PJSC Tatneft. Annual report 2017
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PJSC Tatneft. Annual report 2017

Retail Network

The Company has 685 filling stations operating under the Tatneft corporate brand in the most attractive regions of Russia in terms of capacity and demand dynamics, as well as in the Republic of Belarus and Ukraine. The priorities in this business segment are to increase margins, to ensure the quality of oil products sold, and to develop related services. The Company is implementing a program of modernization and reformatting of filling stations, and qualitatively improving the brand positioning.

Main strategic objectives of the company for the «retail business» block for the next few years:

  • Modernization of the existing filling stations
  • Expansion of the network of filling stations
  • ncrease in the daily flow of filling stations
  • mprovement of the quality of the trade offering at filling stations, including by developing non-fuel sale items at the filling stations
  • ncrease in the sale of branded fuel

The retail business development priority is an increase of the network marginality based on the quality of the trade offering and the development of related services.

In accordance with the «Development of the Retail and Sale Network» investment program for the TATNEFT filling stations, 10 filling stations were built and purchased in 2017 in the Russian Federation, 31 were reformatted, 28 were reequipped, and 9 land plots were purchased.
In Ukraine, 2 land plots were purchased.

The first stage of the network development plan was implemented (targeted development regions were defined), new interiors and exteriors of the filling stations were developed, and the «Automation of investment activity» project was launched.

Reconstruction of filling stations with the introduction of new formats and interiors continues, the range of products and services offered to customers is expanding, and public catering is being developed at filling stations.

2018 INVESTMENT PROGRAM

Investments are planned for the development of the sale infrastructure in the amount of RUB 4.1 billion (excluding VAT) in the Russian Federation. Investments will be mainly aimed at the formatting of 71 filling stations and the construction of 11 filling stations in Russia.

 The State Duma's adoption in November 2017 of a Federal Law on additional increase in excises in 2018 (from the beginning of the year by 1,083 RUB/tonne for AB and 865 RUB/tonne for DF, and from the second half of the year by 679 RUB/tonne for AB, and by 593 RUB/tonne for DF) led to an additional increase in wholesale prices in Q4 2017.

Change in the parameters of the Great Tax Maneuver in November 2016: growth of excises against the background of reduction of duties on exports of oil products. Thus, given the containment of retail prices by state authorities, retail margins are declining.

Enterprises of the company’s retail and sale unit are demonstrating high performance and are leaders in many regional markets of the country.

The retail network carries out retail and wholesale of oil and gas products in the territory of ten constituent entities of the country: Republic of Tatarstan, Republic of Chuvashia, Republic of Mari El, Republic of Udmurtia, Republic of Bashkortostan, Kemerovo region, Samara region, Sverdlovsk region, Ulyanovsk region, and Chelyabinsk region.

The volume of sale of oil products through the Company’s retail distribution network in 2017 made 2.7 million tonnes, which is 4% more than in the preceding year, including retail sale of 5% and positive dynamics of average daily sale per filling station (+6% in 2017).

In 2017, the volume of corporate sales of oil products through the company’s own retail network significantly increased (+16.7%), including through work with large transport enterprises, as a result of which contracts were concluded with such enterprises as Monopoly, Business Lines, and X5 Retail Group. In 2018, sales in this area are expected to grow to 8.4 million liters per month.

The retail network of TATNEFT at the end of 2017 had 685 filling stations, of which 574 were in Russia , 94 – in Ukraine, and 17 – in Belarus. The competitive advantage of the TATNEFT retail network is its scale and wide branching, with coverage of almost all the most attractive regions of Russia, primarily the Volga Region and the Central Federal District, which have high growth prospects and attractive retail margins.

THE VOLUME OF SALE OF OIL PRODUCTS THROUGH THE COMPANY’S RETAIL DISTRIBUTION NETWORK
2017 Retail, tonnesн Small wholesale, tonnes Total, tonnes
Russia 1 503 452 1 076 915 2 580 367
Ukraine 32 682 17 619 50 301
Belarus 44 281 1 751 46 032
Total 1 580 415 1 096 286 2 676 701
NUMBER OF TATNEFT FILLING STATIONS, UNITS


THE VOLUME OF SALE OF OIL PRODUCTS THROUGH THE COMPANY’S RETAIL DISTRIBUTION NETWORK, MILLION TONNES

RELATED SERVICES

The Company carries out modernization of the retail network in order to improve product offering for clients – both fuel and non-fuel offering. The Company's initiatives on development of the related services will, inter alia, increase the profitability of the retail channel. Targeted loyalty programs are being implemented.

The Company is developing related businesses to improve the quality of services and increase revenue. In 2017, the development of promising areas of roadside service continued, such as the organization of catering at the Company’s filling stations (by the end of the year, revenue growth in this area was 38% compared to 2016), and the network of self-service car washing facilities is expanding.

As of the end of 2017, 421 stores (23 more than in 2016) and 259 cafeterias (an increase of 93) were operated at the Company’s filling stations. Revenues from the sale of related products and services at the Company’s filling stations increased by 14% compared to 2016 and amounted to RUB 3 billion, including RUB 2.6 billion in the Russian Federation. The main increase in the revenue was due to the use of modern filling station formats during construction and reconstruction.

INTERACTION WITH CONSUMERS

To obtain feedback from the customers, there is a round-the-clock Hotline. Assessment of the competence of the personnel by consumers is carried out constantly: clients' appeals are accepted via books of comments and suggestions, website, call center, mail, social networks, telephone numbers of reception rooms of the Company and its branches. All incoming information is transmitted to the relevant specialists for consideration. The decision is made on the basis of the received information within 48 hours, with mandatory notifying of customers. Forms of interaction through social networks are constantly developed. In order to improve the quality of the network of filling stations, customer surveys are conducted. On the "Open Days", customers have the opportunity to observe the technological processes of acceptance, sampling, and rapid analysis of fuel.

The quality management system of LLC Tatneft-AZS Tsentr is certified according to international standard ISO 9001:2015.
COMPETITIVE ADVANTAGES

The retail and marketing enterprises of Tatneft demonstrate high performance and are leaders in many regional markets of the country. The Company's filling stations use advanced energy-saving and environmentally friendly technologies.

High quality of fuel and services are the most important priorities of Tatneft filling stations. The guaranteed quality of oil products at filling stations is ensured due to the sale of the own-produced motor fuel – TANECO diesel fuel, the compliance with process specifications and requirements of regulatory documents during acceptance, storage, transportation and sale of oil products. According to experts, whose opinions are based on the results of independent examinations, TANECO diesel fuel conforms to EURO-6 fuel.

The reconstruction of filling stations with the introduction of new formats and interiors is continued. It allows to expand the range of products and services offered to clients and to develop public catering. At filling stations, an all-inclusive service is offered, the range of additional services is constantly expanded.

 

PRODUCT QUALITY

One of the priorities of the Company is to provide high quality products and services. For this purpose, a multi-level system of control of all technological operations with oil products (acceptance, storage, transportation and sale) is organized. The Company has certified stationary testing laboratories and a mobile express laboratory, which are equipped with the most modern equipment. Special software is used: "Info-Oil" – a system of accounting of data received from each filling station, "Terrasoft CRM" – a system of work with complaints and appeals of customers, "AvtoGRAF" – a satellite navigation system to track the movement of fuel trucks. The filling stations are subject to inspections organized by the state supervisory bodies, including the Federal Agency for Technical Regulation and Metrology (Rosstandart). In order to independently confirm the quality, the filling stations are certified in the System of Voluntary Certification of Fuel and Energy Complex (TEKSERT). 32 filling stations passed the procedure of voluntary certification. Quality of oil products is controlled in accordance with the requirements of existing regulatory documents and Technical Regulations of the Customs Union "On Requirements for Motor and Aviation Gasoline, Diesel and Marine Fuel".

NOMINATIONS OF THE TATNEFT'S NETWORK OF FILLING STATIONS
  • Tatneft-AZS Tsentr was awarded the prize of the Government of the Republic of Tatarstan for the quality in 2017 in the nomination "Business Excellence" for achieving significant results in the quality of products and services, ensuring their safety, and introducing highly-effective quality management methods.
  • Diploma of the Government of the Russian Federation for achieving significant results in the field of quality.
  • Kazan branch of the network was awarded the diploma of the Performance Leaders Competition for the A.K. Gastev Cup in the nominations "Employee Development Leader" and "Industry Leader – Wholesale and Distribution".
  • Almetyevsk and Bavly branches were awarded certificates of participation in the Performance Leaders Competition for the A.K. Gastev Cup.