Turkey's Tupras Reports $168 Million Profit in Third-Quarter 2014, As Residuum Upgrade Project Nears End

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Researched by Industrial Info Resources (Sugar Land, Texas)--Turkey's sole oil refiner--and its biggest industrial company--Tupras (BIST:TUPRS) (Kocaeli, Turkey) reported its third-quarter 2014 net income rose to 377 million Turkish liras ($168 million), up 6% from a year earlier. Analysts had expected a profit of 152 million liras.

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The results were better than expected, stemming mainly from higher refinery maintenance in the region, which led to better product spreads and stronger gasoline demand. Also, the recent drop in crude oil prices led to cheaper feedstock.

"These changes resulted in significant inventory losses, thus leading to the earnings beat," said Koray Pamir, an analyst at Deutsche Bank in Istanbul. "Net refinery margin increased to $5.53 per barrel in the third quarter, versus the Mediterranean Basin margin of $3.45 per barrel."

Tupras's domestic sales decreased 13.3% to 12.6 million tonnes. Total sales decreased 11.5% to 16.1 million tonnes, with exports of 3.5 million tonnes. The company posted 30.7 billion liras in revenues, up 0.7% from 2013.

The company's net debt declined to 3.7 billion liras in the third quarter, despite the ongoing capital expenditure relating to the residuum upgrade project (RUP). The completion rate of the RUP stands at 98.2%, with the total full-year 2014 capital expenditures expected to reach $1 billion. Tupras started its residuum upgrade project investments in 2011, the company invested $2.6 billion so far for the project.

Tupras has increased its full-year net refinery margin guidance to the range of $2.50 to $3 per barrel, from $2.20 per barrel. The company expects the capacity utilization ratio to stand at 74% to 75% (currently 72.6%). The company plans to produce 20 million to 20.5 million tonnes in products, and import 2.5 million to 2.7 million tonnes in processed products.

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