8th Aug 2007 16:17
Hellenic Petroleum S.A.08 August 2007 PRESS RELEASE August 8, 2007 FIRST HALF/SECOND QUARTER 2007 FINANCIAL RESULTS (In accordance with International Financial Reporting Standards) Record 2Q performance: Net income up 24% to €127m 2Q Reported Consolidated Net Income increased 24% y-o-y to €127m and 1H 2007 NetIncome grew 4% to €181m, corresponding to €0.41 and €0.59 per share (EPS),respectively. Adjusting for inventory effects, "Clean" Net Income was up 22%y-o-y to €147m in 1H and 27% to €94m in 2Q. Reported Group Earnings beforeInterest, Tax, Depreciation and Amortization (EBITDA) were €309m in 1H; on acomparable, "Clean" basis, they were up 3% to €260m. On the back of these solid results, the Board of Directors approved thedistribution of an interim dividend per share of €0.15, maintaining last year'spayout policy. Key financials for the 6-months to 30 June 2007 and comparisons to last year'sresults, are: • Sales Revenue : €3.8bn, down 7% (2Q: €1.9bn, down 7%)• Net profits : €181m, up 4% (2Q: €127m, up 24%)• Earnings per share : €0.59, up 4% (2Q: €0.41, up 24%)• "Clean" EBITDA : €260m, up 3% (2Q: €160m, up 3%)• "Clean" net income : €147m, up 22% (2Q: €94m, up 27%)• ROACE (12-mth trailing) : 11%• ROE (12-mth trailing) : 13% Key themes for 1H/2Q results were: (a) Solid refining environment a. Mediterranean benchmark refining margins were exceptionally strong during2Q07, with complex/cracking margins 52% above 1Q07 levels and up 11% y-o-y inUSD-terms. Margin strength was largely driven by gasoline cracks that peaked inmid-May, but then almost halved by the end of the quarter. Positive benchmarkmargins impact on results was, however, mitigated by continued weakness of theUSD versus the EUR. b. Still growing Greek products market (excluding seasonal heating Gasoilsales) by 0.5%, on the back of strong automotive diesel and aviation fuel sales.Heating gasoil sales down 17% due to warmer winter, while gasolines were flat. c. In 2Q, crude oil prices moved higher by an average $10/bbl over 1Q07,leading to a positive inventory effect. (b)Improved overall operating profitability a. 1H "Clean" EBITDA up 3% to €260m, with Petrochemicals and Power continuingto drive improvements vs last year; in 2Q, "Clean" EBITDA grew 3% to €160m. b. Core Refining, Supply & Trading "Clean" EBITDA grew 5% to €129m in 2Q. c. 2Q "Clean" Net Income and EPS up 27%, reaching €94m and €0.31respectively. d. Significant contribution to group results from 35%-owned DEPA, accountingfor c7% of Net Income in 1H07. e. Control of the cost base: International subsidiaries' legal structurereorganised, addressing tax and operating inefficiencies, while the BEST-50procurement initiative is proceeding on track, covering more than €100m inexpenditure and identifying €9-10m in savings opportunities. Key business developments for 1H/2Q: a) Refining, Supply & Trading Refining, Supply & Trading, accounted for over 80% of 1H07 Group EBITDA. "Clean"EBITDA was flat at €201m in 1H, as the strong 2Q offset the lower performance in1Q. Key drivers during 1H07 were: f. Soaring benchmark refining margins in 2Q, mainly due to strong gasolinepricing in May. g. Higher sales volumes, except for, mainly, heating gasoil. Automotivediesel and gasoline sales were up y-o-y 3% and 10%, respectively, with wholesalemarket share gains for both products. h. OKTA sales volume grew 6%, on the back of strong domestic market sales anddespite reduced exports to Kosovo in 2Q. i. 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. In addition, y-o-y comparisons wereunfavourable at the reported level due to lower inventory gains vis-a-vis 1H06. The refinery upgrades of Elefsina and Thessaloniki are proceeding as planned,with contracting strategies finalised and implementation progressing. b) Retail Marketing j. EKO sales volume in Greece were up 3% to almost 2m tonnes, as theincreased sales of gasoline, bunkers and aviation in 2Q more than offset theweather-driven lower heating gasoil volumes of 1Q. k. Continued margin pressure, as key strategic focus maintained on marketshare gains. l. Network rationalisation continues, via the "Calypso" project, deliveringtangible results; a further 6 company-owned petrol stations were added to theretail network in 2Q, bringing the total number of company-controlled petrolstations to 249 (20% of total network). m. International Marketing continues to benefit from network expansion (11petrol stations added to the network in 2Q), volume increases, market sharegains and margin improvements; 1H EBITDA grew 24%, on a 21% y-o-y increase inretail network sites. c) Petrochemicals Polypropylene continued its strong performance that, together with costcontainment efforts and lack of significant provisions, led to a sharpimprovement in profitability; in 1H, sales volume increased 9% to 225kT, whereasEBITDA raced ahead 62% to €30m. d) Power Generation & Trading Despite the gas turbine planned maintenance in April, power sales continuedtheir upward march in 2Q and, thus 1H07 sales grew 8% y-o-y to 802GWh. Turnoverand EBITDA in the same period grew 19% to €62m and 45% to €15m, respectively. A Memorandum of Agreement with Edison, Italy's second largest electricityproducer and gas distributor, was recently signed, which calls for thesetting-up of a 50/50 joint venture that aims to create Greece's second largestelectricity operator, with a power generation portfolio of 1,500-2,000MW. e) Exploration & Production Our drilling campaign in Libya is progressing on track, with initial discoveriesunder assessment by the Woodside-led joint venture, in which we participate witha 20% stake. In addition, in Egypt, seismic reprocessing/acquisition started inthe West Obayed region, while negotiations for the El Mesaha block (awarded tothe Melrose-led consortium, in which we participate with a 30% stake) areconcluded and a Concession Agreement initialised. Panos Cavoulacos, CEO of Hellenic Petroleum, commented: "I am pleased to report record net income for the quarter, with positive resultsacross all our business units and countries we operate in. Our continued effortsto strengthen our capabilities and control our cost base, together withfavourable refining margins, had a positive impact on both our underlying andreported profitability". Key Financial Indicators for the Group are shown below: CONSOLIDATED KEY FINANCIAL RESULTS FOR THE SIX- AND THREE-MONTH PERIOD ENDED 30 JUNE 2007 (Prepared in accordance with IFRS) • million 1H06 1H07 % 2Q06 2Q07 % ReportedNet Sales 4,104 3,797 -7% 2,046 1,912 -7%EBITDA 330 309 -6% 196 207 6%EBT 255 242 -5% 148 172 17%Net Income 175 181 4% 102 127 24%EPS (•) 0.57 0.59 4% 0.34 0.41 24% "Clean" (adjusted for inventory effects)EBITDA 252 260 3% 155 160 3%EBT 177 193 9% 107 125 17%Net Income 120 147 22% 74 94 27%EPS (•) 0.39 0.48 22% 0.24 0.31 27% Balance Sheet ItemsCapital Employed 3,342 3,471 4% - - -Net Debt 999 1,008 1% - - -Debt Gearing (D/D+E) 30% 30% - - - - Complete IFRS financial statements are available at the website: www.hellenic-petroleum.gr Group Consolidated Balance Sheet as at 30 June 2007 As at 30 June 31 December 2007 2006ASSETSNon-current assetsProperty, plant and equipment 1,398,286 1,380,334Intangible assets 125,473 117,270Investments in affiliated companies 375,975 366,165Deferred income tax assets 35,387 10,293Available-for-sale financial assets 4,249 3,813Loans, advances and other receivables 63,669 58,674 2,003,039 1,936,549Current assetsInventories 1,329,725 1,206,683Trade and other receivables 1,090,296 1,049,763Cash and cash equivalents 212,409 170,490 2,632,430 2,426,936Total assets 4,635,469 4,363,485 EQUITYShare capital 1,020,081 1,020,081Reserves 535,206 571,312Retained Earnings 789,328 693,517Capital and reserves attributable to Company Shareholders 2,344,615 2,284,910 Minority interest 118,353 112,700 Total equity 2,462,968 2,397,610 LIABILITIESNon- current liabilitiesBorrowings 421,490 322,695Deferred income tax liabilities 21,987 21,492Retirement benefit obligations 145,083 140,956Provisions and other long term liabilities 115,285 77,043 703,845 562,186Current liabilitiesTrade and other payables 584,154 494,963Current income tax liabilities 77,540 10,304Borrowings 803,613 895,661Dividends payable 3,349 2,761 1,468,656 1,403,689Total liabilities 2,172,501 1,965,875Total equity and liabilities 4,635,469 4,363,485 Group Consolidated Income Statement for the year ended 30 June 2007 For the six month period 1 April 2007 1 April 2006 ended to to 30 June 2007 30 June 2006 30 June 2007 30 June 2006 Sales 3,796,960 4,104,006 1,912,230 2,045,813 Cost of sales (3,371,668) (3,678,485) (1,640,863) (1,799,864) Gross profit 425,292 425,521 271,367 245,949 Selling, distribution and administrative (181,398) (176,300) (94,127) (87,220)expenses Exploration and development expenses (7,158) (4,638) (4,831) (3,446) Other operating (expenses) / income - net 10,809 8,723 1,117 2,505 Operating profit 247,545 253,306 173,526 157,788 Finance costs -net (19,316) (14,315) (9,167) (8,403) Currency exchange gains /(losses) 1,638 12,848 5,182 879 Share of operating profit of associates 12,391 3,174 2,626 (2,510) Profit before income tax 242,258 255,013 172,167 147,754 Income tax expense (56,297) (74,371) (41,901) (41,901) Profit for the period 185,961 180,642 130,266 105,853 (Less) / Add Minority Interest (4,863) (6,034) (3,676) (3,450) Net Income attributable to Equity holders 181,098 174,608 126,590 102,403of the Company Basic and diluted earnings per share 0.59 0.57 0.41 0.34(expressed in Euro per share) Parent Company Balance Sheet as at 30 June 2007 As at 30 June 31 December 2007 2006ASSETSNon-current assetsProperty, plant and equipment 665,855 646,130Intangible assets 24,131 22,288Investments in affiliated companies 692,234 692,054Deferred income tax assets 26,552 -Available-for-sale financial assets 67 67Loans, advances and other receivables 172 3,772 1,409,011 1,364,311 Current assetsInventories 1,214,107 1,107,490Trade and other receivables 845,482 828,103Cash and cash equivalents 33,037 37,878 2,092,626 1,973,471Total assets 3,501,637 3,337,782 EQUITYShare capital 1,020,081 1,020,081Reserves 523,281 559,387Retained Earnings 522,822 450,439Total equity 2,066,184 2,029,907 LIABILITIESNon- current liabilitiesBorrowings 284,282 295,335Deferred income tax liabilities - 405Retirement benefit obligations 117,649 115,114Provisions and other long term liabilities 85,383 47,939 487,314 458,793 Trade and other payables 501,831 419,810Current income tax liabilities 72,794 -Borrowings 370,164 426,511Dividends payable 3,350 2,761 948,139 849,082Total liabilities 1,435,453 1,307,875Total equity and liabilities 3,501,637 3,337,782 Parent Company Income Statement for the year ended 30 June 2007 For the six month period 1 April 2007 1 April 2006 ended to to 30 June 2007 30 June 2006 30 June 2007 30 June 2006 Sales 3,527,597 3,868,744 1,769,429 1,905,308 Cost of sales (3,218,457) (3,557,536) (1,559,532) (1,722,272) Gross profit 309,140 311,208 209,897 183,036 Selling, distribution and administrative (92,568) (88,564) (48,836) (42,902)expenses Exploration and development expenses (7,158) (4,639) (4,831) (3,446) Other operating (expenses) / income - net (111) 169 (1,755) 3,256 Operating profit 209,303 218,174 154,475 139,944 Finance costs -net (11,286) (6,293) (5,410) (3,826) Currency exchange gains /(losses) 2,054 8,902 4,792 (2,202) Dividend income 8,662 13,443 8,662 13,443 Profit before income tax 208,733 234,226 162,519 147,359 Income tax expense (50,772) (63,927) (38,756) (37,653) Profit for the period 157,961 170,299 123,763 109,706 Basic and diluted earnings per share 0.52 0.56 0.40 0.36(expressed in Euro per share) This information is provided by RNS The company news service from the London Stock Exchange