27th Feb 2020 16:27
27 February 2020
Fourth quarter / Full Year 2019 financial results |
Positive results and improved outlook led to a
FY19 dividend proposal of €0.5/share
Accelerated strategy implementation
HELLENIC PETROLEUM Group announced its 4Q/FY19 financial results. 4Q19 Adjusted EBITDA came in at €118m, with FY19 at €572m, while FY19 Adjusted Net Income amounted to €185m. Results are satisfactory, considering increased international refining environment volatility and significant deterioration for most of 4Q19, as well as the planned 5-week turnaround at Elefsina refinery for its regular 3-year maintenance, which was safely and successfuly completed in October. Improved operation, following start-up and better performance in other business units offset the negative impact of reduced production and sales during the turnaround period.
Furthermore, at the end of November, the Asporpyrgos refinery completed the transition to its new IMO operating model, supplying Greek bunkering hubs with low-sulphur, high quality marine fuels. During December, IMO FO sales amounted to 85k tons.
The BoD, considering the results, as well as the outlook for the Group, proposed to the AGM the distribution of a €0.25/share final dividend, resulting in a total FY19 proposed dividend of €0.5/share.
IFRS Reported Results were affected by the recovery of crude oil price in 4Q19, with an inventory gain of €4m vs losses in 4Q18, due to the material decline in crude oil prices in the respective period, with 4Q19 Reported EBITDA at €110m, vs €-19m in 4Q18. It should be noted that the results include as of 1 January 2019 the impact of new IFRS 16 on operating leases of retail fuel stations and other equipment.
Strategy implementation - Key developments
On 20 February 2020, the EGM of HELLENIC PETROLEUM approved a Memorandum of Understanding with the HRADF for the joint sale of the total share capital (65% HRADF - 35% ELPE) of DEPA Infrastructure, that will result from the partial spin off of gas distribution activities from DEPA Group, as well as the participation of HELLENIC PETROLEUM in the tender process for the sale of 65% of HRADF in DEPA Commercial, that will result from the restructuring of DEPA Group and will include the gas wholesale and retail activities. The agreement enables the Group to implement its straregy for divesting from gas distribution activites and minority participations, as well as grow in commercial gas activities.
In addition on 17 February 2020, the Group agreed the acquisition of a portfolio of PV projects with total installed capacity of 204MW in the Kozani area, Northern Greece from the German RES developer and contractor juwi. The project, upon completion of the construction process in 4Q21, will be the largest RES plant in Greece and among the 5 largest in Europe. The transaction accelerates the achievement of the target of 300MW of RES operating capacity earlier than scheduled.
Andreas Shiamishis, Group CEO, commented on results:
"2019 has been a transition year for the Group, with a number of business and organizational challenges. During the last months we proceeded with a series of initiatives that enable focus on our transformation strategy, such as the agreement with the HRADF for our participation in DEPA, the agreement for the acquisition and construction of the lagest RES project in Greece, with an effective tariff, which is lower than system energy prices, as well as the planning for the strengthening of our international trading activities. Furthermore, we recorded progress on the governance and organizational fronts, through the amendments of our articles of association and the reorganization of our business activities and management team, introducing a simpler and functional structure.
Regarding results, the Group faced, for the first time after several years, a severe deterioration of the refining environment. In such a backdrop, we responded very successfuly , improving our balance sheet and maintaining high returns for our shareholders. The issue of a 2% €500m Eurobond came at the lowest interest rate for the Group in more than 10 years and opened the international bond market for other Greek corporates. Furthermore, we updated our strategy, focusing on improving competitiveness, though operational excellence and new investments, as well as growth in new activities that will improve our environmental footprint by 50% until 2030, materializing our vision to play a key role in the energy transition in the East Med. I would like to thank all our employees for their efforts that made these achievements possible."
Deterioration of refining environment
International crude oil prices recovered during 4Q19, reflecting mainly macro developments and supply/demand balances, with Brent prices averaging at $62/bbl, lower vs 4Q18 ($68/bbl). Equally on a FY basis, prices moved higher from the lows recorded in January 2019, with Brent at $64/bbl, vs $72/bbl in 2018.
The US dollar maintained its strength during the quarter, with EUR/USD exchange rate at 1.11, while in FY19, euro averaged at 1.12 vs 1.18 in 2018. A stronger USD benefits our international and export oriented business model.
The international refining environment deteriorated significantly during 4Q19. HSFO cracks declined to the lowest levels on record, with the launch to the market of the new compliant VLSFO, ahead of IMO implementation. White products cracks were lower vs 3Q19, with the exception of naphtha. Brent-Urals spread improved slightly, however remained at low levels on average. Those led to a significant deviation among refining benchmarks, with FCC margins averaging at $1.6/bbl, with Hydrocracking margins at $6.6/bbl, the highest in four years, highlighting the importance of the investment at Elefsina refinery, in view of global trends for cleaner fuels.
Increasing demand for domestic fuels market
Domestic fuel demand in FY19 was up 3% at 6.9m MT, the highest in the last 3 years, as both auto-fuels and heating gasoil consumption increased. Aviation and bunkering fuels grew significantly (+10%), at 4.6m MT, mainly driven by marine fuels.
Strong balance sheet, improved capital structure, reduction in finance costs
The new €500m Eurobond issue, combined with the partial refinancing of 2021 Eurobond through a tender offer, as well as improvements in bank loans commercial terms, strengthened our balance sheet and reduced financing costs by 21%, which is expected to continue in 2020. As a result, Net Debt stood at €1.5bn, at the lower end of the Group's target range, with gearing ratio at 40%.
Key highlights and contribution for each of the main business units in 4Q/FY19 were:
REFINING, SUPPLY & TRADING
- Refining, Supply & Trading 4Q19 Adjusted EBITDA at €76m (-39%).
- Net production amounted to 3.2m MT (-17%), with sales at 3.5m MT (-15%), with FY19 at 14.2 and 15.2 respectively.
- Realised ELPE system margin came in at $8.6/bbl in 4Q19, a significant over performance vs benchmarks.
PETROCHEMICALS
- 4Q19 Adjusted EBITDA came in at €20m (-9%), as operational performance and increased integration with Aspropyrgos refinery mitigated the impact of weak benchmark PP margins.
MARKETING
- In Domestic Marketing, improved performance in Retail and Aviation led 4Q19 Comparable EBITDA at €3m, with FY19 at €49m (+14%).
- International Marketing Comparable EBITDA at €15m (+44%), on account of improved in-market operations and supply optimisation, with FY19 at €56m (+11%).
ASSOCIATE COMPANIES
- DEPA Group contribution to consolidated Net Income was €21m for FY19.
- ELPEDISON EBITDA amounted to €20m in FY19, almost flat vs 2018.
Key consolidated financial indicators (prepared in accordance with IFRS) for 4Q/FY19 are shown below:
€ million | 4Q18 | 4Q19 | % Δ | FY18 | FY19 | % Δ |
P&L figures |
|
|
|
|
|
|
Refining Sales Volumes ('000 ΜΤ) | 4,137 | 3,496 | -15% | 16,490 | 15,223 | -8% |
Sales | 2,428 | 2,052 | -15% | 9,769 | 8,857 | -9% |
EBITDA | -19 | 110 | - | 711 | 574 | -19% |
Adjusted EBITDA 1 | 156 | 118 | -24% | 730 | 572 | -22% |
Net Income | -145 | -4 | - | 215 | 160 | -26% |
Adjusted Net Income 1 | 57 | 25 | -56% | 296 | 185 | -37% |
Balance Sheet Items |
|
|
|
|
|
|
Capital Employed |
|
|
| 3,855 | 3,869 | - |
Net Debt |
|
|
| 1,460 | 1,543 | 6% |
Debt Gearing (Net Debt/Capital Employed) |
|
|
| 38% | 40% | - |
Notes:
1. Calculated as Reported adjusted for inventory effects and other non-operating items.
Further information:
V. Tsaitas, Investor Relations Officer
Tel.: +30-210-6302399
Email: [email protected]
Group Consolidated statement of financial position
|
| As at | |
| Note | 31 December 2019 | 31 December 2018 |
ASSETS |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment | 6 | 3.297.668 | 3.268.928 |
Right-of-use assets | 2,7 | 242.934 | - |
Intangible assets | 8 | 104.426 | 105.617 |
Investments in associates and joint ventures | 9 | 384.747 | 390.091 |
Deferred income tax assets | 19 | 59.358 | 64.109 |
Investment in equity instruments | 3 | 1.356 | 634 |
Loans, advances and long term assets | 10 | 55.438 | 73.922 |
|
| 4.145.927 | 3.903.301 |
Current assets |
|
|
|
Inventories | 11 | 1.012.802 | 993.031 |
Trade and other receivables | 12 | 748.153 | 776.487 |
Income tax receivable | 29 | 91.391 | 37.466 |
Assets held for sale |
| 2.520 | 3.133 |
Derivative financial instruments | 23 | 3.474 | - |
Cash and cash equivalents | 13 | 1.088.198 | 1.275.159 |
|
| 2.946.538 | 3.085.276 |
Total assets |
| 7.092.465 | 6.988.577 |
|
|
|
|
EQUITY |
|
|
|
Share capital and share premium | 14 | 1.020.081 | 1.020.081 |
Reserves | 15 | 276.972 | 258.527 |
Retained Earnings |
| 964.972 | 1.052.164 |
Equity attributable to equity holders of the parent |
| 2.262.025 | 2.330.772 |
|
|
|
|
Non-controlling interests |
| 64.548 | 63.959 |
|
|
|
|
Total equity |
| 2.326.573 | 2.394.731 |
|
|
|
|
LIABILITIES |
|
|
|
Non- current liabilities |
|
|
|
Interest bearing loans and borrowings | 17 | 1.610.094 | 1.627.171 |
Lease liabilities | 2,18 | 169.357 | - |
Deferred income tax liabilities | 19 | 213.495 | 185.744 |
Retirement benefit obligations | 20 | 180.398 | 163.514 |
Provisions | 21 | 25.625 | 38.238 |
Other non-current liabilities | 22 | 28.376 | 28.852 |
|
| 2.227.345 | 2.043.519 |
Current liabilities |
|
|
|
Trade and other payables | 16 | 1.401.732 | 1.349.153 |
Derivative financial instruments | 23 | - | 16.387 |
Income tax payable | 29 | 7.147 | 75.119 |
Interest bearing loans and borrowings | 17 | 1.022.270 | 1.108.785 |
Lease liabilities | 2,18 | 30.537 | - |
Dividends payable |
| 76.861 | 883 |
|
| 2.538.547 | 2.550.327 |
Total liabilities |
| 4.765.892 | 4.593.846 |
Total equity and liabilities |
| 7.092.465 | 6.988.577 |
Group Consolidated statement of comprehensive income
|
| For the year ended | |
| Note | 31 December 2019 | 31 December 2018 |
Revenue from contracts with customers | 5 | 8.856.965 | 9.769.155 |
Cost of sales | 24 | (8.051.806) | (8.769.769) |
Gross profit |
| 805.159 | 999.386 |
Selling and distribution expenses | 24 | (329.711) | (324.430) |
Administrative expenses | 24 | (140.012) | (150.518) |
Exploration and development expenses | 25 | (4.843) | (1.403) |
|
|
|
|
Other operating income / (expenses) and other gains / (losses) | 26 | 10.351 | (8.823) |
Operating profit |
| 340.944 | 514.212 |
|
|
|
|
Finance income | 27 | 5.843 | 3.827 |
Finance expense | 27 | (146.303) | (149.532) |
Lease finance cost | 18,27 | (10.081) | - |
Currency exchange gains / (losses) | 28 | (1.255) | 2.194 |
Share of profit / (loss) of investments in associates and joint ventures | 9 | 17.862 | (1.771) |
Profit before income tax |
| 207.010 | 368.930 |
|
|
|
|
Income tax expense | 29 | (43.434) | (154.218) |
Profit for the year |
| 163.576 | 214.712 |
Profit attributable to: |
|
|
|
Owners of the parent |
| 160.798 | 211.614 |
Non-controlling interests |
| 2.778 | 3.098 |
|
| 163.576 | 214.712 |
Other comprehensive income / (loss): |
|
|
|
Other comprehensive income that will not be reclassified to profit or loss (net of tax): |
|
|
|
Actuarial gains / (losses) on defined benefit pension plans | 20 | (12.369) | (11.012) |
Changes in the fair value of equity instruments | 15 | 544 | (695) |
Share of other comprehensive income / (loss) of associates | 15 | (188) | (288) |
|
| (12.013) | (11.995) |
Other comprehensive income that may be reclassified subsequently to profit or loss (net of tax): |
|
|
|
Fair value gains / (losses) on cash flow hedges | 15 | 12.890 | (5.006) |
Recycling of (gains) / losses on hedges through comprehensive income | 15 | 1.501 | (14.920) |
Currency translation differences and other movements |
| 272 | (745) |
|
| 14.663 | (20.671) |
Other comprehensive income / (loss) for the year, net of tax |
| 2.650 | (32.666) |
|
|
|
|
Total comprehensive income for the year |
| 166.226 | 182.046 |
Total comprehensive income / (loss) attributable to: |
|
|
|
Owners of the parent |
| 163.425 | 178.958 |
Non-controlling interests |
| 2.801 | 3.088 |
|
| 166.226 | 182.046 |
Εarnings per share(expressed in Euro per share) | 30 | 0,53 | 0,69 |
Group Consolidated statement of cash flows
|
| For the year ended | |
| Note | 31 December 2019 | 31 December 2018 |
Cash flows from operating activities |
|
|
|
Cash generated from / (used in) operations | 32 | 634.718 | 652.291 |
Income tax received / (paid) |
| (148.655) | (4.918) |
Net cash generated from / (used in) operating activities |
| 486.063 | 647.373 |
|
|
|
|
Cash flows from investing activities |
|
|
|
Purchase of property, plant and equipment & intangible assets | 6,8 | (241.045) | (156.713) |
Proceeds from disposal of property, plant and equipment & intangible assets |
| 1.616 | 277 |
Participation in share capital increase of associates and joint ventures |
| (10.295) | - |
Purchase of subsidiary, net of cash acquired | 36 | (5.341) | (1.298) |
Settlement of consideration of acquisition of further equity interest in subsidiary | - | (16.000) | |
Grants received |
| 439 | 299 |
Interest received | 27 | 5.843 | 3.827 |
Prepayments for right-of-use assets |
| (717) | - |
Dividends received | 9 | 30.490 | 307.735 |
Proceeds from disposal of assets held for sale |
| 1.334 | - |
Proceeds from disposal of investments in equity instruments |
| 19 | 265 |
Net cash generated from / (used in) investing activities |
| (217.657) | 138.392 |
|
|
|
|
Cash flows from financing activities |
|
|
|
Interest paid |
| (150.411) | (140.755) |
Dividends paid to shareholders of the Company |
| (153.248) | (148.767) |
Dividends paid to non-controlling interests |
| (2.246) | (2.061) |
Acquisition of treasury shares |
| - | (683) |
Participation of minority shareholders in share capital increase of subsidiary |
| 34 | 17 |
Proceeds from borrowings |
| 514.700 | 409.694 |
Repayments of borrowings |
| (625.581) | (506.358) |
Payment of lease liabilities - principal | 18 | (30.712) | - |
Payment of lease liabilities - interest | 18 | (10.081) | - |
Net cash generated from / (used in) financing activities |
| (457.545) | (388.913) |
|
|
|
|
Net increase/ (decrease) in cash and cash equivalents |
| (189.139) | 396.852 |
|
|
|
|
Cash and cash equivalents at the beginning of the year | 13 | 1.275.159 | 873.261 |
Exchange gains / (losses) on cash and cash equivalents |
| 2.179 | 5.046 |
Net increase / (decrease) in cash and cash equivalents |
| (189.139) | 396.852 |
Cash and cash equivalents at end of the year | 13 | 1.088.198 | 1.275.159 |
Parent Company Statement of Financial Position
|
| As at | |
| Note | 31 December 2019 | 31 December 2018 |
ASSETS |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment | 6 | 2.693.794 | 2.684.237 |
Right-of-use assets | 2,7 | 32.084 | - |
Intangible assets | 8 | 8.704 | 4.799 |
Investments in subsidiaries, associates and joint ventures | 9 | 1.045.138 | 1.032.372 |
Investment in equity instruments | 3 | 965 | 318 |
Loans, advances and long-term assets | 10 | 22.089 | 8.887 |
|
| 3.802.774 | 3.730.613 |
|
|
|
|
Current assets |
|
|
|
Inventories | 11 | 899.760 | 893.859 |
Trade and other receivables | 12 | 791.257 | 643.261 |
Income tax receivable | 29 | 87.616 | 38.294 |
Derivative financial instruments | 23 | 3.474 | - |
Cash and cash equivalents | 13 | 888.564 | 1.070.377 |
|
| 2.670.671 | 2.645.791 |
Total assets |
| 6.473.445 | 6.376.404 |
|
|
|
|
EQUITY |
|
|
|
Share capital and share premium | 14 | 1.020.081 | 1.020.081 |
Reserves | 15 | 283.106 | 262.263 |
Retained Earnings |
| 935.648 | 864.333 |
Total equity |
| 2.238.835 | 2.146.677 |
|
|
|
|
LIABILITIES |
|
|
|
Non-current liabilities |
|
|
|
Interest bearing loans and borrowings | 17 | 1.607.838 | 1.657.598 |
Lease liabilities | 2,18 | 21.264 | - |
Deferred income tax liabilities | 19 | 182.065 | 151.873 |
Retirement benefit obligations | 20 | 147.074 | 132.539 |
Provisions | 21 | 22.797 | 37.858 |
Other non-current liabilities | 20 | 13.620 | 14.810 |
|
| 1.994.658 | 1.994.678 |
Current liabilities |
|
|
|
Trade and other payables | 16 | 1.271.809 | 1.226.107 |
Derivative financial instruments | 23 | - | 16.387 |
Income tax payable | 29 | 5.785 | 76.322 |
Interest bearing loans and borrowings | 17 | 875.576 | 915.350 |
Lease liabilities | 2,18 | 9.919 | - |
Dividends payable |
| 76.863 | 883 |
|
| 2.239.952 | 2.235.049 |
Total liabilities |
| 4.234.610 | 4.229.727 |
Total equity and liabilities |
| 6.473.445 | 6.376.404 |
Parent Company Statement of Comprehensive Income
|
| For the year ended | |
| Note | 31 December 2019 | 31 December 2018 |
Revenue from contracts with customers | 5 | 8.023.563 | 8.967.702 |
Cost of sales |
| (7.563.197) | (8.287.696) |
Gross profit |
| 460.366 | 680.006 |
Selling and distribution expenses | 24 | (104.209) | (99.248) |
Administrative expenses | 24 | (85.966) | (95.795) |
Exploration and development expenses | 25 | (2.289) | (875) |
Other operating income / (expenses) and other gains / (losses) | 26 | (6.058) | (8.356) |
Operating profit |
| 261.844 | 475.732 |
Finance income | 27 | 10.510 | 9.442 |
Finance expense | 27 | (115.800) | (136.636) |
Lease finance cost | 18,27 | (967) | - |
Dividend income | 9 | 195.416 | 318.795 |
Currency exchange gains / (losses) | 28 | (910) | 2.244 |
Profit before income tax |
| 350.093 | 669.577 |
Income tax expense | 29 | (33.734) | (146.187) |
Profit for the year |
| 316.359 | 523.390 |
Other comprehensive income / (loss): |
|
|
|
Other comprehensive income / (loss), that will not be reclassified to profit or loss (net of tax): |
|
|
|
Actuarial losses on defined benefit pension plans | 15 | (9.835) | (10.878) |
Changes in the fair value of equity instruments | 15 | 469 | (675) |
|
| (9.366) | (11.553) |
Other comprehensive income / (loss), that may be reclassified subsequently to profit or loss (net of tax): |
|
|
|
Fair value gains / (losses) on cash flow hedges | 15 | 12.890 | (5.006) |
Recycling of (gains) / losses on hedges through comprehensive income | 15 | 1.501 | (14.920) |
Other Comprehensive income / (loss) for the year, net of tax |
| 5.025 | (31.479) |
Total comprehensive income for the year |
| 321.384 | 491.911 |
Earnings per share(expressed in Euro per share) | 30 | 1,04 | 1,71 |
Parent Company Statement of Cash flows
|
| For the year ended | |
| Note | 31 December 2019 | 31 December 2018 |
Cash flows from operating activities |
|
|
|
Cash generated from / (used in) operations | 32 | 459.810 | 557.196 |
Income tax received / (paid) |
| (143.204) | 2.224 |
Net cash generated from / (used in) operating activities |
| 316.606 | 559.420 |
|
|
|
|
Cash flows from investing activities |
|
|
|
Purchase of property, plant and equipment & intangible assets | 6,8 | (160.831) | (101.318) |
Proceeds from disposal of property, plant and equipment & intangible assets |
| 1.074 | - |
Dividends received |
| 45.416 | 318.795 |
Interest received | 27 | 10.510 | 9.442 |
Participation in share capital increase of subsidiaries and joint ventures | 9 | (22.680) | (21.054) |
Settlement of consideration of acquisition of further equity interest in subsidiary | 9 | - | (39.000) |
Sale of investment in subsidiaries to related parties |
| - | 7.000 |
Net cash generated from / (used in) investing activities |
| (126.511) | 173.865 |
|
|
|
|
Cash flows from financing activities |
|
|
|
Interest paid |
| (117.527) | (131.965) |
Dividends paid |
| (150.085) | (148.767) |
Loans to affiliated companies |
| - | (3.600) |
Acquisition of treasury shares | 14 | - | (683) |
Proceeds from borrowings |
| 231.420 | 440.748 |
Repayments of borrowings |
| (329.168) | (491.303) |
Payment of lease liabilities - principal | 18 | (7.694) | - |
Payment of lease liabilities - interest | 18 | (967) | - |
Net cash generated from /(used in) financing activities |
| (374.021) | (335.570) |
|
|
|
|
Net increase / (decrease) in cash and cash equivalents |
| (183.926) | 397.715 |
|
|
|
|
Cash and cash equivalents at the beginning of the year | 13 | 1.070.377 | 667.599 |
Exchange gains / (losses) on cash and cash equivalents |
| 2.113 | 5.063 |
Net increase / (decrease) in cash and cash equivalents |
| (183.926) | 397.715 |
Cash and cash equivalents at the end of the year | 13 | 888.564 | 1.070.377 |