Thai Oil Q1 2025 presentation: Refining margins pressured amid global trade tensions

Introduction & Market Context

Thai Oil PCL (SET:TOP) presented its Q1 2025 financial results on May 21, 2025, revealing the impact of global trade tensions on its refining margins. The company’s performance reflected broader market challenges, including concerns over potential U.S. tariffs affecting global GDP and oil demand, alongside crude oil oversupply issues.

As shown in the following market highlight chart, Dubai crude averaged $76.9 per barrel in Q1 2025, while Singapore gross refining margins (GRM) stood at $3.2 per barrel, indicating the challenging environment facing refiners:

The company’s stock price has shown volatility in recent months, with shares trading at 26.75 baht as of May 21, 2025, representing a 3.74% increase on the day of the presentation. However, this remains well below the 52-week high of 56.25 baht, reflecting ongoing investor concerns about the refining sector.

Quarterly Performance Highlights

Thai Oil reported a net operating profit of 2,714 million baht in Q1 2025, down from 3,398 million baht in Q4 2024, primarily due to softer refining margins amid global economic slowdown concerns. This was partially offset by stock gains of 1,160 million baht, significantly higher than the 95 million baht recorded in the previous quarter.

The company’s Q1 performance breakdown by business segment shows the impact of market conditions on each area of operations:

Despite margin pressures, Thai Oil maintained impressive operational efficiency with a refinery utilization rate of 113% in Q1 2025, demonstrating the company’s ability to maximize throughput even in challenging conditions. The aromatics business operated at 79% utilization, while the LAB (Linear Alkyl Benzene) segment achieved 124% utilization.

The following slide illustrates these high utilization rates alongside the company’s commercial achievements:

Detailed Financial Analysis

Thai Oil’s consolidated financial performance shows the impact of market conditions across its business segments. The petroleum and lube business remained the largest contributor to profits, though its contribution was pressured by lower refining margins.

The following chart breaks down the company’s net profit contributions by business segment:

The refinery segment faced particular challenges due to rising crude oil prices attributed to U.S. sanctions on Russia, decreasing gasoline spreads, and softer middle distillate cracks. These factors contributed to the lower gross refining margins compared to previous quarters.

The detailed refinery performance metrics are illustrated below:

Thai Oil’s financial position remains solid, with the company reporting a balanced approach to cash flow management. The consolidated financial statements reveal the company’s ability to maintain financial stability despite market volatility:

Cash flow analysis shows the company’s operational cash generation and investment activities:

Strategic Initiatives

Thai Oil continues to implement its "3Vs Strategy" focused on Value Maximization, Value Enhancement, and Value Diversification. Key achievements include enforcing security contracts worth 15,084 million baht (approximately $440 million USD) and completing a USD bond buyback.

The company is actively expanding its market presence in Vietnam, India, and Indonesia while simultaneously investing in future growth areas including biojet fuel, low-carbon hydrogen, and carbon capture technologies.

The following slide outlines the company’s strategic initiatives and achievements:

Forward-Looking Statements

Looking ahead to the second half of 2025, Thai Oil anticipates a potential recovery in refining margins supported by U.S. and EU refinery closures. The company expects stronger jet fuel demand as global air travel continues to recover, though this will be balanced against ongoing concerns about global trade tensions.

For the aromatics business, the outlook remains challenging with slow PX (paraxylene) and BZ (benzene) demand growth. Similarly, the olefins market faces headwinds due to economic uncertainty, while base oil spreads are expected to soften slightly.

Thai Oil’s management remains cautiously optimistic about domestic petroleum demand in Thailand for 2025, projecting modest growth in gasoline and oil consumption despite economic headwinds.

The company’s strategic focus on high-value businesses and new energy initiatives positions it to navigate the challenging market environment while preparing for longer-term energy transition trends. With its high utilization rates and competitive cash costs, Thai Oil appears well-positioned to weather current market volatility while implementing its strategic growth initiatives.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.