16th May 2019 15:48
PRESS RELEASE
16 May 2018
First quarter 2019 financial results |
Satisfactory performance sustained, despite weaker benchmark refining margins; Higher volumes in the Greek market
HELLENIC PETROLEUM Group 1Q19 Adjusted EBITDA came in at €123m, with Adjusted Net Income at €37m, recording one more quarter of good results and in line with expected industry performance. The drop in benchmark refining margins, mainly on account of the lowest gasoline and naphtha cracks during the last four years and reduced crude availability in the region, as well as maintenance driven production, decrease at 3.6m MT (-9%), led to a negative impact on quarterly operational profitability vs 1Q18.
A mitigating factor to the weak refining environment and crude supply issues has been the flexibility of Group's refineries in processing varied crude grades allowing a sustained over-performance as well as a stronger USD exchange rate. On a comparable basis, non-refining business units' performance at similar levels as 1Q18, contributing by 37% to Group Adj. EBITDA.
With respect to financing costs, a further drop of 16% reflects debt reduction as well as better pricing on account of renegotiation of existing debt facilities. Equity consolidated Power & Gas contribution to Net Income is up (+30%), despite DESFA sale and deconsolidation.
Based on the results above and the positive impact of increasing crude oil prices during the quarter, 1Q19 Reported Net Income amounted to €47m, with results including for the first time the impact of new IFRS 16 on operating leases of retail fuel stations and other equipment.
Benchmark refining margins significantly weaker in 1Q19
During 1Q19, crude oil prices moved higher from the 2018 year-end lows of $50/bbl, reaching $70/bbl at the end of the quarter, mainly due to geopolitical developments and OPEC's decision to reduce crude supply. The lower availability of sour crude grades in the Med led to their prices exceeding those of Brent for the first time since 2013, with negative impact on benchmark margin calculation. This, combined with particularly weak light ends cracks, resulted to complex Med benchmark margins at their lower levels for at least 4 years. Med FCC benchmark margins were 29% lower, averaging $3.4/bbl, with Hydrocracking at $3.7/bbl (-31%).
EUR/USD was flat vs 4Q18, at 1.14, with the USD stronger vs 1Q18.
Increased heating gasoil and bunkering fuels demand
Domestic market fuels demand came in at 1.8m MT (+5%), as heating gasoil consumption was higher (+21%), due to weather conditions, while auto-fuels demand dropped marginally. Aviation and especially bunkering fuels demand recorded another increase (+15%), at 831k MT, mainly on account of increased international marine offtake.
Further balance sheet improvement and financing expenses drop
A reduction of financing expenses was reported for one more quarter and is expected to continue in coming quarters, following the recent renegotiation of existing bank facilities, as well as the repayment of the €325m Eurobond, which matures on 4 July 2019, out of cash reserves.
Overall, Group balance sheet remains strong, with Net debt at €1.5bln, flat q-o-q and debt gearing at 38%, significantly improved vs 1Q18.
The implementation of the new IFRS 16 affected the accounting of operating leases, with a positive EBITDA impact of €9m in 1Q19, mainly in Domestic Marketing, while financial liabilities (mostly retail stations leases) increased by c.€175m.
Key strategic developments
In E&P, on 9 April 2019 the Lease Agreements for Block 10 (HELPE 100%) and Block Ionian (Repsol 50% - operator, HELPE 50%) were signed, while during 1Q19 the scheduled environmental and exploration studies in other W. Greece concessions continued.
Key highlights and contribution for each of the main business units in 1Q19 were:
REFINING, SUPPLY & TRADING
- Refining, Supply & Trading 1Q19 Adjusted EBITDA at €80m (-29%), on account of weaker benchmark margins.
- White products' yield remained at 85%, despite the negative impact of maintenance shut-downs.
- Exports were affected by lower refinery utilisation, leading to total 1Q19 sales of 3.6m MT (-13%).
PETROCHEMICALS
- Higher sales volumes partly offset weaker PP margins, with 1Q19 Adjusted EBITDA at €25m (-4%).
MARKETING
- 1Q19 Marketing Adjusted EBITDA at €20m (+46%), following IFRS 16 implementation, while comparable performance was at a similar level to last year.
- In Domestic Marketing, sales volumes were up 5%, on increased heating gasoil demand, with 1Q19 EBITDA at €9m.
- International Marketing volumes increased by 8%, with EBITDA at €11m (+4%), while construction works for the new fuels terminal in Cyprus commenced.
ASSOCIATED COMPANIES
- 1Q19 DEPA Group contribution to consolidated Net Income amounted to €17m. This is up from last year as a result of a combinations of factors, including the different Group structure, with DESFA no longer included, while ownership and consolidation method for regional gas retail and distribution companies has changed.
- The application of flexibility compensation mechanism independent power generators, as well as increased production, led Elpedison's EBITDA at €11m in 1Q18, notably higher vs 1Q18.
HELLENIC PETROLEUM Group of Companies
Key consolidated financial indicators (prepared in accordance with IFRS) for 1Q19 are shown below:
€ million |
|
|
| 1Q18 | 1Q19 | % Δ |
P&L figures |
|
|
|
|
|
|
Refining Sales Volumes ('000 ΜΤ) |
|
|
| 4,102 | 3,551 | -13% |
Sales |
|
|
| 2,168 | 1,991 | -8% |
EBITDA |
|
|
| 166 | 135 | -18% |
Adjusted EBITDA 1 |
|
|
| 149 | 123 | -18% |
Net Income |
|
|
| 74 | 47 | -37% |
Adjusted Net Income 1 |
|
|
| 62 | 37 | -40% |
Balance Sheet Items |
|
|
|
|
|
|
Capital Employed |
|
|
| 4,419 | 3,971 | -10% |
Net Debt |
|
|
| 1,973 | 1,522 | -23% |
Debt Gearing (ND/ND+E) |
|
|
| 45% | 38% | - |
Notes:
1. Calculated as Reported adjusted for inventory effects and other non-operating items. 1Q19 results includes IFRS16 impact.
Further information:
V. Tsaitas, Investor Relations Officer
Tel.: +30-210-6302399
Email: [email protected]
Group Consolidated statement of financial position
|
| As at | |
| Note | 31 March 2019 | 31 December 2018 |
ASSETS |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment | 10 | 3.245.594 | 3.268.928 |
Right of use assets | 2,11 | 215.259 | - |
Intangible assets | 12 | 105.365 | 105.617 |
Investments in associates and joint ventures |
| 407.982 | 390.091 |
Deferred income tax assets |
| 62.629 | 64.109 |
Investment in equity instruments | 3 | 842 | 634 |
Loans, advances and long term assets | 2 | 42.163 | 73.922 |
|
| 4.079.834 | 3.903.301 |
Current assets |
|
|
|
Inventories | 13 | 1.127.235 | 993.031 |
Trade and other receivables | 2,14 | 807.613 | 821.598 |
Assets held for sale |
| 3.493 | 3.133 |
Derivative financial instruments | 3 | - | - |
Cash, cash equivalents and restricted cash | 15 | 1.223.449 | 1.276.366 |
|
| 3.161.790 | 3.094.128 |
Total assets |
| 7.241.624 | 6.997.429 |
|
|
|
|
EQUITY |
|
|
|
Share capital and share premium | 16 | 1.020.081 | 1.020.081 |
Reserves | 17 | 266.455 | 258.527 |
Retained Earnings |
| 1.099.279 | 1.052.164 |
Equity attributable to equity holders of the parent |
| 2.385.815 | 2.330.772 |
Non-controlling interests |
| 63.445 | 63.959 |
Total equity |
| 2.449.260 | 2.394.731 |
|
|
|
|
LIABILITIES |
|
|
|
Non-current liabilities |
|
|
|
Interest bearing loans & borrowings | 18 | 1.629.332 | 1.627.171 |
Lease liabilities | 2 | 149.496 | - |
Deferred income tax liabilities |
| 192.098 | 185.744 |
Retirement benefit obligations |
| 165.708 | 163.514 |
Provisions |
| 42.293 | 42.038 |
Trade and other payables |
| 28.873 | 28.852 |
|
| 2.207.800 | 2.047.319 |
Current liabilities |
|
|
|
Trade and other payables | 19 | 1.346.411 | 1.349.153 |
Derivative financial instruments |
| 5.626 | 16.387 |
Income tax payable |
| 90.387 | 80.171 |
Interest bearing loans & borrowings | 18 | 1.116.532 | 1.108.785 |
Lease liabilities | 2 | 24.732 | - |
Dividends payable |
| 876 | 883 |
|
| 2.584.564 | 2.555.379 |
Total liabilities |
| 4.792.364 | 4.602.698 |
Total equity and liabilities |
| 7.241.624 | 6.997.429 |
Group Consolidated statement of comprehensive income
|
| For the three month period ended | |
| Note | 31 March 2019 | 31 March 2018 |
Revenue from contracts with customers | 4 | 1.991.216 | 2.168.386 |
Cost of sales |
| (1.804.901) | (1.944.687) |
Gross profit |
| 186.315 | 223.699 |
Selling and distribution expenses |
| (75.548) | (74.475) |
Administrative expenses |
| (33.963) | (32.129) |
Exploration and development expenses |
| (450) | (126) |
Other operating income/(expenses) and other gains/(losses)-net | 5 | 2.916 | 2.023 |
Operating profit |
| 79.270 | 118.992 |
Finance income |
| 1.000 | 975 |
Finance expense |
| (33.296) | (39.508) |
Lease finance cost |
| (2.273) | - |
Currency exchange gain/(loss) | 6 | 1.255 | (2.118) |
Share of profit of investments in associates and joint ventures | 7 | 18.091 | 13.895 |
Profit before income tax |
| 64.047 | 92.236 |
Income tax expense | 8 | (17.433) | (18.015) |
Profit for the period |
| 46.614 | 74.221 |
Profit attributable to: |
|
|
|
Owners of the parent |
| 47.115 | 74.272 |
Non-controlling interests |
| (501) | (51) |
|
| 46.614 | 74.221 |
Other comprehensive income: |
|
|
|
Other comprehensive income that will not be reclassified to profit or loss (net of tax): |
|
|
|
Changes in the fair value of equity instruments | 17 | (4) | (147) |
Other comprehensive income that may be reclassified subsequently to profit or loss (net of tax): |
|
|
|
Fair value gains on cash flow hedges | 17 | 7.889 | 1.884 |
Currency translation differences and other movements | 17 | 30 | (124) |
Other comprehensive income for the period, net of tax |
| 7.915 | 1.613 |
Total comprehensive income for the period |
| 54.529 | 75.834 |
Total comprehensive income/(loss) attributable to: |
|
|
|
Owners of the parent |
| 55.043 | 75.889 |
Non-controlling interests |
| (514) | (55) |
|
| 54.529 | 75.834 |
Basic and diluted earnings per share(expressed in Euro per share) | 9 | 0,15 | 0,24 |
Group Consolidated statement of cash flows
|
| For the three month period ended | |
| Note | 31 March 2019 | 31 March 2018 |
Cash flows from operating activities |
|
|
|
Cash generated (used in)/ from operations | 20 | 4.514 | (98.029) |
Income tax received/(paid) |
| (2.660) | 4.492 |
Net cash generated from / (used in) operating activities |
| 1.854 | (93.537) |
|
|
|
|
Cash flows from investing activities |
|
|
|
Purchase of property, plant and equipment & intangible assets | 10,1 | (31.360) | (25.452) |
Proceeds from disposal of property, plant and equipment & intangible assets |
| 245 | 20 |
Participation in share capital (increase)/ decrease of associates |
| 200 | - |
Purchase of subsidiary, net of cash acquired |
| - | (16.000) |
Settlement of consideration of acquisition of further equity interest in subsidiary | - | (1.298) | |
Grants received |
| - | 80 |
Interest received |
| 1.000 | 975 |
Prepayments for right-of-use assets |
| (259) | - |
Proceeds from disposal of investments in equity instruments |
| - | 257 |
Net cash used in investing activities |
| (30.174) | (41.418) |
|
|
|
|
Cash flows from financing activities |
|
|
|
Interest paid |
| (26.215) | (32.663) |
Dividends paid to shareholders of the Company |
| - | (3) |
Movement in restricted cash | 15 | - | 144.445 |
Acquisition of treasury shares | 17 | - | (249) |
Proceeds from borrowings |
| 7.722 | - |
Repayments of borrowings |
| 148 | (165.734) |
Payment of lease liabilities |
| (10.854) | - |
Net cash used in financing activities |
| (29.199) | (54.204) |
|
|
|
|
Net decrease in cash and cash equivalents |
| (57.519) | (189.159) |
|
|
|
|
Cash and cash equivalents at the beginning of the period | 15 | 1.275.159 | 873.261 |
Exchange gain/(loss) on cash and cash equivalents |
| 4.602 | (2.514) |
Net decrease in cash and cash equivalents |
| (57.519) | (189.159) |
Cash and cash equivalents at end of the period | 15 | 1.222.242 | 681.588 |
Parent Company Statement of Financial Position
|
| As at | |
| Note | 31 March 2019 | 31 December 2018 |
ASSETS |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment | 9 | 2.673.521 | 2.684.237 |
Right of use assets | 2,10 | 24.311 | - |
Intangible assets | 11 | 5.427 | 4.799 |
Investments in subsidiaries, associates and joint ventures |
| 1.032.372 | 1.032.372 |
Investment in equity instruments | 3 | 513 | 318 |
Loans, advances and long-term assets |
| 8.625 | 8.887 |
|
| 3.744.769 | 3.730.613 |
|
|
|
|
Current assets |
|
|
|
Inventories | 12 | 1.023.867 | 893.859 |
Trade and other receivables | 13 | 659.114 | 680.347 |
Cash, cash equivalents and restricted cash | 14 | 1.039.379 | 1.071.585 |
|
| 2.722.360 | 2.645.791 |
Total assets |
| 6.467.129 | 6.376.404 |
|
|
|
|
EQUITY |
|
|
|
Share capital and share premium | 15 | 1.020.081 | 1.020.081 |
Reserves | 16 | 270.135 | 262.263 |
Retained Earnings |
| 900.388 | 864.333 |
Total equity |
| 2.190.604 | 2.146.677 |
|
|
|
|
LIABILITIES |
|
|
|
Non-current liabilities |
|
|
|
Interest bearing loans and borrowings | 17 | 1.661.904 | 1.657.598 |
Lease liabilities | 2 | 18.014 | - |
Deferred income tax liabilities |
| 158.701 | 151.873 |
Retirement benefit obligations |
| 134.422 | 132.539 |
Provisions |
| 37.725 | 37.858 |
Trade and other payables |
| 14.654 | 14.810 |
|
| 2.025.420 | 1.994.678 |
Current liabilities |
|
|
|
Trade and other payables | 18 | 1.232.400 | 1.226.107 |
Derivative financial instruments | 3 | 5.626 | 16.387 |
Income tax payable |
| 86.148 | 76.322 |
Interest bearing loans and borrowings | 17 | 919.791 | 915.350 |
Lease liabilities | 2 | 6.263 | - |
Dividends payable |
| 877 | 883 |
|
| 2.251.105 | 2.235.049 |
Total liabilities |
| 4.276.525 | 4.229.727 |
Total equity and liabilities |
| 6.467.129 | 6.376.404 |
Parent Company Statement of Comprehensive Income
|
| For the three-month period ended | |
| Note | 31 March 2019 | 31 March 2018 |
Revenue from contracts with customers | 4 | 1.824.373 | 2.010.635 |
Cost of sales |
| (1.703.824) | (1.855.792) |
Gross profit |
| 120.549 | 154.843 |
|
|
|
|
Selling and distribution expenses |
| (24.294) | (22.238) |
Administrative expenses |
| (21.043) | (19.557) |
Exploration and development expenses |
| (29) | (21) |
Other operating income/(expenses) & other gains/(losses)-net | 5 | 2.851 | 619 |
Operating profit |
| 78.034 | 113.646 |
Finance income |
| 2.388 | 2.487 |
Finance expense |
| (30.567) | (36.419) |
Lease finance cost |
| (219) | - |
Currency exchange gains/(losses) | 6 | 1.563 | (2.501) |
Profit before income tax |
| 51.199 | 77.213 |
Income tax expense | 7 | (15.144) | (17.398) |
Profit for the period |
| 36.055 | 59.815 |
Other comprehensive income/(loss): |
|
|
|
Other comprehensive income/(loss), that will not be reclassified to profit or loss (net of tax): |
|
|
|
Changes in the fair value of equity instruments | 16 | (17) | (123) |
|
| (17) | (123) |
Other comprehensive income/(loss), that may be reclassified subsequently to profit or loss (net of tax): |
|
|
|
Fair value gains / (losses) on cash flow hedges | 16 | 7.889 | 1.884 |
|
| 7.889 | 1.884 |
|
|
|
|
Other Comprehensive income/(loss) for the period, net of tax |
| 7.872 | 1.761 |
Total comprehensive income for the period |
| 43.927 | 61.576 |
Basic and diluted earnings per share(expressed in Euro per share) | 8 | 0,12 | 0,20 |
Parent Company Statement of Cash flows
|
| For the three-month period ended | |
| Note | 31 March 2019 | 31 March 2018 |
Cash flows from operating activities |
|
|
|
Cash generated from/(used in) operations | 19 | 9.177 | (81.202) |
Income tax (paid)/received |
| (1.768) | 5.768 |
Net cash generated from/(used in) operations |
| 7.409 | (75.434) |
|
|
|
|
Cash flows from investing activities |
|
|
|
Purchase of property, plant and equipment & intangible assets | 9,11 | (25.851) | (17.401) |
Proceeds from disposal of property, plant and equipment & intangible assets |
| 4 | - |
Interest received |
| 2.388 | 2.487 |
Settlement of consideration of acquisition of further equity interest in subsidiary |
| - | (16.000) |
Participation in share capital increase of subsidiaries & associates |
| - | (850) |
Net cash used in investing activities |
| (23.459) | (31.764) |
|
|
|
|
Cash flows from financing activities |
|
|
|
Interest paid |
| (23.295) | (29.957) |
Dividends paid |
| (7) | (3) |
Movement in restricted cash |
| - | 144.445 |
Acquisition of treasury stock |
| - | (249) |
Proceeds from borrowings |
| 4.442 | 7.700 |
Repayments of borrowings |
| - | (161.567) |
Payment of lease liabilities |
| (1.854) | - |
Net cash generated from / (used in) financing activities |
| (20.714) | (39.631) |
|
|
|
|
Net decrease in cash and cash equivalents |
| (36.764) | (146.829) |
|
|
|
|
Cash and cash equivalents at the beginning of the period | 14 | 1.070.377 | 667.599 |
Exchange losses on cash and cash equivalents |
| 4.559 | (2.501) |
Net decrease in cash and cash equivalents |
| (36.764) | (146.829) |
Cash and cash equivalents at end of the period | 14 | 1.038.172 | 518.269 |