Q3 2019 PTT PCL Earnings Presentation
Bangkok Dec 10, 2019 (Thomson StreetEvents) -- Edited Transcript of PTT PCL earnings conference call or presentation Friday, November 15, 2019 at 10:59:00am GMT
TEXT version of Transcript
* Pannalin Mahawongtikul
PTT Public Company Limited - CFO
Unidentified Company Representative, 
Good afternoon, dear analysts. Thank you. Today, we have moved to a cozier room. And thank you for your moral support extended to us at a time when the global economic scene is facing the gloom of economic war. But still, our group's performance remain strong. I will elaborate on the reasons why.
First of all, in terms of health and safety performance, which we deem very important, we are all green, except certain issues with 1 contractor. Our target is 0, so we missed the target slightly, meaning 1 incident relating to our contractor who tripped and injured, resulting in 3 stitches and 2 days away from work. Otherwise, we've met all the benchmarks. So this year, we should be able to comply.
And next, we received awards and recognitions in terms of people, be it the best of drive award -- safe driving and managing human resources for a corporation that excels in environmental sustainability. Our group, apart from PTT itself, PTTEP, ThaiOil also received the award and GC received the best -- the top award organized by the MBA Alumni Association. And in the middle, a handsome gentlemen is picking up the top single fund award, it's the seventh provident fund contest. We have been running the provident fund for staff, and this is recognized.
Next, in the category of planet. We received recognition from DG -- DJSI for 8 consecutive years, EPGC, IRPC and ThaiOil, and we are also recognized for our low carbon and sustainability management. And this is awarded to us by the Thai Greenhouse Gas Organization, and we have contributed to efforts to reduce global warming. And to the right, another handsome gentleman you see in the middle, we have been reforesting. We have contributed to, all together, planting forest in 50 provinces. During the time of Governor [Luan] and a succession of governors Khun [Phongsthorn], Khun [Pannalin], Khun [Pramin] and me, we made efforts in forest conservation. A critical part is the FPT 49 reforestation site located in Nakhon Ratchasima province. This particular project is critical in Pak Thong Chai district. It's the 100 millionth tree planted by King Rama X and the tree is branching out beautifully. So us, together with the Army, built a cycling track. I invite you to enjoy this cycling track with perhaps the nicest weather in Thailand. And it's most challenging. And you have to spend longer than 15 minutes to cover 4 kilometers. It's a challenging terrain. We work with the Department of National Parks and Forestry and the Royal Thai Army.
In addition to that, we receive the awards we signed, and we committed to the effort to use LNG to separate. I think this is pioneering in AEC. And also, Alpha Southeast Asia magazine gave us 4 awards as the Most Organized Investor Relations; Best Senior Management, IR Support; Most Consistent Dividend, which means our dividend is a solid, consistent, continuous; and also Best Strategic Corporate Social Responsibility. These are awards we received.
Next, activity highlights in Q3. As you may have heard, we signed the Map Ta Phut industrial port, Phase 3. This is our pride and joy. It's the first successful undertaking within EEC already signed. And we -- this is a joint venture with Gulf 30 and 70. This is public/private sector undertaking. And next is the reclaiming the sea in Phase 1 and then the LNG terminal will be built around about 7 years down the road, 1 year for site preparation.
And next, for NGV, we have reduced -- we have narrowed the gap between the price of what it should be and the public subsidy. The government allow us to gradually adjust it closer to the cost, resulting in less burden for PTT. But we still have -- we carried the burden still but lighter. And thirdly, we have completed the repurchase of USD notes. PTT-TCC issued 2 new sets of notes to replace the U.S. dollars notes. These are new notes that we issue. So as a result, in compliance with the government's policy to promote international business quarters, we also saved on tax. And we shall benefit from the IBC incentives.
Next for PTTEP, and you probably heard that we have completed the acquisition of Murphy Oil and benefits shall be recognized from September. We also bought shares of Sinphuhorm project. This is located in the northeast. From 66.8%, our holdings had increased to 80.5%. This will serve as the basis for gas to feed power plants in the northeast for energy security in the northeast. We have also completed the acquisition of Partex in Oman, the Middle East as well as other Latin America countries. But our focus is on Oman and the Middle East. This is EP's undertaking. For GC, the construction of Ma Ta Phut olefins reconfiguration has been -- so the reconfiguring from olefins to naphtha GC business has to do with gas and also the PO -- that is 80% complete. These 2 projects should be COD-ed in 2020.
Next for ThaiOil. Construction, according to plan. 20% for the clean fuel project. To convert fuel oil to diesel to jet fuels as well as naphtha, so by 2023. This is in line with the future trends for less fuel oil used. For IRPC, likewise, COD completed today. Fewer oil ready to be sold. 42 million liters per month to align with -- aligning with IMO quality. It's very much favored by many ship liners. So some shippers are using mixed -- mixture but we use purely refined.
For PTTOR. We set up 2 new holding companies in Thailand and in Singapore. And we have joint efforts with communities to set up high debt market. And we also implemented solar rooftops in PTT gas stations for energy conservation. The targets: we will do this in 15 stations. And today, we have completed 5. For GPSC, we will do capital increase. But actually, the sale has started from 11th of October and its capital increase has been completed. And Xayaburi hydro power plant in Laos PDR has already COD-ed in October the 1,285-megawatt plant. The major shareholder is Ch Kanchang. GPSC joined them as well.
Next, also a smaller scale power plant, Nam Lik, also COD in July. So these 2 will churn in revenues back to GPSC.
Lowlight. Of course, we have to address it. On the right side: GC, ThaiOil, IRPC, we have turned around. According to routine, we have to stop to change catalyst to accommodate new tie-ins. And overall, we have to stop producing by about 1 month. And so some volumes will be missing on top of spreads missing. And we have additional expenses due to the fact that the retirement arrangements. According to the new law, people who work for certain number of years, in the past, compensation, 300 days. Now 400 days. So that adds on to the costs. But we have to comply with the law. We have to tend to our workforce. So labor-related expenses increased. We have to tend to their welfare. And the older you get, more sickness, complications arise. So the government awards from 300 days to 400 days. And there's also the write-off of EP 3 wells which is normal. This is typical risk. Please explain to people who don't understand that -- who expect that we find oil everywhere. Such is the risk of exploration and production.
Next is the performance, the CFO, please.
Pannalin Mahawongtikul, PTT Public Company Limited - CFO 
So before we start discussing the performance, we have to start it at the key business drivers that shall affected our activity. So first of all, let's look at on the left-hand side at the Dubai average, which is the crude oil and our major products. So in this third quarter of the year 2019, the Dubai price drop about 9% Q-on-Q from USD 67 down to USD 61 per barrel. And if we look on 9 months year-on-year, the average prices also reduced roughly 9% from USD 70 to USD 64 per barrel. Most of it is because there was an anxious anxiety that the world economy is going to start on the recession phase. As the continued declining of the growth, especially in the U.S. and China, the EU countries are rather weak at the moment. And there is also the concern on trade war between the U.S. and China, and that, in turn, affect the overall demand.
Even though OPEC and non-OPEC countries trying to extend that production cut period to March 2020. However, the price -- the oil price is still rather stable at roughly $60, plus or minus.
For the fuel oil, it decreased a little, which follow Dubai and crude oil also. This is part of fuel oil. We could see that in October, the price of fuel oil starting to decrease. And also, it was affected by the IMO, as everyone has already known, so there was less buying of this fuel oil. And for natural gas, NG, average pool price in the third quarter is at USD 7.2, which is the same as in Q2. But for 9 months versus 2018, the average fuel price increased 12% year-on-year. So from $6.4 to $7.2 to -- per MMBtu. This is the result of the gas of the price from the Gulf and from Myanmar and for NG, that increased. When we say LNG, we mean the LNG contract that we import into the country. But if we look at the LNG [daycare] and spot, the highest price was October last year at roughly USD 11.5 per MMBtu. Then it continued on the decline. And Q3 of 2019, on average, is USD 4.5 and it still on the decline. The swap price is rather low because there is new suppliers coming to the market starting from the end of 2018. And there is an expectation of new capacity of 55 million tons more than last year from U.S. and from the Russia.
Petrochemicals spread. It also follows the same trend. The spread of olefin is -- during these 3 months, in Q3 of 2019 and 9 months of 2019, the spread of olefin and naphtha is getting narrower. It was affected by the total demand from the global economy that's on the decline sites and also the trade war. But on the supply, it increased the small supplies from the U.S., China and Indonesia.
However, when we look at PTT naphtha spread in this Q3, the decline is not very big because there was some impact from Indonesian suppliers who has their planned downtime and that affects the total supply.
For aromatics. The average of a PX naphtha in Q3 decreased 13% in Q-on-Q. There was some stretch from increase of the supply because of many factories in Asia, they have to start -- restart their operation after their planned downtime. And there is a new capacity coming to the market as well, especially from China, and the demand is weakening according to the seasonal effect. The average PX expense in spread in Q3 is the only one that grow by 120% Q-on-Q because the cost of naphtha and crude oil is weakening, but there's still demand from styrene monomer, which still enjoy a very high manufacturing rate. And also, the stock of Beijing in China is keeping on decline. So that's why benzene naphtha spread is on the rise. But when we look at the 9 months, it reduced as well. So it follows the same trend as other petrochemical compounds, and it followed the crude oils and there was pressure from less demand. And as China importing less benzene because they have new domestic capacity from Q2 this year.
For the FX, Thai baht against U.S. dollar at the end of quarter, at the end of Q3, the baht strengthened a little from THB 30.92 to THB 30.77. But if we look back to Q2 comparing to Q1, the baht in Q2 strengthened by THB 1.065 per dollar. So in Q2, we have higher FX gains comparing to Q3 Q-on-Q. But when we look back at the 9 months, the baht appreciate by THB 1.84 per dollar. So when we compare to 9 months last year, that was only THB 0.27 per dollar. So you can see the effect again that is higher year-on-year for our 9-month performance.
So next is the PTT consolidated performance. The revenue. So as we mentioned earlier, as the crude oil declined quite a lot, 9% Q-on-Q in Q3. That, in turn affect our revenues. It drops by 6% mostly due to the price of various products, as mentioned earlier, especially for the petrochemical products. And that affects the products from our separation plan as well. So if you look at the performance of separation plan, it would drop quite a lot.
And we will go into detail in the first slide, looking at the volume on natural gas, electricity of GPSC. And third -- and also the refinery, it also dropped. For 9-month revenues, it's roughly the same. It's dropped by 3% year-on-year. Mostly due to the price effect, and also the sales volume. Even though the overall sales volume is on the rise, but some of them drops [SGC] for the -- our refinery and aromatics products. So that's all, in fact, our revenue. So basically, it's the price effect.
Looking at EBITDA for Q3 in the year 2019. It declines by 8% Q-on-Q. But due to -- every single product group, including the [PGC], if you're looking at the gas industry, EBITDA declined according to the average price that dropped. So even though the sales volumes is higher after the acquisition of Murphy. And therefore the write-off of some wells, as mentioned earlier by the governors, and that why it affected EBITDA. For our gas business, EBITDA lowers according to the price and also the volumes.
9 months EBITDA reduced by 23%. So from roughly 280,000 to 322,000 mostly, it became straight from the petrochemical refinery and also the stock gain. That reveals quite a lot. And when we look at the separation plan, the EBITDA, falls as mentioned earlier. And when we look at the cost of the gas, it is higher. For 9 months of the year 2019, our consolidated as a group, the stock loss is roughly (inaudible). But in last year, there was a stock gain. So that's why there was quite a big gap. For net income in Q3 2019, the net income dropped by 22% Q-on-Q. So currently, it's roughly at THB 20,000 million due to the decline in EBITDA and also the FX gain. The appreciation cost is also higher, especially after the acquisition of Murphy. When we look at 9 months 2019, it also drops from THB 100,000 million to THB 25,000 million due to the cost that came from GLOW and also from (inaudible) FX gain is on the rise.
Now when we go down segment by segment, we start at our upstream plant. So when we look at the net income, it drops by roughly 70% in Q-on-Q from 433 million to 358 million mostly because there was a decrease in the average price. That's dropped to 76 per $0.03. And this is the reducing of the price of the liquids and also gas as well. So even though the sales volumes is higher, so the growth is roughly 15%. The higher volumes came from the Murphy acquisition. And that, in turn, increased the sales volumes by roughly 40,000 barrel per day. And in Q3, the overall cost is a little higher as we have write-off some wells and also the depreciation numbers.
Looking at 9 months, the performance is much better, at 39%. So from 851 million to 1.1 billion is on 9-year (sic) [9-month 2019]. So mostly, it's due to the average price that increased a little at roughly 1%. USD 46.25 per barrels. And sales volume increased by 12% due to the acquisition of Bongkot in the mid of 2018. So that was only 1 quarter. In 2019, we have to take it for a whole 3 quarter. And the acquisition of Murphy in the mid of 2019, that was for 1 quarter. So the total sales volume increase but there are some tax and some other fee related which has increased as well. But it is a good investment because it would lead to more revenue in the future. The depreciation is also increased, which follow the sales volume. And also when we buy the Bongkot project and the Murphy acquisition and FX gain is also increased because the baht has been strengthened. And also, we -- last year, we write off the Montara, so there was some loss. So that's why the net income 9-month of PTTGC, it's higher.
Now let's look at the EBITDA breakdown by business. So if you look at the arrow, almost everything decreased both at Q-on-Q and year-on-year, starting from the gas business. In the third Q of 2019, this dropped by 9% Q-on-Q. So from roughly 20,000 -- 20 billion to about 18 billion. And we're starting from the S&M, EBITDA decreased roughly 16%. So from 4.4 billion to 3.7 billion, mostly it's because the sales volumes that dropped by 6%. So -- and I'm going to cover Page 10 to 13 at the same time. You can see that the gas volumes drops because the volume that we sold to EPP decreased, while volume to SPP and industry increased. And the average gas price to the industrial customer is also reduced according to the average fuel oil price, which is also a decrease, and that internally to decrease EBITDA. Also in baht term.
Looking at TM Q-on-Q, reduced by 1% from 8.5 billion to 8.4 billion. Now actually, the sales volumes grow but the cost also grows, mostly because we have to pay to the state land enterprise. But anyhow, in the Q3 -- Q4, when we have reached the cap, we don't have to pay more than that. So the -- if we had a cap and then the cost will reduce in Q4. And there is also some repairing costs. And we also need to book the cost on employee according to the State Enterprise Employee Relationship Act. And that's why it affects their performance in Q-on-Q.
At GSP, we saw a quite big drops, about 18% from 5 billion to roughly 4 billion. So even though the sales volumes grew by 6%, but the fee cost reduced. Actually, it's reduced by 3% in baht term, but the average sales price decreased quite a lot. So that's why the GSP performance is 18% down. For NG, we -- the loss is getting higher from 1.015 billion to 1.032 billion. Even though we adjust the price every month increased by THB 1 every 4 months, and that's increased the average sale price. But -- and the cost of the gas itself reduced by 2%. Anyhow, the sales volumes dropped by 5%, but there's added cost that increased especially for the allocation that we received from [HQ] and that affected the loss.
For others, they enjoy better performance at roughly 1%. Others includes the PTTLNT and PTTNGD. The EBITDA growth by 1%. But actually, it's because the LNG EBITDA is higher at THB 117 million. But for PTTNGD, EBITDA decreased which align with the decreased average price because some of the customer they sell to the fuel oil, and that's -- the total revenue is down. When -- but after the offset, the increase is only 1%. Though our EBITDA drops 1% as well from 4.2 billion to 4.1 billion. Even though the stock loss decreased from the 1.3 billion to 990 million and our gross margin also increased. However, the products dropped by 3%, mostly due to SG&A that is higher. So that affects the performance in this particular sector.
The trading EBITDA is better by 78% because the sales volumes grow from the sale of [spot A1], [spot] cargo, petrochemical. And they have enjoyed improvement in performance is because they have recorded gain on derivatives. So that's why the trading side is better. But the actual performance is not improved that much because it was affected by the condensate products, which received more discount according to the reference price.
And when we look at the 9 months, the gas EBITDA reduced by 23%. So currently, it's about 56 billion and SMF dropped by 15% due to the industrial sector, because at 9 months, you can see that the cost, retail cost of gas increased by 12% from 6.42 to -- higher. So the cost is higher but at the same time, the reference sales price going back 3 months is only a little higher by 4%. The sales volumes grew by 2%. So it does not impact EBITDA much. And the total is still decreased by 15%. At the TM, it reduced 5% from 26 billion to 25 billion. Majority due to the TDC volume or the reserve volume, which is getting less, mostly because of the electricity duration of the Thailand, even though ASP increased.
So one of the reasons the performance decreased is because for the TM, they have to pay for the maintenance on the pipeline #4 at THB 235 million starting in the Q2, and also the cost of their own gas consumption. Even though they focus on the TM, but they have to run it on the gas and that cost is higher. So the EBITDA decrease. For GSP, it drops by 52% from 27 billion to 13 billion. As we all know, it decreased according to the sales price of petrochemical products. For feed cost, it's higher by 10% from 281 to 312, even though the sales volume grows by 6% from 5,300 to -- and that in turn, affect the EBITDA.
NGD, it's getting better at 10%. So from the 5. -- 3.5 billion loss to 3.1 billion loss, majority is because the average price increased but sales volumes dropped 12%. So even though the costs increased by 12% but the overall loss is getting decreased and the others, the overall (inaudible) better by 6%. Mostly from the LNG, EBITDA increased by -- according to the committed volume, which increased to 10 million tons. And for the other ones, it decreased by -- due to the stock loss that's getting higher. And we look at 9 months 2018, the stock gain was 456 million but now, it's a stock loss. And the impact is quite high to our business. And the sales volume also reduced by 3% to 19 billion liter. Mostly it's from LNG because when we separate our oil business, some contract remain in PTT, where we're starting to move it to the OR. But some of the LPG contract is still with the PTT. So that seems -- that's why it seems that volume has decreased.
Now for non-oil EBITDA, it's getting better, especially from the Amazon as the Amazon Cafe has expanded. The trading EBITDA dropped by 64%. And this also reflect the trading performance, which follow the condensate sales. But gross margin dropped by 45% from 11 tons per lit to 6 tons per lit. This is for the condensate, which -- because we have to give higher discounts. The sales volume grew by 2% from 59 billion to 60 billion.
Can we have the next slide, please? For petrochemical and refinery business, for -- starting from olefin. The PP price, HDPE and LLDPE we see that both the price and spread to naphtha of these 3 products adjusted downwards for both Q3 and 9 months of this year due to dampened demand due to trade wars and economic gloom. But in any case, the utilization rate remain healthy and high at 107% and 103%, predictably. Sales volumes are higher for aromatics in Q3, the benzene spread has improved considerably Q-on-Q, as I have covered earlier, whereas the X spread has gone down. But looking at utilization rate for Q3 alone compared to Q2, utilization rate has improved. So that's GC is so much higher from 72% to 100% because in Q2, they conducted the turnaround for 53 days and [new] rate of Thai ore has reduced from 64 to 54, resulting in performance of aromatics of PTT in Q3 looking better.
Now if we look at 9 months, the performance decreased because of spread of PX and benzene has shrunk 9 months of aro for both of them as well as the decrease of sales volume due to the planned turnaround for both GC and ThaiOil.
Now for the refinery margin, GRM. Q3 market GRM looked slightly better from $2.44 to $3.6 per barrel in Q3. This is because of higher product spread, particularly gasoline spread, as the U.S. has already entered into driving season and the Middle East distillate, the disruption from the drone attack resulting in these improved spreads. But if we look at the accounting GRM in Q3, we see that it is lower from $2.82 to $1.68 per barrel. And with the hedging loss of $0.21 and stock loss of $1.71 per barrel for 9-month performance, market GRM is down as well as accounting GRM. Also lower, looking at the graph, the overall impacts of 9 months, there the performance is down. And net income demonstrates the impacts of the spread, GRM and stock gain loss as I have described. So performance decreased both quarter-wise as well as the time frame of 9 months for the coal business.
For New Castle price in Q3, the New Castle price has reduced by about 15%. But if we look at the average selling price, ASP, the average selling price hasn't changed. It remained the same as Q2 because Q2 -- in Q2, the company has completed the futures contracts so they can still sell at high price, whereas cash costs reduced to $52. Sales volumes also higher by 13% from 1,800 kton to higher, resulting in Q3 performance higher -- looking better by 11%, but that translated into about $1 million. For 9 months, the -- price-wise, average price down from $80 to $64 pursuant to the Indonesian government's policy effective from April last year, whereby 25% of production volume must be sold domestically and capped at $70 per ton, resulting in average price cannot be higher. The sales volume 9 months also reduced by 4% from 6,400 to 5,000 kton. Cash cost reduced by 5%, but that doesn't help much. So as a result, operating net income has reduced from $67 million to $29 million for 9 months of this year. But still, there are other supporting factors in the form of -- the compensation award last year is $12 million. This year, they received $33 million compensation court granted. And that pushed up the performance by 7% overall year-to-date.
Now for our power business, GPSC, Q3 compared with Q2. Actually, Q2, they are quite below already in the overall picture. Electricity sales of GPSC reduced 4% Q-on-Q, but the stream is higher by 5% Q-on-Q. So the reduction of electricity sales is due to seasonal factor. The sales price also down from THB 3.11 per kilowatt hour to THB 3.05 per kilowatt hour. Whereas costs, the gas costs reduced from THB 292 to THB 289 MMBtu. So as a result, the performance of Q3 of GPSC, if we look at the bottom line net income, it is down 7% from 1.8 to 1.5. But if we look at adjusted net income, the reduction is slight for 9 months because last year they didn't have GLOW. So it would look as slow their sales volume. Both electricity and steam shot up considerably, whereas sales price is higher slightly from THB 3 to THB 3.04 per kilowatt hour. But gas costs was higher by about 10%, resulting in the performance -- only slight increase of 1% from THB 2.8 billion to THB 2.9 billion. But for adjusted net income, the increase is 38%. So that's the performance of GPSC.
For performance, if we present in the form of waterfall. As I mentioned, net income -- looking against bottom line, net income reduced by 20% from THB 23 billion down to THB 20 billion. Breakdown show impacts of lower margins by about THB 5.5 billion, whereas stock gain improved in a sense, which means less losses from THB 3 billion in Q2 and Q3 less loss and hence, better stock gain. OpEx is higher, THB 1.33 billion, mainly due to the recognition of worker-related expenses due to State Enterprise Relations Act for PTT. We have to recognize this THB 1.69 billion. For this item, part of that is absorbed in OpEx as well as in cost of goods sold. For depreciation, it is higher as well, THB 762 million, mainly due to acquisition of Murphy by EP. Net income -- well, actually, other income has negative impact. Previously, THB 2.7 billion; in this quarter, THB 1.6 billion only mainly because in Q2, IRPC received fines from the contract guarantee of THB 200-or-so million. But there -- that -- there's no that item in this quarter and has negative impact for FX and derivatives also negative impact due to less FX that is missing by about THB 200 million. And finally, the finance cost and CIT and others, meaning NCI, it's positive impact because interest costs have gone down and less tax due to less gains and less NCI due to weaker performance. So our Q3 performance is lower by about 20% -- 22%.
In terms of balance sheet, the overall assets of PTT increased by 3% from THB 2.3 trillion to THB 2.4 trillion. By item, it shows cash and short-term investments are down by about 1.2. It's mainly because we invest in finance-related and resulting in cash -- less cash and short-term investments. For AR and other current assets, it's down by about THB 48 billion mainly due to account receivables plus other debtors mainly because of the less spending on acquisition and we receive compensation from the oil fund and excise tax rebates. Noncurrent assets are higher by about THB 58 billion after recognizing the goodwill of GLOW that GPSC has to absorb as well as PTTEP's acquisition of Murphy. PP&E higher mainly due to the recognition of GLOW assets and Murphy assets, respectively, and construction works' higher cost.
Now for liabilities. Overall liabilities are higher by nearly THB 500 billion. So the main -- because of less receivables due to lower cost and also outstanding taxes, expenses are less, and the tax are waiting to be paid. That's due to GLOW and Murphy acquisition. And the decommission costs are higher due to Murphy as well and higher compensation of staff as a result of State Enterprise Labor Relations Act.
Short-term loans and long-term loans higher by about THB 160 billion. Short term mainly because of GPSC as they borrow short term. And we've consolidated GLOW loans as well as other subsidiaries borrow long term by about THB 55 billion as well as paying back by about THB 22 billion. So all together, higher liabilities. For equity, it is down by THB 29 billion, even though we recognize net profit of THB 75 billion but we pay dividend to the tune of THB 60 billion and EP redeemed the hybrid bonds by about THB 15 billion and less FX gain by THB 24 billion. And so equity is down slightly about THB 29 billion.
For financial ratio, you will see that it's slightly higher net debt-to-EBITDA from 0.13 to 2. This is a little bit higher due to impacts both way, net debt higher versus lower EBITDA. And likewise, net debt/equity slightly higher from 0.08 to 0.25 due to higher net debt as we have to take GLOW and slight decrease in equity. In any case, our financial ratio remained healthy, less than the policy rate, and we remain debt headroom -- high debt headroom to provide for contingency financial needs in the future.
Cash flow segments for 9 months this year. Cash flow from operation about THB 180 billion. For investment activities, we invest about THB 150 billion, mainly due to GPSC acquisition of GLOW and EP of Murphy and various investments to the tune of THB 140-or-so billion. We received back short-term investments, due interest, dividends and et cetera, about THB 17 billion. As a result, our free cash flow is about THB 23 billion. And the outflow of money, as I said, we paid back the loans, we paid interest and paid out dividend as well as borrowing more, THB 135 billion, so after adjustment, cash out is THB 28 billion. Earlier this year, we have cash in hand, about THB 290 billion. So towards the end of the quarter, that figure is down to THB 260 billion. But we have money in current investments and investment in available for sale. So all told, cash and cash equivalents stands at THB 331 billion.
So next is the outlook for 2020. Of course, we need to start by looking at the major countries, the U.S., Chinese and eurozone, which contributed to roughly 60% of the world, and it has a strong effect. So some positive factors for the U.S. is that they have a stronger labor market, high employment rate, the discovery of shale gas and then some local infrastructure. And also, we do have a fund rate, 3x already at 1.5% now. So this is still less than that leading to lower cost for the business sector. And the U.S. has already approved to high 7 (inaudible) and also increased the debt ceiling of the country. And that, in turn, would lead to a lot of better induction into the system.
The negative impact is that the fading income tax cut boost, even though they have cut many taxes. So even though -- so the question is what is the realistic competitiveness. And the trade war, many analysts have decided the boomerang which has went back into the U.S. China still have their own competitiveness, then they would be able to adjust well. And we have heard that there would be some negotiation phase by phase on the face of trade war issues.
For the Chinese economy, the Beijing starting to stimulate the economy with a fiscal stimulus, accommodative monetary policies and also supporting the agricultural sector and also SME. The growth of China would be of roughly 6%. But for the U.S. might be less than 1%. So I think that the conflict between the U.S. and China, the Chinese companies starting to address that. Most of them -- many companies start to branch out into Vietnam or come back to Thailand, but it would take some time to build a factory. It would take 1 or 2 years. But now 1 year has passed, but they still need more time.
For the eurozone economy, the labor market improved. And they have also used a QE restart and offer accommodative monetary policies. Those temporary problems starting to get better, especially for the German auto scandals on pollution and so on. This is what has happened. And many Europeans they no longer use diesel at all because they care much about environment and then they promote the use of electric vehicle for the transportation because they have a very -- they have a good coverage of electricity grid. It can come from nuclear power, from water -- hydropowers or even the wind power or gas conversion. So there will be more promotion on electric vehicle in Europe. There's still political instability. Brexit is still not a very stable. There might be another election. There might be a new Prime Minister. So we are not sure yet what is going to be the outlook of the U.K.
For Japan, it contributes 6% of world GDP. Even though the population is not that high but they have a very high capacities. For Japan economy, the interest rate is rather low, and they invest in the infrastructure. They still face the labor shortage as they are already an ultra-aging society, but they have invested in Vietnam, in Thailand. And they have moved a lot of their business into Thailand.
They have just completed the host of Rugby World 2019 and then they will host the Tokyo Olympics in next year. So there might be some investment infrastructure, more tourists and also more athletes. So that is an impact as the consumption tax rate increase from 8% to 10% in October this year. And the government would gain more tax, of course. And there's the impact from U.S.-China trade war. Japanese is the major manufacturer, the major industrialist, so they were affected. They have a lot of investments in China and in Vietnam, and a trend decline in the labor force. Currently, the average age of the population is at 48 years.
For India, there seems to be a pickup in the growth. They have relaxed their monetary policy. They decreased their policy interest to 5.15% in order to stimulate the economy. The corporate income tax also down from 30% to 22%. And the government financial's stimulation plan includes a rural consumption promotion. And the continued recovery of investments and especially in construction, and the factory in India, there is still ample opportunity of growth because at the moment, the population income per head is still very low. The negative impact is the weaker domestic demand and there's some problem in nonbanking financial companies. So India is still on the developing side and they have huge population. So even though their population is almost #1 in the world, but they contribute to only 3% of the world GDP.
For Thai economy, our population is roughly 1% of the world. The consumption of water and oil is 1% of the world. But GDP is only 0.6%. Our GDP should be at roughly 1%. We're still in the middle income trap. So we should be at least 1%. We should grow for at least 40% on GDP. In Thailand, public investment is going to play a major part in next year. EEC is going on. There will be more investment in the basic infrastructure. And there are still more gap in building. And also tourism sectors will get better gains. There will be more tourists flowing into the country. And after we have achieved a highly successful ASEAN Summit, it boost up the country's image in the global society. And we're also going to adjust the visa upon arrival program. And that, in turn, shall stimulate the tourism sector. And also the measure to stimulate spending challenges is on our export.
There's -- I don't think we have to worry much about the big industry, but for the small and middle industry, it could be quite worrisome. There are still some worry on the divisive politics. So at the moment, the budget is still in the council. But I think we can still -- so moving on because the action has just been completed. But after the honeymoon period, what would happen? Politics is going to be an important factor and household debt, especially for the farmers, for those with a low income after flood and other problems in the country. So that's the highlight outlook.
When we look at the GDP next year, so let's say, the global GDP growth would be roughly 3%, which is quite low. And maybe it could be at 3.4% or 3.5%; for Thailand, it will be roughly 3%, if possible and if it's a good economy; for the U.S., it would be 2%; for China, it will be at 5% or 6%; for India, it is roughly 6% to 7%. And that is the global GDP when you look at the macro economies.
Now looking at the micro economy at the petroleum when the GDP is not decreased but rather stable. When we look at the spread of the GRM, it works relatively the same. But luckily, our GRM is higher than the Singapore because we have improved our fuel oil into propylene into a high-grade fuel oil. So our GRM is better. And at the refinery, the spread is also better. When we look at our gasoline, previously, it's only 1 digit, so USD 7 to USD 8 and now it's $10-something, even though -- especially for Jet-A1. But for fuel oil, if it's a 3.5%, then that's going to receive negative impact.
So if you look on the right column at Dubai, if it's $55 and fuel oil is $44. And for Dubai, if it hits $65, FO is only $48. So it's almost USD 10 minus. But look at gas oil, 50 -- $65 and $81. So it's a USD 10-plus, almost USD 20-plus. So things would look up for refinery in the year 2020.
And we would be better than Singapore GRM because we have invested. Now some of the politicians, they do not understand it, what we sell at a sale price, but it's because we invest, we adjust our yield. In the next 3 years, ThaiOil wouldn't have FO at all. And our yield would be better as gasoline, the jet oil and naphtha. We cannot compare with Singapore. They originally is a refinery, and they use a lot of FO for the ship. We do not have much FO because we were replaced by the natural gas, and it was converted into a propylene. We have adopted already 3 to 4 years ago. So please have the right understanding. Many of them has a misunderstanding, even those politicians. So when there's a lot of supply with the new suppliers coming into the market, for example, the Russia, U.S. and so on, it could lead to an oversupply situation. So the price is rather stable. The demand is not in -- does not increase because the global growth does not follow the plan and there are renewable energies. The cheaper RE is coming into the market as well. So maybe we have new gas field like Harmon in the U.S.A. or Yamal in Russia. So you see that many want to import the gas into the country, but who is going to use it? It's just the same basic group of users.
For the imported gas, the full contract, it's a long-term commitment contract in order to manage the risk. So that is what happened in the present. And we think that GRM in the future, so from $5.5 in the year 2019, it could be $6.5 for our groups. It would increase about USD 1 after we have adjusted all the yield.
And next is olefins. Olefin is still rather stagnant. We did so after year 2019, but the spread is low, almost lowest. The spread of PE compared to naphtha used to be $500 to $600, but now it's only $300. But if we survive 2019, on the 2020, it should be much better. So in this 1 whole year, no one was willing to invest at the spread of USD 200 or USD 300. This is also true for PP, the spread used to be $600 to $700, but now it's only $400. So are you stop investment? But if we can still -- moving forward, we will achieve a positive outcome in the year 2020. So it sounds like -- this is just a forecasting, okay? This is not a commitment. This is a forecast. There's a growth, there's a consumption, but there is no increase on the supply side in the past year.
Looking at aromatics. If we look at the polystyrene, it's related to textiles, polyesters and the PET bottles, they're still used. So it's 1 of the 4 factors that everyone need in their life. So we see a good stability and is still going on for the PX. And that would, in turn, have a positive impact for ThaiOil and GC, who sold PX for textiles and PET bottle. For polystyrene, the future is not bright because there are some replacement already and some do not like it. Especially for packaging, for the single-use packaging, it does not have a good future. So we would need to skip on this particular product. And there is higher capacity as well.
Now on trend, future trend. Top right, IMO, in our group, we have prepared. We know what the challenges are so we prepared for IMO. We have been able to achieve low sulfur both for ThaiOil and IRPC GC, that's why we can enhance the margin upstream; lower gas supply costs that will put us further into the positive territory; and with the lagging time basis between purchasing and selling price, we are using hedging to work on this.
For PTTEP, the 1/3 linked with HSFO and we -- in the meantime, we use hedging by 2024. We work on the basis of crude and no longer FO. And for Partex M&A, it will succeed in Q4. We anticipate wrapping up in Q4 and we also look at strengthening of sales volume for year 2019.
For GC. Q4, there will be a turnaround of 54 days next -- well, first Q 2020, olefins major turnaround for crackers and oleflex. Q2 next year, we anticipate COD of Map Ta Phut retrofit, polyols and PO.
For IRPC, plant turnaround is scheduled. For GPSC, COD of Xayaburi Power Plant in Q4 and CUP4 expansion project as well as NNEG expansion project. What is it? What is NNEG? Nobody knows? Anyone knows? Nava Nakorn, right? The -- Thailand's very first industry estate towards Rangsit. We built a gas power plant, solar power plant and et cetera.
My -- on my left is gas trend, which is -- where the average pooled gas price is on the up. We will have -- we will start land reclamation work in 2020. There should be good news for EEC, 2 projects. I will keep it under wraps and I will share as soon as they are ready to be shared. For turnaround, the Gas Separation Plant, 20 and 25 days.
NGV. We are trying to narrow the gap of public transport subsidy so that we can economize on subsidy, enabling us to cut further losses. And on our part, we adjust the investment as well. In the past, outside gas pipelines, logistics costs are higher. And if they're not worth it, we negotiate termination. So these days, oil prices are not expensive and people do not adore NGV like before. Back then, NGV was popular due to expensive crude. But now crude has become at a range of 50, 60. So NGV is no longer the necessity, except along the gas pipeline. So that's where we're heading. So thank you.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]