REG - Hellenic Petroleum - 1st Quarter Results

HELLENiQ ENERGY Holdings SAAnnouncement

13/05/2020 16:20

RNS Number : 8203M
  
Hellenic Petroleum S.A.
  
13 May 2020
  
 

13 May 2020




First quarter 2020 financial results




 
 
Improved results on higher production and exports, amid negative oil price environment and covid-19 crisis
 
HELLENIC PETROLEUM Group announced its 1Q20 financial results, with Adjusted EBITDA 4% higher, at €128m and Adjusted Net Income amounting to €44m (+18%).
Refining environment was driven by increased volatility and the covid-19 pandemic, especially at quarter end; improved Refining and Fuels Marketing performance outweighed the negative impact of crude oil and feedstocks' pricing, as well as the weaker domestic market sales due to covid-19. Increased refining availability led exports higher by 27% and total sales at 3.9m MT (+9%). Aspropyrgos refinery successfuly completed the first full quarter of IMO operation model, supplying the market with the full range of products, with a substantial change in the crude mix and required adjustments on operation and working capital.
The significant drop in crude and oil product prices by approximately 50% between December and March, to the lowest levels of the last few years, affected IFRS Reported Results, resulting in inventory losses of €540m, leading Reported Net Results to €-341m. It is noted that losses would have been higher, had the Group not proceeded with an inventory management program, already from 4Q19.
 
Covid-19 impact and response - Key developments
The outbreak of the pandemic and the measures implemented globally are having a significant impact on the economy, affecting the international energy sector. It is estimated that world demand decline, during restrictions on mobility and economic activity will reach or even exceed 20% in 2Q20, leading to a significant drop and volatility in crude oil and product prices; combined with the inability of existing storage capacity to absorb the supply surplus, resulted in an agreement from oil producing countries for a c.10mbpd output reduction from May, while many refineries internationally are reducing runs or shutting down in 2Q20. The Greek market is also affected, with the decline in auto-fuels demand during April estimated at approximately 40%.
The Group proceeded with a series of measures to manage the crisis, already from end of February, with key priorities the health and safety of all staff and contractors, the smooth operation of facilities for uninterrupted market supply, ensuring sufficient liquidity and managing risks, as well as capturing opportunities in the contago pricing structure of crude and products. A policy for the prevention and response to the impact of the pandemic was established, with continuous information updating for employees, regular disinfection at facilities and offices and provision of personal protection equipment. Furthermore, refinery shifts were adjusted and a new tele-working model (WFH) was adopted for the vast majority of head-office staff, utilizing digital technologies. 
The Group has a strong balance sheet, with sufficient liquidity at the start of the crisis. Since the beginning of March, in the context of risk management for the pandemic, the Group's access to credit, from Greek and international banks, grew by €300m, which combined with the utilization of existing facilities headroom, resulted in a total liquidity increase since the beginning of the year of €550m, to help manage the crisis. Furthermore, finance expenses are at historic lows, recording a further significant reduction of 21%, to €26m in 1Q20.
In terms of its strategy, the Group is assessing the impact of the crisis and will adjust its business planning accordingly. Growing in the energy sector and improving carbon footprint by 50% in the next 10 years, remain key priorities, despite any delays due to the crisis. Design and implementation works for the 204MW Kozani project, as well as the sale process of DEPA subsidiaries (Commercial and Infrastructure) in which the Group is involved are in process. It is noted that during 2Q20, the corporate restructuring of DEPA SA, with the spin off of international projects and the demerger of DEPA Infrastructure was completed. 
 
Andreas Shiamishis, Group CEO, commented on results:
"In 1Q20 we managed to improve our operational performance and financial results in almost all our activities, while continuing the fast implementation of our strategy. Despite the notable recent developments in the oil industry, there is no doubt that the event that will define 2020 is the covid-19 pandemic and its impact on the world economy. Already from the first weeks of the crisis, we witnessed unprecedented changes in international supply and demand levels, with respective impact on prices. The crisis will continue to negatively affect most economic activity sectors, especially tourism that is more relevant to our markets.
The Group was among the first to take necessary measures, achieving uninterrupted operations, in the safest possible conditions for our personnel, which successfully responded to the challenge of transitioning to a different operating model. Furthermore, with full awareness of our responsibility to the Greek society, we designed and implement actions totaling €8m, aimed at supporting the national health system and vulnerable groups, that are most affected during this period."
 
Deterioration of refining environment
International crude oil prices moved lower throughout 1Q20, recording a significant decline in March, as the impact from covid-19 and OPEC+ not agreeing to extend its production cuts escalated, with Brent prices averaging at $50/bbl in 1Q20, while in March Brent came in at $32/bbl, the lowest since 1Q16.
The US dollar strengthened further vs the euro, reflecting international macro developments; euro averaged at 1.10 in 1Q20. 
White product cracks were lower vs 4Q19, due to weak demand, while HSFO cracks recovered strongly from the historic lows of 4Q19. Brent-Urals widened significantly to the highest levels in the last 9 years, with a positive impact on benchmark refining margins. As a result, FCC margins averaged at $3.8/bbl, with Hydrocracking margins at $5.2/bbl.
 
Weaker domestic fuel demand 
Domestic fuel demand in 1Q20 was 4% lower at 1.7m MT, with auto-fuels consumption recording a respective decline, due to the negative impact of covid-19 on demand in March. Heating gasoil, despite strong demand in March, due to mobility restrictions, was also lower in 1Q20, on mild weather in January-February. Aviation and bunkering fuels was 18% lower, to 681k MT. The negative trend of 1Q20 is expected to intensify in 2Q.
 
Strong balance sheet, liquidity management
The Group took advantage of favorable international capital markets conditions for the strengthening of its balance sheet, with the €500m Eurobond issue in 4Q19, achieving a material increase of its liquidity. Furthermore, at the initial signs of the crisis, proceeded to the additional improvement of its debt headroom, with new credit facilities of €200m and an increase of its LC issuance capacity for crude supply. Net Debt came in at €1.9bn, with gearing ratio at 49%, mainly due to the commodity price drop and the working capital increase.
 
Key highlights and contribution for each of the main business units in 1Q20 were:
REFINING, SUPPLY & TRADING
-     Refining, Supply & Trading 1Q20 Adjusted EBITDA at €86m (+8%).
-  Net production 8% higher to 3.9m MT, with a respective increase in sales which came in at 3.9m MT (+9%).
-  High value product output increased, as IMO FO production was higher at Aspropyrgos refinery, minimizing HSFO production respectively.
 
PETROCHEMICALS
-  1Q20 Adjusted EBITDA came in at €20m (-22%), on account of weaker benchmark PP margins.
 
MARKETING
-  In Domestic Marketing, improved Retail performance resulted in higher Adjusted EBITDA of €12m, mitigating the impact of weaker demand at the end of the quarter.
-  Higher sales and improved operational performance in International Marketing led Adjusted EBITDA to €15m (+29%).
 
ASSOCIATE COMPANIES
- DEPA Group contribution to 1Q20 consolidated Net Income (excluding the positive impact of BOTAS case arbitration) came in at €15m. 
- ELPEDISON 1Q20 EBITDA was 58% higher, at €17m, due to higher production and supply optimisation. 
 
Key consolidated financial indicators (prepared in accordance with IFRS) for 1Q20 are shown below:
 
 




€ million


 


 


 


1Q19


1Q20


% Δ




P&L figures


 


 


 


 


 


 




Refining Sales Volumes ('000 ΜΤ)


 


 


 


3,551


3,883


9%




Sales 


 


 


 


1,991


1,919


-4%




EBITDA


 


 


 


135


-416


-




Adjusted EBITDA 1


 


 


 


123


128


4%




Net Income


 


 


 


47


-341


-




Adjusted Net Income 1


 


 


 


37


44


18%




Balance Sheet Items


 


 


 


 


 


 




Capital Employed


 


 


 


3,971


3,858


-3%




Net Debt


 


 


 


1,522


1,906


25%




Debt Gearing (ND/ND+E)


 


 


 


38%


49%


-




 
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:   vtsaitas@helpe.gr
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Group Consolidated statement of financial position
 




 


 


As at




 


Note


31 March 2020


31 December 2019




ASSETS


 


 


 




Non-current assets


 


 


 




Property, plant and equipment


10


3.280.073


3.297.668




Right of use assets


11


242.172


242.934




Intangible assets


12


104.805


104.426




Investments in associates and joint ventures


 


429.932


384.747




Deferred income tax assets


 


60.850


59.358




Investment in equity instruments


3


812


1.356




Loans, advances and long term assets


 


46.094


55.438




 


 


4.164.738


4.145.927




Current assets


 


 


 




Inventories


13


679.890


1.012.802




Trade and other receivables


14


647.157


748.153




Income tax receivable


 


92.128


91.391




Assets held for sale 


 


2.018


2.520




Derivative financial instruments


3


-


3.474




Cash and cash equivalents 


15


970.652


1.088.198




 


 


2.391.845


2.946.538




Total assets


 


6.556.583


7.092.465




 


 


 


 




EQUITY


 


 


 




Share capital and share premium


16


1.020.081


1.020.081




Reserves


17


250.682


276.972




Retained Earnings


 


625.162


964.972




Equity attributable to equity holders of  the parent


 


1.895.925


2.262.025




Non-controlling  interests


 


63.599


64.548




Total equity


 


1.959.524


2.326.573




 


 


 


 




LIABILITIES


 


 


 




Non-current liabilities


 


 


 




Interest bearing loans & borrowings


18


1.380.534


1.610.094




Lease liabilities


 


169.923


169.357




Deferred income tax liabilities


 


86.349


213.495




Retirement benefit obligations


 


182.038


180.398




Provisions 


 


25.596


25.625




Trade and other payables


 


28.391


28.376




 


 


1.872.831


2.227.345




Current liabilities


 


 


 




Trade and other payables


19


1.159.572


1.401.732




Derivative financial instruments


 


30.044


-




Income tax payable


 


6.442


7.147




Interest bearing loans & borrowings


18


1.497.419


1.022.270




Lease liabilities


 


29.475


30.537




Dividends payable


 


1.276


76.861




 


 


2.724.228


2.538.547




Total liabilities


 


4.597.059


4.765.892




Total equity and liabilities


 


6.556.583


7.092.465




Group Consolidated statement of comprehensive income




 


 


For the three month period ended




 


Note


31 March 2020


31 March 2019




Revenue from contracts with customers


4


1.918.964


1.991.216




Cost of sales


 


(2.287.093)


(1.804.901)




Gross profit / (loss)


 


(368.129)


186.315




Selling and distribution expenses


 


(80.846)


(75.548)




Administrative expenses


 


(34.437)


(33.963)




Exploration and development expenses


 


(1.305)


(450)




Other operating expense


5


(2.960)


(2.764)




Other operating income / (expenses) and other gains / (losses)


5


5.669


2.916




Operating profit / (loss)


 


(479.048)


79.270




Finance income


 


1.062


1.000




Finance expense


 


(26.707)


(33.296)




Lease finance cost 


 


(2.748)


(2.273)




Currency exchange gains / (losses)


6


2.262


1.255




Share of profit / (loss) of investments in associates and joint ventures


7


45.407


18.091




Profit / (loss) before income tax 


 


(459.772)


64.047




Income tax credit / (expense)


8


119.074


(17.433)




Profit / (loss) for the period


 


(340.698)


46.614




Profit / (loss) attributable to:


 


 


 




     Owners of the parent


 


(339.809)


47.115




     Non-controlling interests


 


(889)


(501)




 


 


(340.698)


46.614




Other comprehensive income / (loss):


 


 


 




Other comprehensive income / (loss) that will not be reclassified to profit or loss (net of tax):


 


 


 




Share of other comprehensive income / (loss) of associates


17


(224)


-




Changes in the fair value of equity instruments 


17


(436)


(4)




 


 


(660)


(4)




Other comprehensive income / (loss) that may be reclassified subsequently to profit or loss (net of tax):


 


 


 




Fair value gains / (losses) on cash flow hedges 


17


(25.474)


7.889




Currency translation differences and other movements


17


(216)


30




 


 


(25.690)


7.919




Other comprehensive income  / (loss) for the period, net of tax


 


(26.350)


7.915




Total comprehensive income / (loss) for the period


 


(367.048)


54.529




Total comprehensive income / (loss) attributable to:


 


 


 




     Owners of the parent


 


(366.098)


55.043




     Non-controlling interests


 


(949)


(514)




 


 


(367.048)


54.529




Earnings / (losses) per share (expressed in Euro per share)


9


(1,11)


0,15




Group Consolidated statement of cash flows
 




 


 


For the three month period ended




 


Note


31 March 2020


31 March 2019




Cash flows from operating activities


 


 


 




Cash generated (used in)/ from operations


20  


(221.655)


4.514




Income tax received/(paid)


 


(3.590)


(2.660)




Net cash generated from / (used in) operating activities


 


(225.245)


1.854




Cash flows from investing activities


 


 


 




Purchase of property, plant and equipment & intangible assets


10,12


(35.532)


(31.360)




Proceeds from disposal of property, plant and equipment & intangible assets


 


665


245




Participation in share capital (increase)/ decrease of associates


 


-


200




Grants received


 


43


-




Interest received


 


1.062


1.000




Prepayments for right-of-use assets


 


(215)


(259)




Net cash used in investing activities


 


(33.977)


(30.174)




Cash flows from financing activities


 


 


 




Interest paid


 


(15.659)


(26.215)




Dividends paid to shareholders of the Company


 


(76.215)


-




Proceeds from borrowings


 


239.681


7.722




Repayments of borrowings


 


68


148




Payment of lease liabilities - principal 


 


(10.015)


(8.581)




Payment of lease liabilities - interest 


 


(2.748)


(2.273)




Net cash used in financing activities


 


135.112


(29.199)




Net decrease in cash and cash equivalents 


 


(124.110)


(57.519)




 


 


 


 




Cash and cash equivalents at the beginning of the period


15


1.088.198


1.275.159




Exchange gain/(loss) on cash and cash equivalents 


 


6.564


4.602




Net decrease in cash and cash equivalents 


 


(124.110)


(57.519)




Cash and cash equivalents at end of the period


15


970.652


1.222.242




 
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent Company Statement of Financial Position
 




 


 


As at




 


Note


31 March 2020


31 December 2019




ASSETS


 


 


 




Non-current assets


 


 


 




Property, plant and equipment


9


2.677.554


2.693.794




Right-of-use assets


10


30.876


32.084




Intangible assets


11


8.862


8.704




Investments in subsidiaries, associates and joint ventures


 


1.055.138


1.045.138




Investment in equity instruments


3


519


965




Loans, advances and long-term assets


 


10.616


22.089




 


 


3.783.565


3.802.774




 


 


 


 




Current assets


 


 


 




Inventories


12


588.244


899.760




Trade and other receivables


13


550.786


791.257




Income tax receivable


 


88.445


87.616




Derivative financial instruments


3


-


3.474




Cash and cash equivalents


14


738.388


888.564




 


 


1.965.863


2.670.671




Total assets


 


5.749.428


6.473.445




 


 


 


 




EQUITY


 


 


 




Share capital and share premium


15


1.020.081


1.020.081




Reserves


16


257.294


283.106




Retained Earnings


 


555.005


935.648




Total equity


 


1.832.380


2.238.835




 


 


 


 




LIABILITIES


 


 


 




Non-current liabilities


 


 


 




Interest bearing loans and borrowings


17


1.225.765


1.607.838




Lease liabilities


 


20.639


21.264




Deferred income tax liabilities


 


55.272


182.065




Retirement benefit obligations


 


148.463


147.074




Provisions


 


22.797


22.797




Other non-current liabilities


 


13.455


13.620




 


 


1.486.391


1.994.658




Current liabilities


 


 


 




Trade and other payables


18


1.056.016


1.271.809




Derivative financial instruments


3


30.044


-




Income tax payable


 


5.192


5.785




Interest bearing loans and borrowings


17


1.329.283


875.576




Lease liabilities


 


8.846


9.919




Dividends payable


 


1.276


76.863




 


 


2.430.657


2.239.952




Total liabilities


 


3.917.048


4.234.610




Total equity and liabilities


 


5.749.428


6.473.445




 
 
 
Parent Company Statement of Comprehensive Income
 




 


 


For the three-month period ended




 


Note


31 March 2020


31 March 2019




Revenue from contracts with customers


4


1.740.600


1.824.373




Cost of sales


 


(2.173.932)


(1.703.824)




Gross profit / (loss)


 


(433.332)


120.549




Selling and distribution expenses


 


(27.553)


(24.294)




Administrative expenses


 


(20.612)


(21.043)




Exploration and development expenses


 


(1.017)


(29)




Other operating income/(expenses) & other gains/(losses)


5


4.464


2.851




Operating profit / (loss)


 


(478.050)


78.034




Finance income


 


2.220


2.388




Finance expense


 


(25.392)


(30.567)




Lease finance cost


 


(358)


(219)




Currency exchange gains/(losses)


6


2.295


1.563




Profit / (Loss) before income tax 


 


(499.285)


51.199




Income tax credit / (expense)


7


118.642


(15.144)




Profit / (Loss) for the period


 


(380.643)


36.055




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


(338)


(17)




 


 


(338)


(17)




Other comprehensive income/(loss), that may be reclassified subsequently to profit or loss (net of tax):


 


 


 




Fair value gains / (losses) on cash flow hedges


16


(25.474)


7.889




 


 


(25.474)


7.889




Other Comprehensive income/(loss) for the period, net of tax


 


(25.812)


7.872




Total comprehensive income / (loss) for the period


 


(406.455)


43.927




Basic and diluted earnings / (losses) per share

(expressed in Euro per share)


8


(1,25)


0,12




 
 
 
 
 
 
 
 
 
 
 
 
 
Parent Company Statement of Cash flows
 




 


 


For the three-month period ended




 


Note


31 March 2020


31 March 2019




Cash flows from operating activities


 


 


 




Cash generated from / (used in) operations


19


(246.288)


9.176




Income tax received / (paid)


 


(795)


(1.768)




Net cash generated from / (used in) operations


 


(247.083)


7.408




Cash flows from investing activities


 


 


 




Purchase of property, plant and equipment & intangible assets


9,11


(24.360)


(25.851)




Proceeds from disposal of property, plant and equipment & intangible assets


 


-


4




Dividends received


 


150.000


-




Interest received


 


2.220


2.388




Participation in share capital increase of subsidiaries, associates and joint ventures


 


(10.000)


-




Net cash generated from / (used in) investing activities


 


117.860


(23.459)




Cash flows from financing activities


 


 


 




Interest paid


 


(14.237)


(23.295)




Dividends paid


 


(76.215)


(7)




Proceeds from borrowings


 


218.120


4.442




Repayments of borrowings


 


(152.002)


-




Payment of lease liabilities - principal


 


(2.759)


(1.635)




Payment of lease liabilities - interest


 


(358)


(219)




Net cash generated from /(used in) financing activities


 


(27.451)


(20.714)




Net increase / (decrease) in cash and cash equivalents


 


(156.674)


(36.765)




Cash and cash equivalents at the beginning of the period


14


888.564


1.071.585




Exchange gains / (losses) on cash and cash equivalents


 


6.498


4.559




Net increase / (decrease) in cash and cash equivalents


 


(156.674)


(36.765)




Cash and cash equivalents at end of the period


14


738.388


1.039.379




 


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