EUR 115.07 For Business Accounts Only

TUPRAS 2Q18 - MUCH BETTER

Tupras reported a net profit of TL1,027mn in 2Q18, much better than market consensus of TL762mn and our expectation of TL241mn. The company posted an EBITDA of TL2,098mn in 2Q18 vs. market consensus of TL1,615mn and our expectation of TL1,215mn. Deviations from our expectations were: i) higher than expected sales volume due to high-margin jet fuel sales, ii) an inventory gain of US$231mn (vs. our expectation of US$150mn), iii) a net tax income of TL110mn (vs. a net tax expense expectation of TL32mn) and iv) lower than expected opex with increasing usage of railway transportation in 2Q18. Despite heavy maintenance activity in this quarter, Tupras managed to improve EBITDA by 42% YoY thanks to increased middle distillate yields which had favourable cracks, an inventory gain of US$231mn and depreciation of TL against US$ by 22%. The management did not make any revision to 2018 guidance apart from crude oil price forecasts. We expect the earnings announcement to have positive impact on the stock. Net profit and EBITDA reached TL1,405mn (-40% YoY) and TL3,054mn (+2% YoY) in 1H18, respectively.