Press Release for 4Q 2014 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 advantage of low cost of crude oil and energy with high capacity utilisation, continued to disrupt the 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, level respectively.

In 2014, the capacity utilisation was 72.6%. In the early part of the year, maintenance, including connections for the RUP investment as well as a poor refining environment were the main factors. Lower asphalt demand and thin trading margins meant that domestic sales fell by 1.9 million tons (743,000 tons of asphalt and 1.14 million tons of diesel). Due to lower production volumes exports were down 172,000 tons at 16.1 million tons.

Despite the decline in sales volumes and in the Mediterranean product prices, Sales revenue was just 3.3% below 2013 due to the effect of the average annual exchange rate rising by 14.9%.

Operational and Financial Data

	2013	2014	Difference
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
Revenues (Million TL)	41.078	39.723	-%3.3
Operating Profit (Million TL)	41	436	395
Profit/Loss Before Tax (Million TL)	13	184	171
Net Profit (Million TL)	1.197	1.459	% 22

In 2013, provision was made for the TL 309 Million penalty by The Competition Board and in 2014, for the TL 55 million tax fine. In addition to this, falling oil prices led to significant inventory losses, but thanks to a better refining margin environment, operating profits increased TL 395 million to TL 436 million. Increased expenses due to rising interest rates and exchange rates meant that profit before tax was TL 184 million. TL 1,308 million income from tax incentives related to the Residuum Upgrading project lifted net profits to TL 1,459 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 and related projects, which are expected to contribute a Billion USD to the nation’s current account balance, had reached 3 Billion USD.

Whilst striving to ensure guarantee of supply of the highest quality products to the Turkish market, we continued to invest in a project that will raise the company’s profile in the sector, contribute to the nation’s current account, is currently providing employment for thousands of workers and will help us to generate greater value for our shareholders and other stakeholders in the future.