10th Nov 2016 16:19
PRESS RELEASE
10 November 2016
Third quarter / nine month 2016 financial results |
Positive results on increased production and exports, despite weaker benchmark refining margins
Strong operational performance in Refining, Supply & Trading, the Group's main activity, as well as increased exports led 3Q16 HELLENIC PETROLEUM Group Adjusted EBITDA at €191m, despite the considerable decline of benchmark refining margins, compared to last year. Reported EBITDA for 3Q16 amounted to €190m, 74% higher vs 3Q15.
Group refineries reported a 19% production growth, at 3.9m MT, the strongest performance on record, fully capturing the high mechanical availability of units, recording overperformance vs benchmark margins. Petchems reported another quarter of Increased sales, sustaining contribution at high levels, despite weaker international margins. In Fuels Marketing, domestic retail market share growth and higher sales in most activities sustained.
Strong operational performance and relative stability in crude oil prices, led 3Q16 Group Net Income to €80m, 110% higher vs 3Q15, with 9M16 Group Net Income to €184m, the highest in the last few years and up 76% vs last year.
Stable crude oil price, weaker benchmark margins
During 3Q16, supply/demand balances, combined with expectations about OPEC's intention to adjust production, maintained crude oil prices on average at the same levels with 2Q16, at $47/bbl.
Despite higher crude oil supply in the Med, underpinned by Iran's return to international markets and its significantly higher exports in the region, products oversupply led Med benchmark refining margins lower by approximately 36% vs last year, with FCC margins averaging $4.6/bbl ($7.3/bbl), with Hydrocracking margin at $4.0/bbl ($6.2/bbl).
Increased domestic fuels demand
Domestic fuels demand, according to official market data, was higher by 8% in 3Q16, with total consumption volume at 1.6 million tones, reversing the respective decline recorded in 3Q15, following the imposition of capital controls. Increased tourism supported Aviation & Bunkering market, which also grew by 6% in 3Q16.
In 9M16, total domestic fuels demand was unchanged vs last year, at 5m MT.
Record sales and exports, further diversification of crude sourcing
The increased production of the complex and upgraded Group refineries, led to increased sales by 20%, at (4.388k MT), with exports 45% higher at 2.459k MT, a new record high, highlighting Group's export orientation.
Furthermore, the implementation of commercial agreements with national oil companies and increased liquidity enabled the diversification in the crude grades and supply terms, as well as realization of additional commercial opportunities in the Med region, with a positive effect on financial results and crude supply risk management.
Successful issue of the new €375m bond reduced interest cost and improved financial risk management
The Group continued the implementation of its financial strategy, with the issue of a new 5-year, €375m Eurobond, maturing in October 2021, with a 4.875% coupon. Significant part of the demand came from existing noteholders, which participated in the tender offer for the 8% May 2017 Bond, which ran in parallel with the new issue, with noteholders in excess of €200m opting to participate to new bond. Furthermore, demand from new investors was strong, significantly oversubscribing the offering, resulting to the upsize of the issue and the tightening of the final yield compared to initial price talk.
Lower finance costs, strong operating cash flows
The new bond issue and tender offer, combined with the material improvement in terms and definitions of bonds and bank facilities, as well as the repayment and refinancing of €1.5bn of borrowings during 2016, improved Group's capital structure and extended maturity profile; furthermore, finance cost is reduced by €15m from 2017, as the new notes have significantly lower interest cost (4.875% vs 8%).
Operating cash flows (Adjusted EBITDA - capex) for 9M16 amounted to €435m, at the same levels as last year, despite lower benchmark margins. High profitability, combined with stronger capital structure led Net Debt to €1.8bn, significantly lower vs last year (3Q15: €2.4bn).
Key strategic developments
On 28 October, following an international tender process, the JV of TOTAL - EDISON - HELLENIC PETROLEUM was announced as preferred bidder for the award of hydrocarbons exploration and exploitation rights in offshore "block 2" in NW Ionian Sea.
Regarding the sale of 66% of DESFA share capital to SOCAR, the parties agreed to extend the long-stop date for the completion of the transaction to 30 November 2016.
Furthermore, on 31 August, the merger of "HELLENIC FUELS SA" and "EKO SA", was successfully completed through the absorption of the latter from the former.
Key highlights and contribution for each of the main business units in 3Q16 were:
REFINING, SUPPLY & TRADING
Highest quarterly production ever
- Refining, Supply & Trading 3Q16 Adjusted EBITDA at €124m, (2Q15: €166m)
- Production amounted to 3.9 million tonnes, the highest quarterly performance on record with sales at 4.3m tonnes, while exports at 2.5m MT, represent 57% of total sales.
- White products' yield at 84%.
PETROCHEMICALS
Higher production and sales
- Higher PP production and sales volumes (+16%), maintained profitability at high levels, with Adjusted EBITDA at €25m, despite the decline in benchmark margins.
MARKETING
Increase in market shares
- Marketing Adjusted EBITDA in 3Q16 amounted to €44m, vs €47m LY.
- Market share gains in retail, aviation and bunkering continued. Domestic Marketing profitability, with Adjusted EBITDA at €26m, was negatively affected by the effect of Platt's prices evolution on international aviation sales pricing formula.
- International Marketing was impacted by lower margins in the Bulgarian market and weak volumes in Serbia, with Adjusted EBITDA at €18m.
ASSOCIATED COMPANIES
- DEPA Group contribution to consolidated Net Income came in at €9m, with higher volumes, as demand from gas-fired electricity generators increased notably.
- Elpedison EBITDA at €16m on higher production and implementation of the flexibility remuneration mechanism from May 2016.
Key consolidated financial indicators (prepared in accordance with IFRS) for 3Q16 are shown below:
€ million | 3Q15 | 3Q16 | % Δ | 9M15 | 9M16 | % Δ |
P&L figures | ||||||
Refining Sales Volumes ('000 ΜΤ) | 3,622 | 4,339 | 20% | 10,187 | 11,788 | 16% |
Sales | 1,836 | 1,873 | 2% | 5,500 | 4,813 | -12% |
EBITDA | 115 | 199 | 74% | 413 | 533 | 29% |
Adjusted EBITDA 1 | 240 | 191 | -20% | 575 | 517 | -10% |
Net Income | 38 | 80 | 110% | 105 | 184 | 76% |
Adjusted Net Income 1 | 111 | 75 | -32% | 203 | 183 | -10% |
Balance Sheet Items | ||||||
Capital Employed | 4,241 | 3,775 | -11% | |||
Net Debt | 2,409 | 1,781 | -26% | |||
Debt Gearing (ND/ND+E) | 57% | 47% | - |
Notes:
1. Calculated as Reported adjusted for inventory effects and other non-operating items.
Note to Editors:
Founded in 1998, Hellenic Petroleum is one of the leading energy groups in South East Europe, with activities spanning across the energy value chain and presence in 6 countries.
Further information:
V. Tsaitas, Investor Relations Officer
Tel.: +30-210-6302399
Email: [email protected]
Group Consolidated Statement of Financial Position
As at | |||
Note | 30 September 2016 | 31 December 2015 | |
ASSETS | |||
Non-current assets | |||
Property, plant and equipment | 11 | 3.311.176 | 3.385.270 |
Intangible assets | 12 | 108.719 | 117.062 |
Investments in associates and joint ventures | 684.757 | 678.637 | |
Deferred income tax assets | 166.997 | 239.538 | |
Available-for-sale financial assets | 2.070 | 523 | |
Loans, advances and other receivables | 83.809 | 85.022 | |
4.357.528 | 4.506.052 | ||
Current assets | |||
Inventories | 13 | 727.523 | 662.025 |
Trade and other receivables | 14 | 776.333 | 752.142 |
Derivative financial instruments | 8.569 | - | |
Cash, cash equivalents and restricted cash | 15 | 1.130.757 | 2.108.364 |
2.643.182 | 3.522.531 | ||
Total assets | 7.000.710 | 8.028.583 | |
EQUITY | |||
Share capital | 16 | 1.020.081 | 1.020.081 |
Reserves | 17 | 462.219 | 443.729 |
Retained Earnings | 405.331 | 220.506 | |
Capital and reserves attributable to owners of the parent | 1.887.631 | 1.684.316 | |
Non-controlling interests | 104.694 | 105.954 | |
Total equity | 1.992.325 | 1.790.270 | |
LIABILITIES | |||
Non-current liabilities | |||
Borrowings | 18 | 1.308.653 | 1.597.954 |
Deferred income tax liabilities | 42.363 | 45.287 | |
Retirement benefit obligations | 108.443 | 95.362 | |
Provisions for other liabilities and charges | 6.869 | 6.405 | |
Other long term liabilities | 242.074 | 22.674 | |
1.708.402 | 1.767.682 | ||
Current liabilities | |||
Trade and other payables | 19 | 1.688.124 | 2.795.378 |
Derivative financial instruments | - | 34.814 | |
Current income tax liabilities | 6.021 | 6.290 | |
Borrowings | 18 | 1.605.196 | 1.633.033 |
Dividends payable | 642 | 1.116 | |
3.299.983 | 4.470.631 | ||
Total liabilities | 5.008.385 | 6.238.313 | |
Total equity and liabilities | 7.000.710 | 8.028.583 | |
Group Consolidated statement of comprehensive income
For the nine month period ended | For the three month period ended | |||||
Note | 30 September 2016 | 30 September 2015 | 30 September 2016 | 30 September 2015 | ||
Sales | 4.806.983 | 5.499.837 | 1.867.173 | 1.835.815 | ||
Cost of sales | (4.139.028) | (4.906.506) | (1.621.542) | (1.656.299) | ||
Gross profit | 667.955 | 593.331 | 245.631 | 179.516 | ||
Selling and distribution expenses | (215.120) | (248.924) | (71.124) | (87.518) | ||
Administrative expenses | (88.972) | (86.685) | (26.221) | (32.170) | ||
Exploration and development expenses | (2.273) | (1.129) | (88) | (455) | ||
Other operating income / (expenses) - net | 5 | 16.449 | 12.368 | (630) | 4.177 | |
Operating profit / (loss) | 378.039 | 268.961 | 147.568 | 63.550 | ||
Finance (expenses) / income - net | 6 | (149.589) | (153.068) | (51.338) | (52.628) | |
Currency exchange gains / (losses) | 7 | 13.084 | (17.456) | 2.213 | 3.227 | |
Share of net result of associates | 8 | 12.732 | 19.612 | 10.372 | 8.649 | |
Profit / (loss) before income tax | 254.266 | 118.049 | 108.815 | 22.798 | ||
Income tax (expense) / credit | 9 | (70.438) | (13.473) | (28.685) | 15.544 | |
Profit / (loss) for the period | 183.828 | 104.576 | 80.130 | 38.342 | ||
Other comprehensive income: | ||||||
Items that will not be reclassified to profit or loss: | ||||||
Actuarial gains / (losses) on defined benefit pension plans | 17 | (5.300) | 261 | - | 261 | |
(5.300) | 261 | - | 261 | |||
Items that may be reclassified subsequently to profit or loss: | ||||||
Fair value gains / (losses) on available-for-sale financial assets | (5.977) | (192) | (987) | (18) | ||
Fair value gains / (losses) on cash flow hedges | 17 | 11.160 | 1.215 | (21.751) | (35.468) | |
Derecognition of gains / (losses) on hedges through comprehensive income | 17 | 19.642 | - | 19.642 | - | |
Other movements and currency translation gains / (losses) | (1.032) | (396) | 241 | 83 | ||
23.793 | 627 | (2.855) | (35.403) | |||
Other comprehensive (loss) / income for the period, net of tax | 18.493 | 888 | (2.855) | (35.142) | ||
Total comprehensive (loss) / income for the period | 202.321 | 105.464 | 77.275 | 3.200 | ||
Profit attributable to: | ||||||
Owners of the parent | 184.906 | 104.614 | 78.041 | 38.339 | ||
Non-controlling interests | (1.078) | (38) | 2.089 | 3 | ||
183.828 | 104.576 | 80.130 | 38.342 | |||
Total comprehensive income attributable to: | ||||||
Owners of the parent | 203.396 | 105.683 | 75.082 | 3.183 | ||
Non-controlling interests | (1.075) | (219) | 2.193 | 17 | ||
202.321 | 105.464 | 77.275 | 3.200 | |||
Basic and diluted earnings per share(expressed in Euro per share) | 10 | 0,60 | 0,34 | 0,26 | 0,13 | |
Group Consolidated statement of cash flows
For the nine month period ended | |||
Note | 30 September 2016 | 30 September 2015 | |
Cash flows from operating activities | |||
Cash generated from operations | 20 | (427.273) | (893.374) |
Income and other taxes paid | (8.902) | (29.422) | |
Net cash generated (outflow)/inflow operating activities | (436.175) | (922.796) | |
Cash flows from investing activities | |||
Purchase of property, plant and equipment & intangible assets | (81.752) | (131.026) | |
Proceeds from disposal of property, plant and equipment & intangible assets | 1.422 | 421 | |
Interest received | 3.810 | 6.604 | |
Dividends received | 1.119 | 18.289 | |
Investments in associates - net | (7) | 18 | |
Proceeds from disposal of available for sale financial assets | - | 771 | |
Net cash generated (outflow)/inflow investing activities | (75.408) | (104.923) | |
Cash flows from financing activities | |||
Interest paid | (139.560) | (141.829) | |
Dividends paid to shareholders of the Company | (473) | (64.004) | |
Dividends paid to non-controlling interests | (185) | (1.932) | |
Proceeds from borrowings | 275.500 | 400.605 | |
Repayments of borrowings | (603.009) | (221.034) | |
Net cash generated (outflow)/inflow financing activities | (467.727) | (28.194) | |
Net (decrease) / increase in cash, cash equivalents and restricted cash | (979.310) | (1.055.913) | |
Cash,cash equivalents and restricted cash at the beginning of the period | 15 | 2.108.364 | 1.847.842 |
Exchange gains / (losses) on cash, cash equivalents and restricted cash | 1.703 | 1.881 | |
Net (decrease) / increase in cash, cash equivalents and restricted cash | (979.310) | (1.055.913) | |
Cash, cash equivalents and restricted cash at end of the period | 15 | 1.130.757 | 793.810 |
Parent Company Statement of Financial Position
As at | |||
Note | 30 September 2016 | 31 December 2015 | |
ASSETS | |||
Non-current assets | |||
Property, plant and equipment | 10 | 2.722.781 | 2.774.026 |
Intangible assets | 11 | 6.555 | 8.371 |
Investments in subsidiaries, associates and joint ventures | 24 | 651.634 | 656.326 |
Deferred income tax assets | 105.410 | 177.639 | |
Available-for-sale financial assets | 3 | 1.550 | 50 |
Loans, advances and long-term assets | 12 | 19.670 | 16.654 |
3.507.600 | 3.633.066 | ||
Current assets | |||
Inventories | 12 | 647.791 | 580.747 |
Trade and other receivables | 13 | 983.200 | 1.001.818 |
Derivative financial instruments | 3 | 8.569 | - |
Cash, cash equivalents and restricted cash | 14 | 913.388 | 1.839.156 |
2.552.948 | 3.421.721 | ||
Total assets | 6.060.548 | 7.054.787 | |
EQUITY | |||
Share capital | 15 | 1.020.081 | 1.020.081 |
Reserves | 16 | 459.671 | 438.818 |
Retained Earnings | (43.932) | (234.008) | |
Total equity | 1.435.820 | 1.224.891 | |
LIABILITIES | |||
Non- current liabilities | |||
Borrowings | 17 | 1.312.462 | 1.536.414 |
Retirement benefit obligations | 87.942 | 77.500 | |
Provisions for other liabilities and charges | 3.336 | 3.000 | |
Other long term liabilities | 228.398 | 12.400 | |
1.632.138 | 1.629.314 | ||
Current liabilities | |||
Trade and other payables | 18 | 1.620.520 | 2.744.965 |
Derivative financial instruments | 3 | - | 34.814 |
Borrowings | 17 | 1.371.428 | 1.419.687 |
Dividends payable | 642 | 1.116 | |
2.992.590 | 4.200.582 | ||
Total liabilities | 4.624.728 | 5.829.896 | |
Total equity and liabilities | 6.060.548 | 7.054.787 | |
Parent Company Statement of Comprehensive Income
For the nine month period ended | For the three month period ended | |||||
Note | 30 September 2016 | 30 September 2015 | 30 September 2016 | 30 September 2015 | ||
Sales | 4.296.275 | 4.953.252 | 1.654.875 | 1.595.502 | ||
Cost of sales | (3.858.659) | (4.596.231) | (1.510.126) | (1.517.100) | ||
Gross profit | 437.616 | 357.021 | 144.749 | 78.402 | ||
Selling and distribution expenses | (59.780) | (93.525) | (18.488) | (34.294) | ||
Administrative expenses | (54.972) | (55.273) | (15.319) | (21.445) | ||
Exploration and development expenses | (214) | (1.055) | (63) | (385) | ||
Other operating income / (expenses) - net | 5 | 5.518 | 2.119 | (3.182) | 198 | |
Dividend income | 38.348 | 32.659 | - | - | ||
Operating profit / (loss) | 366.516 | 241.946 | 107.697 | 22.476 | ||
Finance (expenses) / income -net | 6 | (124.827) | (125.607) | (43.591) | (43.165) | |
Currency exchange gains / (losses) | 7 | 13.377 | (16.809) | 2.072 | 3.371 | |
Profit / (loss) before income tax | 255.066 | 99.530 | 66.178 | (17.318) | ||
Income tax expense | 8 | (64.990) | (9.537) | (21.307) | 18.774 | |
Profit / (Loss) for the period | 190.076 | 89.993 | 44.871 | 1.456 | ||
Other comprehensive income: | ||||||
Items that will not be reclassified to profit or loss: | ||||||
Acruarial gains / (losses) on defined benefit pension plans | 16 | (3.914) | 261 | - | 261 | |
(3.914) | 261 | - | 261 | |||
Items that may be reclassified subsequently to profit or loss: | ||||||
Fair value gains/(losses) on available-for-sale financial assets | 16 | (6.035) | - | (1.042) | - | |
Fair value gains/(losses) on cash flow hedges | 16 | 11.160 | (26.235) | (2.109) | (34.309) | |
Derecognition of gains/(losses) on hedges through comprehensive income | 16 | 19.642 | 27.449 | - | (1.160) | |
24.767 | 1.214 | (3.151) | (35.469) | |||
Other Comprehensive income/(loss) for the period, net of tax | 20.853 | 1.475 | (3.151) | (35.208) | ||
Total comprehensive income/(loss) for the period | 210.929 | 91.468 | 41.720 | (33.752) | ||
Basic and diluted earnings per share(expressed in Euro per share) | 9 | 0,62 | 0,29 | 0,15 | 0,00 | |
Parent Company Statement of Cash flows
For the nine month period ended | |||
Note | 30 September 2016 | 30 September 2015 | |
Cash flows from operating activities | |||
Cash outflow from operations | 19 | (502.693) | (837.705) |
Income tax paid | (1.279) | (15.933) | |
Net cash outflow from operating activities | (503.972) | (853.638) | |
Cash flows from investing activities | |||
Purchase of property, plant and equipment & intangible assets | 10,11 | (60.445) | (115.454) |
Proceeds from disposal of property, plant and equipment & intangible assets | - | 812 | |
Dividends received | 37.684 | 32.659 | |
Interest received | 6 | 10.138 | 16.252 |
Participation in share capital increase of affiliated companies | (2.408) | (2.100) | |
Net cash outflow from investing activities | (15.031) | (67.831) | |
Cash flows from financing activities | |||
Interest paid | (135.877) | (134.075) | |
Dividends paid | (473) | (64.004) | |
Proceeds from borrowings | 275.500 | 355.232 | |
Repayments of borrowings | (547.711) | (222.521) | |
Net cash outflow from financing activities | (408.561) | (65.368) | |
Net decrease in cash, cash equivalents and restricted cash | (927.564) | (986.837) | |
Cash, cash equivalents and restricted cash at beginning of the period | 14 | 1.839.156 | 1.593.262 |
Exchange gains / (losses) on cash, cash equivalents and restricted cash | 1.796 | 1.908 | |
Net decrease in cash, cash equivalents and restricted cash | (927.564) | (986.837) | |
Cash, cash equivalents and restricted cash at end of the period | 14 | 913.388 | 608.333 |