7th Nov 2007 15:24
Hellenic Petroleum S.A.07 November 2007 PRESS RELEASE November 7, 2007 THIRD QUARTER/NINE MONTH 2007 FINANCIAL RESULTS (In accordance with International Financial Reporting Standards) Solid 3Q performance in a weaker environment: Net income more than doubles to €84m 3Q 2007 Reported Consolidated Net Income increased 109% y-o-y to €84m and 9M NetIncome grew 23% to €265m, corresponding to €0.27 and €0.87 per share (EPS),respectively. Adjusting for inventory effects, "Clean" Net Income was up 3%y-o-y to €226m in 9M, but down 18% to €82m in 3Q. Reported Group Earnings beforeInterest, Tax, Depreciation and Amortization (EBITDA) increased 3% to €444m in9M; on a comparable, "Clean" basis, they were lower by 11% to €392m. Key financials for the 9-month period to 30 September 2007 and comparisons tolast year's results, are: • Sales Revenue €5.9bn, down 3% (3Q: €2.1bn, up 5%) • Net Income €265m, up 23% (3Q: €84m, up 109%) • Earnings per share €0.87, up 23% (3Q: €0.27, up 109%) • "Clean" EBITDA €392m, down 11% (3Q: €132m, down 30%) • "Clean" Net Income €226m, up 3% (3Q: €82m, down 18%) • ROACE (12-mth trailing) 10% • ROE (12-mth trailing) 11% Key themes for 3Q/9M results were: (a) Weakening refining environment a. After the exceptional strength in May, Mediterranean benchmark refiningmargins weakened significantly, with the 3Q blended benchmark refining margindown by $2.5/bbl over the previous quarter and $0.8/bbl lower versus 3Q06.However, in 9M07 the blended benchmark refining margin was 2% higher y-o-y. b. During 3Q, the EUR strengthened further against the USD, with an adversetranslation effect on refining margins and, thus, profitability. However,weakness in the USD positively affected the revaluation of USD-denominatedloans, resulting in €16m currency gains. c. Still growing Greek products market (excluding seasonal heating Gasoilsales) by 0.9%, on the back of strong automotive diesel and aviation fuel sales.Heating gasoil sales down 14% due to warmer winter, while gasolines were flat. d. In 3Q, crude oil prices continued their ascent, moving by an average $6/bbl over 2Q07, leading to a positive inventory effect. In contrast, the sharpfall in crude oil prices led to inventory losses of €85m in 3Q06. (b)Improving profitability a. In the absence of last year's inventory losses, 9M reported EBITDAincreased by 3% to €444m (3Q at €135m, up 32%); "Clean" EBITDA was down 11% to€392m (3Q at €132m, 30% lower). b. Net Income grew 23% to €265m in 9M (3Q at €84m, up 109%). On a comparable,"Clean" basis, Net Income increased by 3% y-o-y to €226m in the respectiveperiod. c. Free cash flow (FCF) reached €282m, driven by improvements in workingcapital needs. d. Net Income boosted by FX gains, stronger DEPA-related income and a lowertax rate; 9M reported EPS increased by 23% to €0.87 (3Q at €0.27, up 109%),while "Clean" EPS was up 3% to €0.74 (3Q at €0.26, down 18%). Key business developments for 3Q/9M: a) Refining, Supply & Trading Refining, Supply & Trading, accounted for almost 80% of 9M07 Group EBITDA.Reported EBITDA was up 1% to €342m in 9M, while "Clean" EBITDA was down 16% to€290m. Key drivers during 9M07 were: e. An improved product mix and higher sales volumes (particularly in "white"products) mitigated part of the weakness in benchmark refining margins in 3Q. f. OKTA sales volume grew 4%, on the back of a strong domestic market. g. As expected, profitability was adversely affected by the planned, 3-weekturnaround of the Aspropyrgos refinery in 1Q, lower heating gasoil sales andstrengthening of the EUR versus the USD. The refinery upgrades of Elefsina and Thessaloniki are proceeding as planned,with contracting strategies finalised and implementation progressing. b) Retail Marketing Retail marketing accounted for 13% of 9M07 Group EBITDA. EBITDA was flat y-o-y,amounting to €58m. Key drivers during 9M07 were: h. EKO sales volume in Greece were up 6% to 3.1m tonnes, with volumes in theseasonally strong 3Q increasing by 12% to 1.2m tonnes. Building on the solidperformance of 1H07, sales of gasoline and diesel in 3Q were up 14% and 5%,respectively. i. Improved margin performance and market share gains in Greece in 3Q,compared to 1H. j. Network rationalisation in the domestic market continued, withcompany-controlled petrol stations accounting for 21% of the total network,versus 17% in 3Q06. k. Continuous rollout of network in key foreign markets (Bulgaria andSerbia), which, together with improvements in average throughputs, led to a 17%increase in volume sales abroad. l. Further margin improvements in International Marketing; EBITDA increased36% to €26m. c) Petrochemicals The continued strength of the polypropylene business, together with costcontainment efforts, led to a sharp improvement in profitability; in 9M, salesvolume increased 3% to 330kT and EBITDA raced ahead 56% to €48m. d) Power Generation & Trading Power generation sales continued their upward march in 3Q and, thus, 9M07 totalsales were up 3% y-o-y to 1,320GWh. With T-Power's spark spread improving 37% in9M07, turnover and EBITDA in the same period grew 9% to €102m and 26% to €25m,respectively. Panos E. Cavoulacos, CEO of Hellenic Petroleum, commented: "In a weak environment due to strength of the EUR and weakness in benchmarkrefining margins, we posted a solid performance in 3Q07. Our relentless focus oncommercial performance and a tight grip on costs, together with furtherexpansion of our international footprint, delivered once again strong results." Key Financial Indicators for the Group are shown below: HELLENIC PETROLEUM GROUP CONSOLIDATED KEY FINANCIAL RESULTS FOR THE NINE- AND THREE-MONTH PERIOD ENDED 30 SEPTEMBER 2007 (Prepared in accordance with IFRS) • million 9M06 9M07 % A 3Q06 3Q07 % A ReportedNet Sales 6,127 5,913 -3% 2,023 2,116 5%EBITDA 432 444 3% 102 135 32%EBT 315 352 12% 60 110 83%Net Income 215 265 23% 40 84 109%EPS (•) 0.70 0.87 23% 0.13 0.27 109% "Clean" (adjusted for inventory effects)EBITDA 439 392 -11% 188 132 -30%EBT 322 300 -7% 145 107 -26%Net Income 220 226 3% 100 82 -18%EPS (•) 0.72 0.74 3% 0.32 0.26 -18% Balance Sheet ItemsCapital Employed 3,364 3,421 2% - - -Net Debt 1,010 923 -9% - - -Debt Gearing (D/D+E) 30% 28% - - - - Complete IFRS financial statements are available at the website: www.hellenic-petroleum.gr Group Consolidated Balance Sheet as at 30 September 2007 As at 30 September 31 December 2006 2007ASSETSNon-current assetsProperty, plant and equipment 1,398,497 1,380,334Intangible assets 130,979 117,270Investments in affiliated companies 382,144 366,165Deferred income tax assets 34,443 10,293Available-for-sale financial assets 4,270 3,813Loans, advances and other receivables 67,867 58,674 2,018,200 1,936,549 Current assetsInventories 1,329,031 1,206,683Trade and other receivables 1,175,604 1,049,763Cash and cash equivalents 210,145 170,490 2,714,780 2,426,936 Total assets 4,732,980 4,363,485 EQUITYShare capital 1,020,081 1,020,081Reserves 529,017 571,312Retained Earnings 826,247 693,517Capital and reserves attributable to Company Shareholders 2,375,345 2,284,910 Minority interest 122,072 112,700 Total equity 2,497,417 2,397,610 LIABILITIESNon- current liabilitiesBorrowings 400,813 322,695Deferred income tax liabilities 22,526 21,492Retirement benefit obligations 146,779 140,956Provisions and other long term liabilities 125,338 77,043 695,456 562,186Current liabilitiesTrade and other payables 699,038 494,963Current income tax liabilities 100,705 10,304Borrowings 737,006 895,661Dividends payable 3,358 2,761 1,540,107 1,403,689Total liabilities 2,235,563 1,965,875Total equity and liabilities 4,732,980 4,363,485 Group Consolidated Income Statement for the year ended 30 September 2007 For the nine month period ended For the three month period ended 30 September 2007 30 September 30 September 30 September 2006 2007 2006 Sales 5,913,155 6,126,926 2,116,195 2,022,920 Cost of sales (5,280,134) (5,547,498) (1,908,466) (1,869,012) Gross profit 633,021 579,428 207,729 153,908 Selling, distribution and (285,003) (267,354) (103,605) (91,055)administrative expenses Exploration and development (12,178) (9,387) (5,020) (4,748)expenses Other operating (expenses) / 9,995 16,775 (814) 8,053income - net Operating profit 345,835 319,462 98,290 66,158 Finance costs -net (30,586) (25,507) (11,270) (11,194) Currency exchange gains /(losses) 17,861 12,118 16,223 (730) Share of net result of associates 18,700 8,866 6,309 5,692and dividend income Profit before income tax 351,810 314,939 109,552 59,925 Income tax expense (78,252) (90,729) (21,955) (16,358) Profit for the period 273,558 224,210 87,597 43,567 (Less) / Add Minority Interest (8,778) (9,473) (3,915) (3,439) Net Income attributable to Equity 264,780 214,737 83,682 40,128holders of the Company Basic and diluted EPS 0.87 0.70 0.27 0.13 Parent Company Balance Sheet as at 30 September 2007 As at 30 September 2007 31 December 2006ASSETSNon-current assetsProperty, plant and equipment 664,785 646,130Intangible assets 28,864 22,288Investments in affiliated companies 692,234 692,054Deferred income tax assets 26,494 -Available-for-sale financial assets 70 67Loans, advances and other receivables 172 3,772 1,412,619 1,364,311 Current assetsInventories 1,209,679 1,107,490Trade and other receivables 877,106 828,103Cash and cash equivalents 59,579 37,878 2,146,364 1,973,471Total assets 3,558,983 3,337,782 EQUITYShare capital 1,020,081 1,020,081Reserves 517,092 559,387Retained Earnings 534,978 450,439Total equity 2,072,151 2,029,907 LIABILITIESNon- current liabilitiesBorrowings 267,501 295,335Deferred income tax liabilities - 405Retirement benefit obligations 118,886 115,114Provisions and other long term liabilities 95,865 47,939 482,252 458,793 Trade and other payables 620,065 419,810Current income tax liabilities 87,049 -Borrowings 294,108 426,511Dividends payable 3,358 2,761 1,004,580 849,082Total liabilities 1,486,832 1,307,875Total equity and liabilities 3,558,983 3,337,782 Parent Company Income Statement for the year ended 30 September 2007 For the nine month period For the three month period ended ended 30 September 30 September 30 September 30 September 2007 2006 2007 2006 Sales 5,472,527 5,699,346 1,944,930 1,830,602 Cost of sales (5,033,646) (5,308,147) (1,815,189) (1,750,611) Gross profit 438,881 391,199 129,741 79,991 Selling, distribution and (148,793) (135,604) (56,225) (47,040)administrative expenses Exploration and development (12,178) (9,387) (5,020) (4,748)expenses Other operating (expenses) / (3,536) 5,591 (3,425) 5,422income - net Operating profit 274,374 251,799 65,071 33,625 Finance costs -net (17,246) (11,860) (5,960) (5,567) Currency exchange gains /(losses) 17,321 6,412 15,267 (2,490) Dividend income 8,662 13,443 - - Profit before income tax 283,111 259,794 74,378 25,568 Income tax expense (67,149) (75,500) (16,377) (11,573) Profit for the period 215,962 184,294 58,001 13,995 Basic and diluted EPS 0.71 0.60 0.19 0.05 This information is provided by RNS The company news service from the London Stock Exchange