global economic outlook for 2025 is expected to grow at a stable rate, with the International Monetary Fund (IMF) projecting global growth at 3.2%, the same as in 2024 (IMF, October 2024). The recovery is anticipated to be gradual, supported by factors such as declining inflation, recovery in manufacturing and transportation in certain regions, and economic stimulus measures from various countries worldwide. These factors are expected to boost consumption and investment, alleviating pressure on consumers and businesses, which will, in turn, support steady growth across the overall econ omy. However, there remain several risk factors, including economic , geopolitics, and President Trump's policies, which may lead to increased trade protectionism, posing risks to the global supply chain and adding pressure on the overall business sector. Upstream business unit The company forecasts that the price of Dubai crude oil in 2025 will be between 73-78 USD/barrel. The demand for crude oil is expected to increase slightly from 2024, as the global economy gradually recovers due to economic stimulus measures and interest rate cuts by central banks worldwide, leading to higher oil demand. However, policies accelerating the development of alternative energy technologies and the use of renewable energy in many countries remain a factor putting pressure on crude oil prices. On the supply side, OPEC Plus is expected to manage production to maintain market balance, while increasing crude oil production from non-OPEC countries such as the United States, Canada, Brazil, and Guyana will help ease supply constraints in the market. For petroleum products from its refinery, the company expects product prices and margins in 2025 to slightly weaken compared to 2024. This is largely due to an anticipated increase in petroleum product supply as new refineries come online in Asia, particu larly in China and India. On the demand side, economic factors are expected to provide some support, especially with China’s economic stimulus measures likely boosting the construction industry and driving up oil demand. Economic pressures, including high policy interest rates, will, however, dampen demand growth. In terms of product spreads, the company forecasts that the Diesel-Dubai crude spread (10 ppm) will average between 14-17 USD/barrel. The low sulfur fuel oil (LSFO)-Dubai crude spread is projected to range from 9-12 USD/barrel, while the Gasoline -Dubai crude spread is expected to average 11-15 USD/barrel. The Company continues to manage production planning and sales contracts to align with market conditions, closely monitoring market trends to opti mize crude sourcing and product margins. Refinery utilization for 2025 is forecasted to be around 91%. For petrochemical products from its aromatics plant, the company expects the paraxylene-naphtha spread in 2025 to decrease to around 240-260 USD/ton, pressured by the ongoing global economic slowdown. However, China’s economic outlook is expected to improve with the support of stimulus measures, which may gradually boost demand for aromatics products. On the supply side, new production capacities for paraxylene and benzene are anticipated to come online. The benzene-naphtha spread is forecasted to be around 270-290 USD/ton, down from 2024, partly due to lower-than-average inventory levels seen in 2024. The company estimates that the utilization rate of its aromatics plant in 2025 will be approximately 84%. The outlook for Olefins products, the company anticipates ethylene prices in 2025 to range between 900-930 USD/ton, and propylene prices between 820-850 USD/ton, similar to 2024 levels. Demand recovery is expected to remain limited due to the global economic slowdown. However, gradual improvements in economic conditions may provide some support to the ethylene and propylene markets. Meanwhile, the market will continue to face pressure from additional production capacity, especially for propylene, primarily driven by new output from China. The company estimates the utilization rate of its olefins plant in 2025 to be around 91%. Intermediates business unit
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 23 For phenol market, The company anticipates that the phenol (P2F) product spread in 2025 will be between 230-250 USD/ton, similar to 2024 levels. Demand for phenol, acetone, and BPA is expected to remain under pressure due to the global economic slowdown, though there may be gradual improvement. On the supply side, new production capacity in China continues to increase, despite the recent closure of the BPA manufacturer in Japan. For the monoethylene glycol (MEG) market outlook, the company projects MEG prices at 510-540 USD/ton, with pressure likely to persist due to sluggish demand recovery and additional production units coming online in 2025, both of which are key factors weighing on prices. For purified terephthalic acid (PTA), the company expects the PTA spread to improve from 2024 levels as demand begins to normalize with recovering economic activity, though new capacity will also continue entering the market. Polymers & Chemicals Business unit The Company anticipates that the average polyethylene price in 2025 is expected to be around 980 – 1,010 USD/ton, a slight increase from 2024. Demand for the product is expected to recover due to economic stimulus measures, particularly from major economies like the United States and China. However, the market remains volatile, facing pressures from economic rece ssion risks, geopolitical uncertainties, and continued growth in production capacity, especially in China. Demand is expected to increase, support ed by various economic measures. The Company projects the polyethylene plant’s utilization rate in 2025 to be approximately 107%. Performance Chemicals Business unit The demand for industrial coating resins is expected to improve in 2025 compared to 2024, with growth in this product segment projected to outpace overall GDP growth. This positive trend is supported by recovery signals from end-use industries, such as the automotive sector. However, increased price competition is anticipated, especially with new production capacity coming online.
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 24 7. Sustainability Management GC strives to operate for the organization’s growth as well as the balance of the three dimensions, namely Environment, Social, Governance and Economic (ESG). Our success has been reflected throughout the recognitions both national and international. The C ompany has implemented sustainability strategies and achieved the objectives as our goals. We have also attained outstanding results under sustainability strategy (Step up): Sustainability Management in the Environmental Dimension Efficiency-driven: The Company is implementing projects to improve energy efficiency in the production process and transition to renewable or low-carbon energy. The Company has successfully executed projects to reduce Scope 1 and 2 greenhouse gas emissions according to set targets. Additionally, the Company is exploring the feasibility of using new technologies to find further opportunities for action. For example, the Heat Exchanger installation project to transfer energy from hot condensate to preheat feed, and the project to improve the efficiency of the propylene oxide production unit to reduce steam energy consumption. Portfolio-driven: The Company is moving forward to shift its business towards low -carbon operations by investing in High Value Business (HVB) and businesses aligned with circular economy principles. It is also seeking opportunities to create Synergy (Leverage Synergy) and maximize value from its operations. For example, the Plastics Waste Management project in collaboration with brand owners who plan to use products made from recycled PET plastic bottles (PCR PET or Post Consumer Recycled Resin PET) and recycled HDPE plast ic bottles (PCR HDPE or Post Consumer Recycled Resin HDPE) through the GC YOUTURN platform. Compensation-driven: The Company is continuously implementing projects to restore and balance forest ecosystems in collaboration with government agencies, the private sector, social sectors, and various communities. Examples include the Carbon Credit Management in Forests for Sustainable Development Project by the Mae Fah Luang Foundation under Royal Patronage, the Mangrove Reforestation and Care Project for Carbon Credits in collaboration with the Department of Marine and Coastal Resources, and currently, the Company is studying the technological feasibility and investment assessment for carbon capture technology in collaboration with PTT Group. Moreover, the Company is engaging in discussions and coordination with government agencies, regulatory bodies, associations, the private sector, and relevant industries to promote the development of carbon capture projects as a national initiative, supporting Thailand's Net Zero target. Sustainability Management in the Social Dimension The Company carries out social responsibility initiatives according to its resource efficiency improvement plan, aligned with the Company's strategy. These initiatives aim to elevate CSR projects by adding value to communities and society. Notable projects include the development of the On Nut Urban Forest Park (Flagship Project) on 55 rai (approximately 21.74 acres) in collaboration with the Australian Embassy and partner networks. This project extends to developing a resilient urban center and surrounding areas (Resilient Urban Centre and Surrounds: RUCAS). Another significant project is Upcycling Social Enterprise (Impact Driven Project), which adds value to the Ban Bon community
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 25 sewing group by producing upcycled survival bags for the Friends in Need (of "Pa") Volunteers Foundation and the Thai Red Cross Society. The Our Khung Bangkachao project (Strategic Fit Project) aims to create a knowledge management platform for waste segre gation through various activities, such as the Recycle Market. Additionally, the Company is developing community products that reflect the unique identity of Rayong Province in collaboration with partners. The Company also reviews community support measure s for emergencies to minimize impacts on the community, society, and the Company, as well as related organizations. Sustainability Management in the Governance & Economic Dimension The Company is committed to sustainability efforts that align with national guidelines and international standards. The Company discloses sustainability information related to its operational strategies, management systems, processes, and sustainability performance on key business issues and stakeholder expectations under the sustainability management framework, which includes: - International sustainability disclosure principles (Global Reporting Initiative Standards 2021: GRI 2021) - International Financial Reporting Standards (IFRS), including IFRS S1, which provides general guidelines for companies on sustainability-related financial disclosures, and IFRS S2, which outlines the disclosure of climate change-related opportunities and risks, including industry-based metrics - European Sustainability Reporting Standards (ESRS) - Stakeholder Engagement Standard (AA1000) - Dow Jones Sustainability Indices (DJSI) - Carbon Disclosure Project (CDP Worldwide: CDP) - Morgan Stanley Capital International (MSCI) sustainability performance benchmarks - United Nations Sustainable Development Goals (SDGs) The Company analyzes data to improve and review operations in accordance with the Dow Jones Sustainability Indices (DJSI) and Carbon Disclosure Project (CDP) criteria, particularly in climate change management and water security. Given the increasingly stringent assessment criteria, preliminary score evaluations are conducted to accelerate operational improvements and maintain exemplary global sustainability standards. The Company has participated in the 2024 DJSI evaluation, expecting to maintain its leadership in global sustainability within the Top 3 ranks. Additionally, the Company has participated in the EcoVadis assessment, an international sustainability index focused on supply chain collaboration, and is currently awaiting the evaluation results.
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 26 8. Appendix 8.1 Production and Sales Graph 1: Refinery Intake and Sales Volume Graph 2: Aromatics Intake and Sales Volume (BTX) Graph 3: Olefins Intake and Olefins and Derivatives Sales Volume 9% 11% 8% 6% 8% 7% 6% 4% 9% 6% 12% 11% 14% 11% 14% 11% 11% 20% 12% 14% 70% 67% 62% 64% 65% 63% 63% 64% 66% 64% 3% 3% 3% 7% 3% 4% 7% 7% 4% 5% 6% 8% 13% 12% 10% 15% 13% 5% 10% 11% Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 Others Fuel Oil Diesel Jet Naphtha+Ref. Refinery Sales Volume (KBD) Utilization rate Refinery Intake (KBD) 103% 103% 105% 106% 104% 105% 104% 95% 104% 102% 166 171 176 197 162 186 181 169 177 175 149.2 149.8 152.3 153.7 151.4 152.0 151.0 138.0 151.3 148.1 28.0 30.0 27.1 29.7 33.9 37.9 33.8 36.1 28.7 35.4 177.2 179.9 179.4 183.3 185.4 189.9 184.7 174.1 180.0 183.5 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 Crude Condenstate Residue 1,006 1,194 995 1,126 1,149 1,385 1,276 1,286 4,321 5,096 412 378 251 367 260 224 288 295 1,408 1,068 1,417 1,573 1,246 1,494 1,409 1,609 1,565 1,581 5,729 6,164 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 202 202 Aromatics Intake (KTons) Aromatics Sales Volume (KTons) Utilization rate 89% 90% 69% 83% 83% 89% 90% 91% 83% 88% 536 528 385 460 410 497 517 484 1,909 1,907 0% 0% 1% 0% 0% 0% 0% 0% 0% 0%0% 0% 0% 0% 0% 0% 0% 0% 0% 0%10% 12% 5% 4% 9% 12% 5% 9% 8% 61% 63% 72% 68% 73% 66% 64% 72% 66% 68% 29% 24% 22% 25% 25% 25% 24% 23% 25% 24% Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 202 202 Other By-Products Condensate Residue Naphtha Group PX Group BZ Group Olefins Intake (KTons) Olefins Sales Volume (KTons) Utilization rate 1,027 1,152 1,309 1,158 1,191 1,224 1,198 1,226 4,646 4,839 72% 81% 89% 78% 83% 84% 79% 82% 80% 82% 36% 35% 33% 36% 36% 31% 31% 33% 35% 32% 31% 38% 41% 33% 34% 45% 40% 33% 36% 37% 32% 26% 25% 29% 30% 24% 29% 33% 28% 29% Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 202 202 Ethane Other Gas Naphtha 661 726 836 736 759 777 748 775 2,958 3,059 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 202 202
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 27 Graph 4: Intermediates products sales Volume Graph 5: Polymers & Chemicals products sales Volume Graph 6: Utilization rate 12% 12% 15% 17% 15% 15% 15% 16% 14% 15% 15% 13% 14% 12% 15% 13% 14% 13% 13% 14% 11% 11% 9% 9% 10% 10% 9% 11% 10% 10%6% 6% 6% 5% 6% 4% 6% 5% 6% 5%2% 3% 8% 5% 4% 6% 6% 4% 5% 5% 55% 54% 48% 52% 50% 52% 50% 51% 52% 51% Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 202 202 EO-Based PHN Acetone BPA PO PTA Intermediates Sales Volume (KTons) 612 615 699 676 695 744 757 757 2,602 2,952 Polymers & Chemicals Sales Volume (KTons) 535 574 632 590 612 586 567 620 2,331 2,385 41% 42% 40% 37% 41% 40% 41% 37% 40% 40% 29% 30% 30% 34% 29% 29% 28% 33% 31% 30% 15% 15% 14% 12% 14% 15% 13% 13% 14% 14% 3% 2% 2% 2% 3% 2% 3% 2% 2% 2% 12% 11% 14% 15% 13% 13% 15% 15% 13% 14% Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 202 202 HDPE LLDPE LDPE PS Others Utilization rate Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 2023 2024 Upstream - Refinery 103% 103% 105% 106% 104% 105% 104% 95% 104% 102% - Aromatics 89% 90% 69% 83% 83% 89% 90% 91% 83% 88% - Olefins 72% 81% 89% 78% 83% 84% 79% 82% 80% 82% Intermediates - MEG 13% 4% 90% 78% 46% 78% 92% 92% 47% 78% - Phenol 104% 98% 102% 91% 108% 107% 111% 112% 99% 110% - BPA 98% 103% 103% 95% 118% 79% 120% 95% 100% 103% - PO 26% 46% 106% 61% 50% 90% 76% 58% 60% 69% Polymers & Chemicals HDPE 106% 110% 110% 97% 115% 111% 98% 101% 106% 106% LLDPE 93% 93% 105% 98% 103% 85% 89% 109% 97% 96% LDPE 96% 119% 115% 93% 111% 117% 114% 102% 106% 111% Total PE 99% 104% 109% 97% 109% 101% 97% 104% 102% 103%
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_________________________________________________________________________________________________________________________________ Management Discussion and Analysis FY2024 28 8.2 Detail of Adjusted EBITDA by Business Unit Note: 1) Adjusted EBITDA refers to EBITDA excluding Stock gain/(loss),NRV, Gain/(loss) from commodity hedging, and Extra item. 2) Retroactively Adjusted EBITDA by excluding gain from bond buy-back in 2023 Adjusted EBITDA1 Margin by Business Unit Q4/20232 Q3/2024 Q4/2024 YoY % +/(-) QoQ % +/(-) 20232 2024 YoY % +/(-) Adjusted EBITDA (Million Baht) Upstream 6,547 4,204 2,147 -67% -49% 24,364 20,154 -17% Refinery 4,759 1,446 1,293 -73% -11% 18,702 8,452 -55% Aromatics 1,697 1,731 522 -69% -70% 6,541 6,414 -2% Olefins 92 1,027 332 >200% -68% (880) 5,288 >200% Intermediates 192 236 (15) -108% -106% (359) 1,523 >200% Polymers & Chemicals 1,181 2,037 (201) -117% -110% 6,178 3,300 -47% Bio & Circularity 185 150 69 -63% -54% 673 352 -48% Performance Chemicals 1,783 1,856 664 -63% -64% 7,006 6,945 -1% Service and Others 24 -95 -0 -101% 100% 255 -508 <-200% Total 9,912 8,387 2,663 -73% -68% 38,117 31,766 -17% Adjusted EBITDA margin (%) Upstream 7 5 3 (4) (2) 7 6 (1) Intermediates 1 1 0 (1) (1) (1) 2 3 Polymers & Chemicals 5 8 -1 (6) (9) 6 3 (3) Bio & Circularity 5 4 1 (4) (3) 4 2 (2) Performance Chemicals 8 8 3 (5) (5) 7 8 1 Average 6 6 2 (4) (4) 6 5 (1)
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Management Discussion and Analysis FY2024 29 8.3 Planned Maintenance Shutdown Schedule 2025 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Cracker Oleflex HDPE LDPE LLDPE I LLDPE II PS MEG EA Phenol I Phenol II BPA REFRefinery Aromatics I Aromatics II GCOPO Plant ARO 2025 OLEPOLMEGPHN 11 OLE2/1 15 72 44 3 HDPE 1 15 HDPE 2 12 20 74 13 10 18 53 50