REG - Helleniq Energy - 1st Quarter Results
18/05/2023 16:00
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RNS Number : 9373Z Helleniq Energy Holdings S.A. 18 May 2023
Maroussi, 18 May 2023
First Quarter 2023 financial results
Strong profitability on increased refinery utilization and
higher exports amid positive international refining environment -
Focus on Energy Transition strategy implementation
HELLENiQ. ENERGY Holdings S.A. ("Company") announced its 1Q23 consolidated
financial results, with Adjusted EBITDA at €404m and Adjusted Net Income at
€252m.
Despite a slight weakening of the international refining environment, the
Company continues to report strong results, driven mainly by high refining
margins and improved operational performance across its businesses. Compared
to a relatively weak 1Q22, current year performance improves on most areas
with higher sales volume and increased profitability. Refining sales volume
reached 3.7m MT (+12%), with exports increasing by 27%, making up for 60% of
total sales volume.
1Q23 Reported Net Income at €155m, reflects the impact of volatile crude oil
and product prices on reported results, as the difference vs last year's first
quarter due to inventory effect is €426m; 1Q23 reported inventory losses in
Refining and Marketing in Greece of €145m vs inventory gains of €281m in
1Q22.
Strategy Implementation - Vision 2025
During 2022, the Company implemented a transformation strategy across most
sectors, in response to changing environment and future projections. In
particular, developing a second pillar of growth in cleaner forms of energy
became an integrated part of the Group's strategic plan while corporate
governance framework was upgraded, a more appropriate corporate structure was
established and, finally, a new corporate identity was introduced.
Having successfully completed the first phase of these initiatives, the focus
is firmly on four priorities, namely: (a) promote operational excellence in
our activities throughout the Group, (b) develop a value enhancing RES and
power storage portfolio, (c) improve carbon footprint in our core activities
and (d) embed and further improve ESG and sustainability criteria in our
business.
In this framework, we are currently evaluating and maturing an investment for
carbon capture and storage (CCS) facility at the Elefsina refinery, for the
production of "blue" hydrogen. For this, an application for funding support
has recently been submitted to the EU Innovation Fund. Although CCS technology
is relatively well-known, prevailing conditions (institutional framework,
funding priorities at European level, availability of storage) are not
conducive for an immediate investment decision. However, we believe that such
projects need to be pursued and matured if we are to achieve environmental
targets within a realistic timeline. On the contrary, the pilot investment in
"green" hydrogen at the Elefsina refinery edges closer to the final investment
decision, while projects for the production of biofuels (HVO, SAF) at the
Group's refineries are in the implementation phase.
An important part of new technologies for carbon footprint improvement depends
on the availability of low-cost accessible green energy. In this context, the
development of a RES portfolio makes sense for us not only as a stand-alone
new business proposition but also a major synergistic benefit for our core
businesses.
In terms of operational excellence and competitiveness improvement, the
digital transformation program is being accelerated, with investments of more
than €40m and significant benefits, which are estimated to reach €50m on
an annualized basis at the end of the program.
In the RES business, following the addition of approximately 300 MW of
installed capacity during the last year, the total operating RES capacity
amounts to 341 MW, with additional projects in production and storage, under
evaluation in Greece and internationally. The development of storage and
energy management solutions is of particular importance, given, also
significant synergy opportunities with the rest of the Group's portfolio.
As far as the E&P is concerned, our objective is to complete as soon as
possible the data processing and interpretation of the 2D seismic surveys that
were completed in the 2 offshore areas of West of Crete and Southwest of Crete
in collaboration with ExxonMobil, as well the 3D seismic surveys that were
conducted at 3 other offshore areas (Block 2, Block Ionio and Block 10).
Despite satisfactory progress, decisions on any drilling campaign are not
expected within 2023.
Normalization of crude oil prices and strong international refining margins
International crude oil and product prices continued to normalize during 1Q23,
with Brent prices averaging $81/bbl. Concerns remain, however, about global
demand dynamics and normalization of supply compared to the corresponding
period in 2022, during which prices had increased following Russia's invasion
of Ukraine.
Benchmark refining margins strengthened significantly in 1Q23 vs last year,
mainly due to an inventory build ahead of the implementation of sanctions on
product exports from Russia on 5 February 2023 and reduced refining capacity
due to strikes in France. In particular, FCC and Hydrocracking benchmark
margins averaged $10.7/bbl and $14.1/bbl respectively in 1Q23 vs $3.6/bbl and
$6.7/bbl respectively in 1Q22.
Improved auto fuels demand
Auto fuels consumption recorded a significant increase of 5% in 1Q23, as a
result of a growing economy and the extension of the tourism season.
Supporting this is an even stronger growth of aviation fuels demand (+25%) on
increased flight activity, while bunkering fuels offtake fell by 2%. Despite
the aforementioned performance, mild weather conditions led to reduced heating
gasoil needs and an overall lower total oil products demand in Greece compared
to 1Q22.
Balance sheet and capital expenditure
The Group's balance sheet strengthened in 1Q23 on the back of profitability
and normalized working capital needs. Net debt decreased by €0.5bn vs FY22
and by €0.9bn y-o-y, with gearing (Net Debt over Capital Employed) declining
to 34%.
Capital expenditure amounted to €40m, lower vs the corresponding period of
last year which included the extensive maintenance program at the Elefsina
refinery.
Andreas Shiamishis, Group CEO, commented on the results:
"A year after the invasion in Ukraine, we find the international energy market
partly recovered from a sudden shock but with a changed perspective with
respect to the industry's strategy and priorities.
Targeting a more environmentally-neutral energy market remains a priority and
determines our current and future investments in RES, energy storage, as well
as in the reduction of the carbon footprint of our energy products. However,
at the same time, events of recent past and the increase of RES in the energy
mix present additional challenges with respect to accessibility and energy
security.
Our strategy, as described by Vision 2025, considers all the above and having
successfully completed the first phase of the transformation, we are
proceeding with developing a value-enhancing New Energy portfolio in Greece
and internationally, as well as evaluating and implementing investments which
support the energy transition of our refineries and the substantial
improvement of our environmental footprint.
Having said all that, at the same time we remain focused on improving our
operations and deliver the required results across all of our businesses. In
this context, 1Q23 financial results are positive, as they continue to report
increased production, exports and profitability, especially compared to a weak
first quarter last year. With a lower price environment, positive results
depend to a great extent on strong refining margins in the Mediterranean
region and the operational flexibility of our refineries. Likewise, the areas
we can control in our other businesses (retail petrol stations, international
subsidiaries, RES) demonstrate improved performance, even if they contribute
to a lesser extent to the overall performance.
Projecting forward, international refining environment looks weaker in the
coming months, but we would expect a strong domestic market, driven by
increased demand due to tourism and investment growth."
Key highlights and contribution for each of the main business units in 1Q23
were:
REFINING, SUPPLY & TRADING
- Refining, Supply & Trading 1Q23 Adjusted EBITDA came in at €366m,
supported by international refining margins, overperformance at our refineries
and higher sales volume, with increased exports contribution.
- Production reached 3.6m MT, significantly higher (+29%) vs the corresponding
period of 2022, during which a full turnaround was implemented at the Elefsina
refinery.
PETROCHEMICALS
- 1Q23 Adjusted EBITDA came in at €15m, lower y-o-y on weak PP margins,
partly offset by the 9% sales volume increase.
MARKETING
- In 1Q23, Domestic Marketing recorded lower sales volume (-7% y-o-y),
while, excluding heating gasoil, it delivered an increase of 2%. Regulatory
gross margin caps, lower inventory valuation due to falling prices and higher
transportation costs negatively impacted profitability.
- International Marketing recorded higher sales volume (+9% y-o-y) in 1Q23,
with Adjusted EBITDA rising by 33% to €17m, on higher margins and improved
contribution from Bulgaria and the Republic of North Macedonia.
RENEWABLES
- Higher RES operating capacity (341 ΜW) led to increased electricity
output, with Adjusted EBITDA coming in at €10m in 1Q23.
ASSOCIATE COMPANIES
- DEPA companies' contribution to 1Q23 consolidated Net Income was €9m.
- Elpedison 1Q23 EBITDA came in at €60m, driven by high availability at
the electricity generation plants, operational flexibility and trading
opportunities in the natural gas markets.
HELLENiQ ENERGY Holdings S.A.
Key consolidated financial indicators for 1Q23
(prepared in accordance with IFRS)
€m 1Q22 1Q23 % Δ
P&L figures
Refining Sales Volume ('000 ΜΤ) 3,292 3,688 12%
Sales 2,803 3,113 11%
EBITDA 501 279 -44%
Adjusted EBITDA (1) 99 404 -
Adjusted Net Income (1) 4 252 -
Operating Profit 420 202 -52%
Net Income 346 155 -55%
Balance Sheet Items
Capital Employed 4,791 4,331 -10%
Net Debt 2,331 1,454 -38%
Gearing (ND/ND+E) 49% 34% -15 pps (2) π,μ,pps(2) (2)
Note 1: Adjusted for inventory effects and other non-operating/one-off items,
as well as the IFRS accounting treatment of the EUAs deficit,
Note 2: pps stands for percentage points
Further information:
Nikos Katsenos, Head of IR
Tel.: +30 210-6302305
Email: nkatsenos@helleniq,gr (mailto:nkatsenos@helleniq.gr)
Group Consolidated statement of financial position
As at
Note 31 March 2023 31 December 2022
Αssets
Non-current assets
Property, plant and equipment 10 3.619.378 3.639.004
Right-of-use assets 11 233.868 233.141
Intangible assets 12 539.667 518.073
Investments in associates and joint ventures 7 432.273 402.101
Deferred income tax assets 95.991 91.204
Investment in equity instruments 3 489 490
Derivative financial instruments 906 958
Loans, advances and long term assets 13 63.180 64.596
4.985.752 4.949.567
Current assets
Inventories 14 1.541.125 1.826.242
Trade and other receivables 15 807.845 866.109
Income tax receivable 14.310 14.792
Derivative financial instruments - 5.114
Cash and cash equivalents 16 966.007 900.176
3.329.287 3.612.433
Total assets 8.315.039 8.562.000
Equity
Share capital and share premium 17 1.020.081 1.020.081
Reserves 18 295.009 297.713
Retained Earnings 1.493.619 1.341.908
Equity attributable to the owners of the parent 2.808.709 2.659.702
Non-controlling interests 68.073 67.699
Total equity 2.876.782 2.727.401
Liabilities
Non- current liabilities
Interest bearing loans and borrowings 19 1.486.788 1.433.029
Lease liabilities 178.989 177.745
Deferred income tax liabilities 197.723 202.523
Retirement benefit obligations 176.318 175.500
Derivative financial instruments - -
Provisions 36.285 36.117
Other non-current liabilities 22.560 22.662
2.098.663 2.047.576
Current liabilities
Trade and other payables 20 1.888.112 1.835.957
Derivative financial instruments 2.741 1.761
Income tax payable 8 483.358 432.385
Interest bearing loans and borrowings 19 934.173 1.409.324
Lease liabilities 29.765 30.372
Dividends payable 1.445 77.224
3.339.594 3.787.023
Total liabilities 5.438.257 5.834.599
Total equity and liabilities 8.315.039 8.562.000
Group Consolidated statement of comprehensive income
For the period ended
Note 31 March 2023 31 March 2022
Revenue from contracts with customers 4 3.113.343 2.802.927
Cost of sales (2.778.127) (2.258.207)
Gross profit / (loss) 335.216 544.720
Selling and distribution expenses (93.808) (82.740)
Administrative expenses (40.483) (36.650)
Exploration and development expenses (4.244) (6.375)
Other operating income and other gains 5 7.403 5.191
Other operating expense and other losses 5 (2.551) (4.678)
Operating profit / (loss) 201.533 419.468
Finance income 1.326 538
Finance expense (32.124) (24.192)
Lease finance cost (2.325) (2.362)
Currency exchange gains / (losses) 6 558 (4.270)
Share of profit / (loss) of investments in associates and joint ventures 7 31.289 46.352
Profit / (loss) before income tax 200.257 435.534
Income tax 8 (44.491) (88.902)
Profit / (loss) for the period 155.766 346.632
Profit / (loss) attributable to:
Owners of the parent 155.276 345.206
Non-controlling interests 490 1.426
155.766 346.632
Other comprehensive income / (loss):
Other comprehensive income / (loss) that will not be reclassified to profit or
loss (net of tax):
Changes in the fair value of equity instruments - (16)
- (16)
Other comprehensive income / (loss) that may be reclassified subsequently to
profit or loss (net of tax):
Share of other comprehensive income / (loss) of associates (1.117) (17.727)
Fair value gains / (losses) on cash flow hedges (921) 5.266
Currency translation differences and other movements (782) (167)
(2.820) (12.628)
Other comprehensive income / (loss) for the period, net of tax (2.820) (12.644)
Total comprehensive income / (loss) for the period 152.946 333.988
Total comprehensive income / (loss) attributable to:
Owners of the parent 152.572 332.574
Non-controlling interests 374 1.414
152.946 333.988
Εarnings / (losses) per share (expressed in Euro per share) 9 0,51 1,13
Group Consolidated statement of cash flows
For the period ended
Note 31 March 2023 31 March 2022
Cash flows from operating activities
Cash generated from operations 21 615.161 (278.332)
Income tax received / (paid) 8 (2.365) (2.148)
Net cash generated from/ (used in) operating activities 612.796 (280.479)
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets 10, 11 (45.617) (84.009)
Proceeds from disposal of property, plant and equipment & intangible 97 22
assets
Acquisition of share of associates and joint ventures (1) -
Purchase of subsidiary, net of cash acquired - 404
Grants received 1 -
Interest received 1.326 539
Prepayments for right-of-use assets (27) (387)
Dividends received 7 31.715 -
Net cash generated from/ (used in) investing activities (12.507) (83.431)
Cash flows from financing activities
Interest paid on borrowings (26.484) (10.042)
Dividends paid to shareholders of the Company 26 (75.779) -
Proceeds from borrowings 19 435.211 211.400
Repayments of borrowings 19 (855.611) (4.300)
Payment of lease liabilities - principal (9.192) (9.829)
Payment of lease liabilities - interest (2.325) (2.362)
Net cash generated from/ (used in) financing activities (534.180) 184.867
Net increase/ (decrease) in cash and cash equivalents 66.109 (179.043)
Cash and cash equivalents at the beginning of the year 16 900.176 1.052.618
Exchange (losses) / gains on cash and cash equivalents (278) (4.409)
Net increase / (decrease) in cash and cash equivalents 66.109 (179.043)
Cash and cash equivalents at end of the period 16 966.007 869.166
Parent Company Statement of Financial Position
As at
Note 31 March 2023 31 December 2022
Assets
Non-current assets
Property, plant and equipment 683 671
Right-of-use assets 11 10.442 10.817
Intangible assets 110 138
Investments in subsidiaries, associates and joint ventures 7 1.674.167 1.654.517
Deferred income tax assets 10.918 11.020
Investment in equity instruments 38 38
Loans, advances and long term assets 13 356.843 230.243
2.053.201 1.907.444
Current assets
Inventories - -
Trade and other receivables 173.896 86.159
Income tax receivables - -
Derivative financial instruments - -
Cash and cash equivalents 15.919 209.054
189.815 295.213
Total assets 2.243.016 2.202.657
Equity
Share capital and share premium 17 1.020.081 1.020.081
Reserves 18 281.104 281.104
Retained Earnings 892.758 765.156
Total equity 2.193.943 2.066.341
Liabilities
Non-current liabilities
Interest bearing loans & borrowings - -
Lease liabilities 8.773 9.611
Deferred income tax liabilities - -
Retirement benefit obligations 8.120 7.977
Provisions - -
Other non-current liabilities 174 174
17.067 17.762
Current liabilities
Trade and other payables 24.081 36.491
Derivative financial instruments - -
Income tax payable 8 4.716 3.582
Interest bearing loans & borrowings - -
Lease liabilities 1.764 1.257
Dividends payable 25 1.445 77.224
32.006 118.554
Total liabilities 49.073 136.316
Total equity and liabilities 2.243.016 2.202.657
Parent Company Statement of Comprehensive Income
For the period ended
Note 31 March 2023 31 March 2022
Revenue from contracts with customers 7.457 6.040
Cost of sales (6.779) (5.491)
Gross profit / (loss) 678 549
Administrative expenses (3.275) (1.414)
Other operating income and other gains 5 3.686 3.686
Other operating expense and other losses 5 (2.820) (3.351)
Operating profit /(loss) (1.731) (530)
Finance income 4.584 1.416
Finance expense (3) (504)
Lease finance cost (93) (135)
Dividend income 25 126.081 -
Profit / (loss) before income tax 128.838 246
Income tax credit / (expense) (1.236) (31)
Profit / (loss) for the period 127.602 215
Parent Company Statement of Cash flows
For the period ended
Note 31 March 2023 31 March 2022
Cash flows from operating activities
Cash generated from / (used in) continuing operations 21 (10.880) 6.361
Income tax received / (paid) - -
Net cash generated from / (used in) operating activities (10.880) 6.361
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets (18) -
Participation in share capital increase of subsidiaries, associates and joint (18.650) (6.450)
ventures
Loans and advances to Group Companies (126.600) (100.800)
Interest received 6.852 650
Dividends received 32.979 -
Proceeds from disposal of assets held for sale - -
Net cash generated from / (used in) investing activities from discontinued - -
operations
Net cash generated from / (used in) investing activities (105.437) (106.600)
Cash flows from financing activities
Interest paid - -
Dividends paid to shareholders of the Company (75.779) -
Payment of lease liabilities - principal, net (578) (750)
Payment of lease liabilities - interest (461) (135)
Net cash generated from / (used in) financing activities from discontinued - -
operations
Net cash generated from / (used in) financing activities (76.818) (885)
Net increase / (decrease) in cash and cash equivalents (193.135) (101.124)
Cash and cash equivalents at the beginning of the period 209.054 843.493
Exchange gain / (loss) on cash and cash equivalents - -
Net cash outflow due to demerger - (713.493)
Net increase / (decrease) in cash and cash equivalents (193.135) (101.124)
Cash and cash equivalents at end of the period 15.919 28.876
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