24th Feb 2017 07:00
PRESS RELEASE
23 February 2017
Fourth quarter / Full year 2016 financial results |
Reported Net Income at record high of €329m, despite weaker benchmark refining margins by 25%
HELLENIC PETROLEUM Group announced its FY16 results, according to IFRS. In FY16, the Group achieved significantly higher profitability, for the second consecutive year, following losses in 2013 and 2014, despite a 25% drop in benchmark refining margins, reporting the strongest reported results on record; Reported EBITDA came in at €836m, while Net Income amounted to €329m, vs NI of €45m in FY15 and -€329m in FY14. Adjusted results, removing the effect of €102m of inventory gains, due to the recovery of international oil prices, were sustained for the second year at historical highs, with Adjusted EBITDA at €731m and Adjusted Net Income at €265m, vs losses of €117m in 2013 and marginal profit of €2m in 2014.
Record high production and exports
Group refineries reported a 16% production growth in FY16, at 14.8m MT, the strongest performance on record, fully capturing the high availability of units and crude optionality, recording over performance vs benchmark margins. Exports reached a historical high, at 8.6m MT, representing 56% of total sales. All Group activities reported positive results, with Petchems increasing contribution to €100m, also with higher sales. Fuels Marketing Adjusted EBITDA amounted to €100m, with most of our subsidiaries increasing their share in respective markets.
Stronger financial position, lower interest expense and stronger cash flows
During 2016 the Group, for the second consecutive year, achieved strong operating cash flows (Adjusted EBITDA - Capex) of €605m, higher vs 2015 (€593m) and significantly increased vs those of 2014 (€281m) and 2013 (€66m), further improving and de-risking Group balance sheet.
Strong operating cash flows and the improved position of the Group in financial markets, following successful negotiation and harmonisation in financial ratios and debt covenants in eurobonds and bank facilities, enabled the decrease of gross debt by €389m, which came in at €2,842m in FY16, with obvious benefits for the Group, reaffirmed by the successful issue of the new 5-year, €375m Eurobond, with a 4.875% coupon.
Furthermore, improved liquidity, combined with the agreements for direct supply from national oil companies of Iran, Iraq, Saudi Arabia and Egypt, enabled the realization of opportunities in the Med crude pricing, with significant benefits for the Group in its financial performance, operations and security of supply.
Following the improvement of balance sheet structure, total equity increased by €352m, to €2,142m. FY16 Net Debt amounted to €1,759m, with gearing ratio at 45% and capital employed at €3,903m, reflecting an improved balance sheet structure.
Increased market share in the domestic market, despite marginally lower demand
Domestic fuels demand was marginally higher by 0.26% in FY16 (ground fuels consumption lower by 0,81%, vs marine & aviation market higher by 0,91%), amounting to 10,424k MT, vs 10,451k MT in 2015.
Domestic Fuels Marketing total sales increased by 7.8%, at 3.538k MT; market share was also higher in all products ranging between 0.3% and 8.1%, with total increase of 2.4%. The development of company controlled network was also significant in 2016, with both EKO and BP penetrating the market, with high value consumer proposition in products and services.
Key strategic developments
In the context of an international tender process, HELLENIC PETROLEUM was announced as preferred bidder for the award of hydrocarbons exploration and exploitation rights in offshore "block 10" in Kyparissiakos Gulf area.
Regarding the sale process of 66% of DESFA share capital to SOCAR, it did not materialise to a transaction. The Group, in cooperation with the HRADF will assess their next steps.
Furthermore, following a tender process conducted by RAE in December 2016 for the construction of PV projects with a total capacity of 40 MW, the Group submitted successful offers for all its 3 projects, with total installed capacity of 8,6 MW. The Group will proceed with the development of these projects in the next few months.
Dividend Distribution
On the basis of the positive 2016 results and the improved financial position of the Group, the BoD of HELLENIC PETROLEUM decided to propose to the AGM the distribution of €0,20/share.
4Q16 Results - key developments
Recovery of crude oil prices
OPEC's decision to reduce crude oil production and exports led to the recovery of international crude oil prices, with Brent averaging $51/bbl, the highest since 3Q15.
A heavier refinery maintenance schedule in 4Q16 affected products' supply-demand balances, leading to the recovery of key product cracks q-o-q, supporting Med benchmark refining margins, with FCC averaging $5.4/bbl, vs $4,7/bbl in 4Q15 and Hydrocracking at $5.5/bbl vs $6.6/bbl last year. On a FY16 basis the two key benchmark margins came in at $5.0/bbl, $1.5/bbl lower (-25%) vs 2015.
4Q16 Results
Adjusted EBITDA amounted to €215m (+17%), with Adjusted Net Income at €82m (+27%). Higher refining contribution, on account of operational performance and strong refining margins, as well as improved performance in Petchems and Marketing were the key results drivers. Thessaloniki refinery safely and successfully completed a planned 4-week, full turnaround program, in line with schedule. The refinery was back in operation during 4Q16, with improved financial contribution.
Reported results benefited significantly from inventory gains of €82m, due to crude oil price recovery and the agreement for an insurance compensation of HELLENIC PETROLEUM relating to the post start-up operational issues of the flexicoker unit at Elefsina refinery during the 2013-14 period, with Reported Net Income at €145m.
The Group recorded another quarter of strong cash flow, with operating cash flows (Adjusted EBITDA - capex) at €171m, sustaining the balance sheet de-resking process.
Key highlights and contribution for each of the main business units in 4Q16 were:
REFINING, SUPPLY & TRADING
- Refining, Supply & Trading 4Q16 Adjusted EBITDA at €169m.
- Production amounted to 3.7 million tonnes, affected by the lower utilisation at Thessaloniki refinery, due to maintenance, with white products' yield at 84%
- Exports amounted to 2m MT, slightly lower vs last year, accounting for 53% of total sales of 3.8m MT.
PETROCHEMICALS
- Despite weaker PP benchmark margins, Petchems profitability was sustained at high levels, with Adjusted EBITDA at €25m, while sales were 8% higher at 64k tonnes.
MARKETING
- Marketing Adjusted EBITDA in 4Q16 amounted to €20m, vs €17m LY (+17%).
- Market share gains were the key driver of Domestic Marketing profitability, with Adjusted EBITDA at €9m.
- International Marketing was affected by lower margins in Bulgaria and Serbia, with Adjusted EBITDA at €11m.
ASSOCIATED COMPANIES
- DEPA Group contribution to consolidated Net Income came in at €15m, due to significant demand increase from gas-fired electricity generators and weather conditions.
- Elpedison EBITDA at €11m in 4Q16.
Key consolidated financial indicators (prepared in accordance with IFRS) for 4Q16 are shown below:
€ million | 4Q15 | 4Q16 | % Δ | FY15 | FY16 | % Δ |
P&L figures | ||||||
Refining Sales Volumes ('000 ΜΤ) | 4,070 | 3,830 | -6% | 14,258 | 15,618 | 10% |
Sales | 1,803 | 1,873 | 4% | 7,303 | 6,680 | -9% |
EBITDA | 31 | 303 | - | 444 | 836 | 88% |
Adjusted EBITDA 1 | 184 | 215 | 17% | 758 | 731 | - |
Net Income | -60 | 145 | - | 45 | 329 | - |
Adjusted Net Income 1 | 65 | 82 | 27% | 268 | 265 | -1% |
Balance Sheet Items | ||||||
Capital Employed | 2,913 | 3,903 | 34% | |||
Net Debt | 1,122 | 1,759 | 57% | |||
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 | 31 December 2016 | 31 December 2015 | |
ASSETS | |||
Non-current assets | |||
Property, plant and equipment | 6 | 3.302.923 | 3.385.270 |
Intangible assets | 7 | 108.294 | 117.062 |
Investments in associates and joint ventures | 8 | 689.607 | 678.637 |
Deferred income tax assets | 17 | 100.973 | 239.538 |
Available-for-sale financial assets | 3 | 1.626 | 523 |
Loans, advances and long term assets | 9 | 91.131 | 85.022 |
4.294.554 | 4.506.053 | ||
Current assets | |||
Inventories | 10 | 929.164 | 662.025 |
Trade and other receivables | 11 | 868.331 | 752.142 |
Derivative financial instruments | 21 | 15.192 | - |
Cash, cash equivalents and restricted cash | 12 | 1.081.580 | 2.108.364 |
2.894.267 | 3.522.531 | ||
Total assets | 7.188.821 | 8.028.583 | |
EQUITY | |||
Share capital | 13 | 1.020.081 | 1.020.081 |
Reserves | 14 | 469.788 | 443.729 |
Retained Earnings | 549.891 | 220.506 | |
Capital and reserves attributable to owners of the parent | 2.039.760 | 1.684.316 | |
Non-controlling interests | 101.875 | 105.954 | |
Total equity | 2.141.635 | 1.790.270 | |
LIABILITIES | |||
Non- current liabilities | |||
Borrowings | 16 | 1.456.204 | 1.597.954 |
Deferred income tax liabilities | 17 | 42.736 | 45.287 |
Retirement benefit obligations | 18 | 110.912 | 95.362 |
Provisions for other liabilities and charges | 19 | 9.306 | 6.405 |
Trade and other payables | 20 | 259.644 | 22.674 |
1.878.802 | 1.767.682 | ||
Current liabilities | |||
Trade and other payables | 15 | 1.777.909 | 2.795.378 |
Derivative financial instruments | 21 | - | 34.814 |
Current income tax liabilities | 3.534 | 6.290 | |
Borrowings | 16 | 1.386.299 | 1.633.033 |
Dividends payable | 642 | 1.116 | |
3.168.384 | 4.470.631 | ||
Total liabilities | 5.047.186 | 6.238.313 | |
Total equity and liabilities | 7.188.821 | 8.028.583 | |
Group Consolidated statement of comprehensive income
For the year ended | |||
Note | 31 December 2016 | 31 December 2015 | |
Sales | 6.679.923 | 7.302.939 | |
Cost of sales | (5.672.795) | (6.608.357) | |
Gross profit | 1.007.128 | 694.582 | |
Selling and distribution expenses | (279.912) | (339.901) | |
Administrative expenses | (128.828) | (118.328) | |
Exploration and development expenses | 23 | (2.167) | (536) |
Other operating (expenses) / income- net | 24 | 30.050 | 9.427 |
Operating profit | 626.271 | 245.244 | |
Finance income | 25 | 5.129 | 8.797 |
Finance expense | 25 | (205.909) | (209.842) |
Currency exchange gains / (losses) | 26 | 20.773 | (26.753) |
Share of profit of investments in associates and joint ventures | 8 | 19.407 | 21.518 |
Profit before income tax | 465.671 | 38.964 | |
Income tax (expense) / credit | 27 | (136.936) | 6.063 |
Profit for the year | 328.735 | 45.027 | |
Other comprehensive income: | |||
Items that will not be reclassified to profit or loss: | |||
Actuarial gains/(losses) on defined benefit pension plans | (7.776) | 1.615 | |
Share of other comprehensive income of associates | 14 | (869) | - |
(8.645) | 1.615 | ||
Items that may be reclassified subsequently to profit or loss: | |||
Changes in the fair value on available-for-sale financial assets | 14 | (6.267) | (255) |
Transfer of available-for-sale reserve to operating profit | 14, 24 | 6.414 | - |
Fair value gains / (losses) on cash flow hedges | 14 | 15.862 | (4.802) |
Derecognition of gains/(losses) on hedges through comprehensive income | 14 | 19.642 | 24.548 |
Currency translation differences and other movements | (1.076) | (603) | |
34.575 | 18.888 | ||
Other comprehensive income for the year, net of tax | 25.930 | 20.503 | |
Total comprehensive income for the year | 354.665 | 65.530 | |
Profit / (loss) attributable to: | |||
Owners of the parent | 329.760 | 46.684 | |
Non-controlling interests | (1.025) | (1.657) | |
328.735 | 45.027 | ||
Total comprehensive income attributable to: | |||
Owners of the parent | 355.819 | 67.239 | |
Non-controlling interests | (1.154) | (1.709) | |
354.665 | 65.530 | ||
Basic and diluted earnings per share(expressed in Euro per share) | 28 | 1,08 | 0,15 |
Group Consolidated statement of cash flows
For the year ended | |||
Note | 31 December 2016 | 31 December 2015 | |
Cash flows from operating activities | |||
Cash generated from operations | 30 | (317.366) | 494.359 |
Income tax paid | (16.159) | (34.648) | |
Net cash generated (used in) / from operating activities | (333.525) | 459.711 | |
Cash flows from investing activities | |||
Purchase of property, plant and equipment & intangible assets | (125.719) | (165.253) | |
Acquisition of subsidiary, net of cash acquired | (350) | - | |
Proceeds from disposal of property, plant and equipment & intangible assets | 2.168 | 828 | |
Expenses paid relating to share capital increase of subsidiary | - | (772) | |
Grants received | 1.431 | 1.182 | |
Interest received | 5.129 | 8.797 | |
Dividends received | 8 | 1.139 | 18.289 |
Participation in share capital (increase)/ decrease of associates | 8 | - | 18 |
Proceeds from disposal of available for sale financial assets | - | 771 | |
Net cash generated from / (used in) investing activities | (116.202) | (136.140) | |
Cash flows from financing activities | |||
Interest paid | (190.479) | (200.793) | |
Dividends paid to shareholders of the Company | (473) | (64.004) | |
Dividends paid to non-controlling interests | (2.925) | (2.770) | |
Movement in restricted cash | 12 | (1.969) | 44.444 |
Proceeds from borrowings | 507.732 | 420.924 | |
Repayments of borrowings | (900.799) | (226.690) | |
Net cash generated from / (used in) financing activities | (588.913) | (28.889) | |
Net (decrease) / increase in cash and cash equivalents | (1.038.640) | 294.682 | |
Cash and cash equivalents at the beginning of the year | 12 | 1.952.808 | 1.647.842 |
Exchange gains / (losses) on cash and cash equivalents | 9.887 | 10.284 | |
Net (decrease)/ increase in cash and cash equivalents | (1.038.640) | 294.682 | |
Cash and cash equivalents at end of the year | 12 | 924.055 | 1.952.808 |
Parent Company Statement of Financial Position
As at | |||
Note | 31 December 2016 | 31 December 2015 | |
ASSETS | |||
Non-current assets | |||
Property, plant and equipment | 6 | 2.718.798 | 2.774.026 |
Intangible assets | 7 | 6.490 | 8.371 |
Investments in subsidiaries, associates and joint ventures | 8 | 655.265 | 656.326 |
Deferred income tax assets | 17 | 38.839 | 177.639 |
Available-for-sale financial assets | 1.017 | 50 | |
Loans, advances and long-term assets | 9 | 35.109 | 16.654 |
3.455.518 | 3.633.066 | ||
Current assets | |||
Inventories | 10 | 839.306 | 580.747 |
Trade and other receivables | 11 | 1.036.420 | 1.001.818 |
Derivative financial instruments | 21 | 15.192 | - |
Cash, cash equivalents and restricted cash | 12 | 888.783 | 1.839.156 |
2.779.701 | 3.421.721 | ||
Total assets | 6.235.219 | 7.054.787 | |
EQUITY | |||
Share capital | 13 | 1.020.081 | 1.020.081 |
Reserves | 14 | 469.754 | 438.818 |
Retained Earnings | 100.315 | (234.008) | |
Total equity | 1.590.150 | 1.224.891 | |
LIABILITIES | |||
Non-current liabilities | |||
Borrowings | 16 | 1.460.281 | 1.536.414 |
Retirement benefit obligations | 18 | 88.521 | 77.500 |
Provisions for other liabilities and charges | 19 | 6.829 | 3.000 |
Trade and other payables | 20 | 246.405 | 12.400 |
1.802.036 | 1.629.314 | ||
Current liabilities | |||
Trade and other payables | 15 | 1.691.973 | 2.744.965 |
Derivative financial instruments | 21 | - | 34.814 |
Borrowings | 16 | 1.150.418 | 1.419.687 |
Dividends payable | 642 | 1.116 | |
2.843.033 | 4.200.582 | ||
Total liabilities | 4.645.069 | 5.829.896 | |
Total equity and liabilities | 6.235.219 | 7.054.787 | |
Parent Company Statement of Comprehensive Income
For the year ended | |||
Note | 31 December 2016 | 31 December 2015 | |
Sales | 5.992.446 | 6.584.471 | |
Cost of sales | (5.291.281) | (6.202.430) | |
Gross profit | 701.165 | 382.041 | |
Selling and distribution expenses | (68.559) | (123.818) | |
Administrative expenses | (81.516) | (74.609) | |
Exploration and development expenses | 23 | (283) | (890) |
Other operating income/(expenses) - net | 24 | 31.081 | (185) |
Dividend income | 38.348 | 32.659 | |
Operating profit | 620.236 | 215.198 | |
Finance income | 25 | 13.541 | 20.663 |
Finance expense | 25 | (189.015) | (187.235) |
Finance (expenses)/income - net | (175.474) | (166.572) | |
Currency exchange gains / (losses) | 26 | 21.462 | (25.901) |
Profit before income tax | 466.224 | 22.725 | |
Income tax | 27 | (131.901) | 4.816 |
Profit for the year | 334.323 | 27.541 | |
Other comprehensive income: | |||
Items that will not be reclassified to profit or loss: | |||
Actuarial (losses)/gains on defined benefit pension plans | 14 | (4.568) | 917 |
(4.568) | 917 | ||
Items that may be reclassified subsequently to profit or loss: | |||
Changes in the fair value on available-for-sale financial assets | 14,24 | (6.414) | - |
Transfer of available-for-sale reserve to operating profit | 14 | 6.414 | - |
Fair value gains / (losses) on cash flow hedges | 14 | 15.862 | (4.802) |
Derecognition of gains/(losses) on hedges through comprehensive income | 14 | 19.642 | 24.548 |
Other Comprehensive income for the year, net of tax | 30.936 | 20.663 | |
Total comprehensive income for the period | 365.259 | 48.204 | |
Basic and diluted earnings per share(expressed in Euro per share) | 28 | 1,09 | 0,09 |
Parent Company Statement of Cash flows
For the year ended | |||
Note | 31 December 2016 | 31 December 2015 | |
Cash flows from operating activities | |||
Cash (used in) / generated from operations | 30 | (395.355) | 436.769 |
Income tax paid | (1.279) | (16.993) | |
Net cash (used in) / generated from operating activities | (396.634) | 419.776 | |
Cash flows from investing activities | |||
Purchase of property, plant and equipment & intangible assets | (91.161) | (134.691) | |
Proceeds from disposal of property, plant and equipment & intangible assets | 82 | 812 | |
Grants received | - | 1.182 | |
Dividends received | 38.348 | 32.659 | |
Interest received | 25 | 13.541 | 20.663 |
Participation in share capital increase of subsidiaries & associates | (9.711) | (3.500) | |
Net cash used in investing activities | (48.901) | (82.875) | |
Cash flows from financing activities | |||
Interest paid | (180.425) | (186.577) | |
Dividends paid | (474) | (64.011) | |
Movement in restricted cash | (1.969) | 44.444 | |
Repayments of borrowings | (839.789) | (326.743) | |
Proceeds from borrowings | 505.968 | 475.892 | |
Net cash used in financing activities | (516.689) | (56.995) | |
Net (decrease) / increase in cash and cash equivalents | (962.224) | 279.906 | |
Cash and cash equivalents at the beginning of the year | 12 | 1.683.600 | 1.393.262 |
Exchange gains / (losses) on cash and cash equivalents | 9.882 | 10.432 | |
Net (decrease) / increase in cash and cash equivalents | (962.224) | 279.906 | |
Cash and cash equivalents at the end of the year | 12 | 731.258 | 1.683.600 |