26th May 2006 09:33
Hellenic Petroleum S.A.26 May 2006 May 17, 2006 FIRST QUARTER 2006 FINANCIAL RESULTS (In accordance with International Financial Reporting Standards) Strong performance continues for Hellenic Petroleum Group Hellenic Petroleum Group reported 1st quarter 2006 Consolidated Earnings BeforeTax of €107 million and Net Income of €72 million, corresponding to €0.24 pershare (EPS). Group Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) forthe 1st quarter 2006 were €134 million. The key financials for the 1st quarter of 2006 and comparatives were as follows: • Sales €2,058 million, up 41 % • EBITDA €134 million, up 4 % • Net Income €72 million, up 32 % • Earnings per share (EPS) €0.24, up 32 % • Operating cash flow measure €116 million, up 51 % • ROACE 13.3 % (12M: Apr 05 - Mar 06) versus 13.8 % for 2005 full year • ROE 16.2 % (12M: Apr 05 - Mar 06) versus 15.9 % for 2005 full year Significant market factors affecting 1st quarter 2006 results were: • Positive refining environment, albeit with lower international refining margins - High and volatile crude oil and product prices - Lower international benchmark margins for complex refineries (Med Cracking refining margins), by $0.85/bbl, as well as lower sweet-sour crude price differential. • Overall stable domestic petroleum products market. • Strengthening of the US Dollar against the Euro by 8%, compared to 1st quarter of 2005. Key developments by business segment were as follows: REFINING, SUPPLY & TRADING Operating profit for Refining, Supply & Trading was €92 million, 4% up vs. thefirst quarter of 2005. Key drivers have been: - Total sales volume out of the company's three refineries in Greece amounted to 4.1 million tons, similar to last year. OKTA refining sales were 237 thousand tons, same as last year. - The adverse impact of lower refining margins was partly offset by the strengthening of the US Dollar against the Euro. Increasing prices of crude and oil products also had a positive effect on the financial results. - Flat operating expenses during the 1st quarter of 2006 as planned. RETAIL MARKETING Domestic marketing sales volume up from last year (1,022 thousand metric tons, + 2 %), but at lower profit margins. Implementation of the KALYPSO (creation offlagship company owned and operated petrol stations) is progressing, althoughnot yet with significant impact on Group results. International marketing network sales volume increased by 3.5 % year on year,due to new petrol stations and organic growth. However, as in Greece,significant international price increase resulted in pressure on local marketingmargins and operating profits. Finally, OKTA is expanding its petrol stations network in FYROM. The Company'sobjective is the re-branding of a network of about 20, white flag petrolstations under the brand name of OKTA within 2006; 10 of which in operation byQ2. PETROCHEMICALS Petrochemicals sales volumes increased by 15% in the 1st quarter of 2006compared to the same period last year, continuing the improvement reported atthe end of 2005. Total sales amounted to 100 thousand tons, with EBITDAoperating profits up. POWER GENERATION AND TRADING With the completion of the construction of the plant in Thessaloniki at the endof 2005, the period January to March '06 was the first operating quarter of thisunit. Despite the fact that Thessaloniki Power is a coastal highly efficientgas fired plant (CCGT), the unit operated at a loss due to low daily averageprices in electricity market (SMP) and high natural gas prices. Furthermore, during the 1st quarter of 2006, Hellenic Petroleum startedcross-border power trading through imports from Bulgaria and exports to Italy. Power sales were €25 million and, despite the positive impact of cross-bordertrading, power generation and trading sector results recorded losses. EXPLORATION AND PRODUCTION E&P activities in the period related to the progress of exploration activitiesin Libya where the drilling program is under way. Furthermore, following theInternational Bid round by EGPC, Hellenic Petroleum was awarded the West Obayedblock in the Western Desert. The award relates to the rights to exploration aswell as the appointment of Hellenic Petroleum as an "operator" for the specificarea. CORPORATE INITIATIVES At Group level, Hellenic Petroleum's key priorities are the improvement ofcompetitiveness and returns on capital employed. To this extend key initiativesinclude: - Group-wide procurement processes and procedures re-engineering. The project covers operating expenses and capital projects (approximately €500 million annually) aiming to achieve savings in the range of 10-15% over the next three years. - Strengthening of human resources by recruiting qualified personnel (new engineers) through new and meritocratic procedures, as well as the hiring of specialized executives with the necessary skills and experience to cover the increasing demands from the expansion of the Group's activities in Greece and abroad. - Set up of a Group treasury vehicle (Hellenic Petroleum Finance plc) to centrally cover the funding of the Group's subsidiaries, at a lower rates and transaction costs. FINANCIAL POSITION AND INVESTMENT PLAN The Group's financial position remains strong despite the increase in debtgearing to 29 %. The increase in debt results from the increase in the value ofinventories, both due to higher prices and higher stock levels. The capital expenditure of the Group during the 1st quarter was €17 million, asthere are no major projects in progress. The Elefsina refinery upgrade project(FEED) is progressing well; selection of flexicoker technology already made. Key Financial Indicators for the Group are attached: HELLENIC PETROLEUM GROUP 1st QUARTER 2006 CONSOLIDATED KEY FINANCIAL RESULTS (Prepared in accordance with IFRS) 1st QUARTER • MILLION 2005 2006 % Net Sales 1,460 2,058 41 % EBITDA 129 134 4 % Earnings before Tax 82 107 30 % Net Income 55 72 32 % Earnings per Share (EPS) • 0.18 0.24 32 % Operating Cash Flow (1) 77 116 52 % 31.12.2005 31.3.2006 Net Debt 700 930 -- Debt Gearing (D/D+E) 25% 29 % -- (1) Calculated as EBITDA less capital expenditure. Complete IFRS financial statements are available at the website: www.hellenic-petroleum.gr Consolidated Balance Sheet As at 31 March 31 December 2006 2005ASSETSNon-current assetsProperty, plant and equipment 1.385.344 1.405.940Intangible assets 94.061 94.859Investments in associates 363.559 357.858Deferred income tax assets 40.550 42.255Available-for-sale financial assets 2.082 2.092Loans, advances and other long term assets 41.568 36.078 1.927.164 1.939.082Current assetsInventories 1.353.673 1.169.098Trade and other receivables 919.070 888.079Cash and cash equivalents 152.480 193.630 2.425.223 2.250.807Total assets 4.352.387 4.189.889 EQUITYShare capital 1.019.963 1.019.963Reserves 543.642 543.642Retained Earnings 662.758 590.933Capital and reserves attributable to Company Shareholders 2.226.363 2.154.538 Minority interest 104.720 101.924 Total equity 2.331.083 2.256.462 LIABILITIESNon- current liabilitiesBorrowings 536.397 539.573Deferred income tax liabilities 19.548 18.645Retirement benefit obligations 136.699 133.747Provisions and other long term liabilities 68.134 67.348 760.778 759.313Current liabilitiesTrade and other payables 527.054 637.043Current income tax liabilities 176.929 153.045Borrowings 548.255 356.360Dividends payable 8.288 27.666 1.260.526 1.174.114Total liabilities 2.021.304 1.933.427Total equity and liabilities 4.352.387 4.189.889 Consolidated Income Statement For the three month period ended 31 March 31 March 2006 2005 Sales 2.058.193 1.460.271 Cost of sales (1.878.621) (1.279.571) Gross profit 179.572 180.700 Selling, distribution and administrative expenses (89.080) (89.802) Exploration and development expenses (1.194) (3.416) Other operating income - net 6.218 2.927 Operating profit 95.516 90.409 Finance expense - net (6.237) (3.935) Currency exchange gains /(losses) 12.296 (6.002) Share of profit of associates 5.684 1.774 Profit before income tax 107.259 82.246 Income tax expense (32.472) (26.987) Profit for the period 74.787 55.259 Attributable to:Shareholders of the company 72.203 54.636Minority interest 2.584 623Profit for the period 74.787 55.259 Earnings per share attributable to Company Shareholders(expressed in Euro per share):Basic & Diluted 0,24 0,18 Parent Company Balance Sheet As at 31 March 31 December 2006 2005ASSETSNon-current assetsProperty, plant and equipment 643.011 657.028Intangible assets 25.808 26.602Investments in affiliated companies 685.164 685.145Deferred income tax assets 27.561 27.606Available-for-sale financial assets 5 5Loans, advances and other receivables 87 79 1.381.636 1.396.465Current assetsInventories 1.231.207 1.071.322Trade and other receivables 740.679 726.743Cash and cash equivalents 65.116 75.956 2.037.002 1.874.021Total assets 3.418.638 3.270.486 EQUITYShare capital 1.019.963 1.019.963Reserves 543.643 543.643Retained Earnings 445.302 384.709Total equity 2.008.908 1.948.315 LIABILITIESNon- current liabilitiesBorrowings 327.662 335.187Retirement benefit obligations 111.141 108.711Provisions and other long term liabilities 46.902 46.435 485.705 490.333Current liabilitiesTrade and other payables 469.679 552.055Current income tax liabilities 162.334 135.247Borrowings 283.724 116.870Dividends payable 8.288 27.666 924.025 831.838Total liabilities 1.409.730 1.322.171Total equity and liabilities 3.418.638 3.270.486 Parent Company Income Statement For the three month period ended 31 March 31 March 2006 2005 Sales 1.963.436 1.365.563 Cost of sales (1.835.264) (1.238.338) Gross profit 128.172 127.225 Selling, distribution and administrative expenses (45.662) (50.224) Exploration and development expenses (1.193) (3.416) Other operating (expenses) / income - net (3.087) 931 Operating profit 78.230 74.516 Finance costs -net (2.467) (1.349) Currency exchange gains /(losses) 11.104 (4.754) Dividend income - 4.710 Profit before income tax 86.867 73.123 Income tax expense (26.274) (21.900) Profit for the period 60.593 51.223 Earnings per share attributable to the Company Shareholders 0,20 0,17(expressed in Euro per share): This information is provided by RNS The company news service from the London Stock Exchange