REG - Hellenic Petroleum - 3rd Quarter Results <Origin Href="QuoteRef">HEPr.AT</Origin>

HELLENiQ ENERGY Holdings SAAnnouncement

10/11/2014 17:10

RNS Number : 6390W
Hellenic Petroleum S.A.
10 November 2014
PRESS RELEASE
10 November, 2014
Third quarter 2014 financial results
Improved operating performance on better refining environment and 
higher exports on the back of Elefsina refinery
Crude oil price decline affected reported results
HELLENIC PETROLEUM Group reported improved consolidated operating results across all its activities with Adjusted EBITDA at 146 million. These are attributed primarily to improved results from the Refining, Supply and Trading business, where improved international refining environment, increased contribution of Elefsina refinery and higher production and exports reversed the weak performance of the previous quarters. In addition, continuous cost control and better results of Marketing subsidiaries, driven by increased tourism and air traffic in Greece, as well as Petrochemicals added to the positive performance. The crude oil price drop led to inventory losses, negatively affecting reported results. Finally, despite the continuingadversities of liquidity and high funding costs for Greek companies, the Group's financial position is enhanced, following the recent Eurobond issues and positive operating cash flows in 3Q14.
Key figures for 3Q and 9M period to 30 September 2014 are summarised below:
3Q13
3Q14
All numbers in m
9M13
9M14
3,397
3,581
Refining Sales Volumes ('000 )
9,782
9,557
74
146
Adjusted EBITDA
133
246
75
45
EBITDA
40
123
1
24
Adjusted Net Income
(82)
(48)
2
(51)
Net Income
(171)
(139)
19
24
Capex
56
85
-
-
Gearing
49%
46%
0.4
3.6
ELPE benchmark refining margin ($/bbl)
2.2
2.4
Significant drop in crude oil prices and improvement of European benchmark refining margins; stronger dollar vs euro
Increased crude oil supply, mainly in the US, as well as the higher production in Libya and Iraq offset the decreasing supply of Russian crude oil in the Mediterranean and coupled with weaker global demand growth resulted in the reduction of international crude oil prices in 3Q14. Brent crude oilprice recorded a $25/bbl decline to less than $90/bbl in the beginning of October, compared to its 2014 peak at the end of June ($115/bbl).
International currency markets led to weaker euro vs dollar q-o-q, with a 3Q14 average at 1.33, recording a 2-year low at 1.25. The stronger dollar benefits refiners, as benchmark margins, their main profitability driver are dollar denominated.
International crude oil markets developments, as well as stronger demand for products, mainly gasoline, led to improved refining margins for European refiners. Benchmark Med FCC margins amounted to $4.6/bbl, (3Q13: $1.0/bbl) and Hydrocracking came at $5.1/bbl (3Q13: $2.9/bbl). 
Demand growth in domestic fuels market
Domestic fuels demand in 3Q14 amounted to 1.6 million tons, a 3% growth, according to preliminary official market data, recording an increase in auto fuels for the first time since 2009. Diesel consumption was higher, while gasoline demand declined at a slower pace. The aviation fuels market growth was also significant (13%), on increased air traffic during the tourism season.
Satisfactory operating results 
Adjusted EBITDA amounted to 146m, 97% higher compared with the same period last year, reflecting mainly the improved European refining environment in 3Q14. The improvement came mainly from Refining, Supply & Trading, which increased production and sales. Sales in exports markets were up to 1.6 million tonnes and accounted for 46% of total sales. The utilisation rate of Elefsina refinery exceeded 100% vs design capacity in 3Q14, following the improvement works of last Spring, with increased efficiency and contribution. Marketing and Petrochemicals also reported improved results.
Competitiveness improvement projects contributed to results with an additional 24m benefit for 3Q14. The reduction of fixed costs by 12% in 2014 vs last year accounts for a material part of the benefit. Over the last few years, the Group implemented a number of projects to improve its competitiveness resulting in lower operating costs across all our businesses, through a fit-for-purpose organization and synergies in Head Office and shared services on one hand, while improving the refineries operation and energy efficiency, with a significant effect on profitability.
On reported results, the large decline in crude oil and product prices resulted in inventory losses of approximately 100m, leading EBITDA to 45m (3Q13: 75m), while Net Income amounted to -51m (3Q13: 2m).
Net debt came at 1.8bn, lower than last year, while gearing stood at 46% (3Q13: 49%). Following the recent bond issues, the Group's financial position is stronger, enabling, as a first step, the early partial repayment of a syndicated loan with Greek and international banks. The Group will assess its overall strategy with respect to sources of funding and cash utilisation, aiming to further reduce cost of debt and address the volatile conditions in capital markets. This will clearly take into account the recent successful completion of Greek banks' stress tests, as well as the broader market conditions in Europe and Greece.
Reserves distribution according to L. 4172/2013
The Board of Directors of HELLENIC PETROLEUM decided to call an Extraordinary General Meeting in 2014, to discuss the application of provisions of Article 72 of L. 4172/2013 in relation to the extraordinary taxation and distribution of special tax reserves. The Group recorded a provision of 21m in FY13 results, which corresponds to 19% of the relative reserves, exhausting the tax obligation for both the company and its shareholders and the net distribution amounting to 0.21 per share is proposed to the EGM.
DESFA sale process
The regulatory approval process for the sale of 66% of DESFA share capital to SOCAR by the competent authorities in Greece and the EU is in progress. After the final certification of DESFA as independent gas transportation operator by the Greek Regulation Authority of Energy (RAE) and the alignment of the Greek legal framework, the approval of the European Competition Authorities is the final step for the completion of regulatory processes.
John Costopoulos, Group CEO, commented on 3Q14 performance:
"In the third quarter, the Group reported satisfactory operating results, highlighting its profitability outlook, following the extensive growth investment program and restructuring of previous years. The significant drop in the crude oil price, which adversely affected reported results, demonstrates the volatility and uncertainties of the international industry environment. Weak crude oil prices are beneficial both for refiners, as they reduce energy costs, one of the most important factors affecting profitability, as well as overall economic activity and development.
All our refineries operated at high utilisation rates, leading to higherexports. The Elefsina refinery utilisation, following the improvement works of last Spring, exceeded 100% of design capacity throughout the quarter, with a significant contribution to the Group's results. Marketing subsidiaries, both in Greece and international, as well as Petrochemicals, also recorded a strong performance.
We remain committed towards maintaining our strong export orientation andthe continuous operational improvement in all our activities and reassess our strategy taking into account the risks and opportunities arising from the significant changes in the business environment."
Key highlights and contribution for each of the main business units were:
REFINING, SUPPLY & TRADING
- Domestic Refining, Supply & Trading Adjusted EBITDA came at 84m (3Q13: 22m) 
- Group's refineries performance exceeded benchmarks, on the back of supply and crude slate optimisation, realising available opportunities in international markets, while total costs were reduced by 10%, despite the highest production of the last few years, at 3.3 million tonnes.
- Domestic market sales increased by 3%, improving the Group's market share in auto fuels, while exports, at 1.6 million tonnes, grew by 13%, leading total sales volumes at 3.6 million tonnes, the highest in the last 5 years.
DOMESTIC MARKETING
- Domestic Marketing sales grew by 10%, with all activities improving contribution. Increased tourism had a positive impact both in retail as well as aviation segments, leading EBITDA to 25m (+28%).
- Improvement in market shares on the back of network management and marketing, with BP ULTIMATE DIESEL recording significant penetration, just a few months after launch.
INTERNATIONAL MARKETING
- International Marketing sustained profitability, with adjusted EBITDA at 16m, on cost control and improved commercial and operational performance in all markets where the group operates, despite the challenging environment.
- Higher sales volumes by 4%, on further integration with the Thessaloniki refinery.
PETROCHEMICALS
- Strong PP margins, record high propylene production at Aspropyrgos refinery and cost control led to an increase in profitability by 14%, with adjusted EBITDA at 19m. 
ASSOCIATED COMPANIES
- DEPA Group contribution to consolidated Net Income came at 3m (vs 10m in 3Q13), due to weak demand from gas-fired generators.
- Elpedison EBITDA at 13m (-18% vs 3Q13).
Key consolidated financial indicators (prepared in accordance with IFRS) for the nine-month period to 30 September 2014 are shown below:
 million
3Q13
3Q14
% 
9M13
9M14
% 
P&L figures






Refining Sales Volumes ('000 )
3.397
3.581
5%
9.782
9.557
-2%
Sales 
2.650
2.634
-1%
7.447
7.096
-5%
EBITDA
75
45
-40%
40
123
-
Adjusted EBITDA 1
74
146
97%
133
246
84%
Net Income
2
-51
-
-171
-139
-
Adjusted Net Income 1
1
24
-
-82
-48
-
Balance Sheet Items






Capital Employed



4.604
3.849
-16%
Net Debt



2.293
1.780
-22%
Debt Gearing (ND/ND+E)



49%
46%
-
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 andpresence in 7 countries.
Further information:
V. Tsaitas, Investor Relations Officer
Tel.:  +30-210-6302399
Email: vtsaitas@helpe.gr
E. Stranis, Group Corporate Affairs Director
Tel.:  +30-210-6302241
Email: estranis@helpe.gr
G. Stanitsas, Group Communications Director
Tel.:  +30-210-6302197
Email: gstanitsas@helpe.gr
Group Consolidated Statement of Financial Position


As at

Note
30 September 2014
31 December 2013
ASSETS



Non-current assets



Property, plant and equipment
11
3.405.740
3.463.119
Intangible assets
12
132.717
143.841
Investments in associates and joint ventures

675.834
691.501
Deferred income tax assets

105.991
63.664
Available-for-sale financial assets
3
1.239
1.163
Loans, advances and other receivables

97.852
106.735


4.419.373
4.470.023
Current assets



Inventories
13
1.056.236
1.005.264
Trade and other receivables
14
711.701
737.250
Derivative financial instruments
3
-
5.263
Cash, cash equivalents and restricted cash
15
1.279.047
959.602


3.046.984
2.707.379
Total assets

7.466.357
7.177.402




EQUITY



Share capital
16
1.020.081
1.020.081
Reserves
17
561.968
566.103
Retained Earnings

374.041
512.771
Capital and reserves attributable to owners of the parent

1.956.090
2.098.955




Non-controlling interests

111.647
115.511




Total equity

2.067.737
2.214.466




LIABILITIES



Non-current liabilities



Borrowings
18
1.826.024
1.311.804
Deferred income tax liabilities

41.898
45.405
Retirement benefit obligations

83.101
87.429
Provisions for other liabilities and charges

6.271
6.184
Other long term liabilities

22.689
24.584


1.979.983
1.475.406
Current liabilities



Trade and other payables
19
2.168.765
2.125.435
Derivative financial instruments
3
1.460
-
Current income tax liabilities

12.777
22.404
Borrowings
18
1.234.687
1.338.384
Dividends payable

948
1.307


3.418.637
3.487.530
Total liabilities

5.398.620
4.962.936
Total equity and liabilities

7.466.357
7.177.402
Group Consolidated Statement of Comprehensive Income


For the nine month period ended

For the three month period ended

Note
30 September 2014
30 September 2013

30 September 2014
30 September 2013







Sales

7.095.566
7.447.050

2.632.917
2.649.857







Cost of sales

(6.804.441)
(7.242.569)

(2.532.666)
(2.506.104)







Gross profit

291.125
204.482

100.251
143.753







Selling and distribution expenses

(235.302)
(230.716)

(82.108)
(79.406)







Administrative expenses

(83.354)
(91.198)

(28.425)
(29.777)







Exploration and development expenses

(2.310)
(2.117)

(993)
(269)







Other operating income / (expenses) - net
5
3.117
(1.001)

2.928
1.739







Operating profit / (loss)

(26.724)
(120.550)

(8.347)
36.041







Finance (expenses) / income - net
6
(165.641)
(156.599)

(59.390)
(54.630)







Currency exchange gains / (losses)
7
(10.146)
10.129

(9.491)
1.488







Share of net result of associates
8
22.613
50.768

(1.505)
11.820







Profit / (loss) before income tax 

(179.898)
(216.252)

(78.733)
(5.281)







Income tax (expense) / credit
9
39.139
42.228

28.975
9.002







Profit / (loss) for the period

(140.759)
(174.024)

(49.758)
3.721







Other comprehensive income:






Items that may be reclassified subsequently to profit or loss:
Fair value gains/(losses) on available-for-sale financial assets

70
(131)

47
(115)
Fair value gains / (losses) on cash flow hedges 
17
(4.975)
7.276

(5.693)
4.683
Derecognition of gains/(losses) on hedges through comprehensive income
17
-
29.638

-
5.611
Other movements and currency translation differences

762
(1.286)

234
(524)
Other comprehensive (loss) / income for the period, net of tax

(4.143)
35.497

(5.412)
9.655
Total comprehensive (loss) / income for the period

(144.902)
(138.527)

(55.170)
13.376







Profit attributable to:






 Owners of the parent

(138.730)
(171.028)

(50.697)
1.942
 Non-controlling interests

(2.029)
(2.996)

939
1.779


(140.759)
(174.024)

(49.758)
3.721
Total comprehensive income attributable to:






 Owners of the parent

(142.865)
(135.576)

(56.198)
11.487
 Non-controlling interests

(2.037)
(2.951)

1.028
1.889


(144.902)
(138.527)

(55.170)
13.376
Basic and diluted earnings per share
(expressed in Euro per share)
10
(0,45)
(0,56)

(0,17)
0,01
Group Consolidated Statement of Cash Flows


For the nine month period ended

Note
30 September 2014
30 September 2013
Cash flows from operating activities



Cash generated from operations
20
129.990
(218.306)
Income and other taxes paid

(20.625)
(6.119)
Net cash used in operating activities

109.365
(224.425)




Cash flows from investing activities



Purchase of property, plant and equipment & intangible assets

(85.201)
(56.484)
Proceeds from disposal of property, plant and equipment & intangible assets

1.283
4.097
Interest received

5.415
5.324
Dividends received

38.356
12.802
Investments in associates - net

-
(2.504)
Net cash used in investing activities

(40.147)
(36.765)




Cash flows from financing activities



Interest paid

(142.196)
(126.747)
Dividends paid to shareholders of the Company

(359)
(43.703)
Dividends paid to non-controlling interests

(1.827)
(2.739)
Proceeds from borrowings

1.096.056
1.276.000
Repayments of borrowings

(724.125)
(1.245.072)
Net cash generated from / (used in) financing activities

227.549
(142.261)




Net (decrease) / increase in cash, cash equivalents and restricted cash

296.767
(403.451)




Cash,cash equivalents and restricted cash at the beginning of the period
15
959.602
901.061
Exchange gains / (losses) on cash, cash equivalents and restricted cash

22.678
(2.038)
Net (decrease) / increase in cash, cash equivalents and restricted cash

296.767
(403.451)
Cash, cash equivalents and restricted cash at end of the period
15
1.279.047
495.572
Parent Company Statement of Financial Position


As at

Note
30 September 2014
31 December 2013
ASSETS



Non-current assets



Property, plant and equipment
10
2.776.050
2.804.714
Intangible assets
11
9.492
10.776
Investments in subsidiaries, associates and joint ventures

659.826
654.068
Deferred income tax assets

66.848
25.056
Available-for-sale financial assets

50
45
Loans, advances and long-term assets

142.795
142.742


3.655.061
3.637.401




Current assets



Inventories
12
954.254
882.040
Trade and other receivables
13
863.418
865.560
Derivative financial instruments

-
5.263
Cash, cash equivalents and restricted cash
14
1.064.427
739.311


2.882.099
2.492.174
Total assets

6.537.160
6.129.575




EQUITY



Share capital
15
1.020.081
1.020.081
Reserves
16
556.718
561.694
Retained Earnings

(85.910)
24.594
Total equity

1.490.889
1.606.369




LIABILITIES



Non- current liabilities



Borrowings
17
1.802.128
1.226.430
Retirement benefit obligations

67.464
72.527
Provisions for other liabilities and charges

3.000
3.000
Other long term liabilities

12.878
13.895


1.885.470
1.315.852
Current liabilities



Trade and other payables
18
2.108.182
2.053.275
Derivative financial instruments

1.460
-
Current income tax liabilities
8
-
6.952
Borrowings
17
1.050.211
1.145.820
Dividends payable

948
1.307


3.160.801
3.207.354
Total liabilities

5.046.271
4.523.206
Total equity and liabilities

6.537.160
6.129.575
Parent Company Statement of Comprehensive Income


For the nine month period ended

For the three month period ended

Note
30 September 2014
30 September 2013

30 September 2014
30 September 2013







Sales

6.542.111
6.906.069

2.414.230
2.442.930







Cost of sales

(6.463.460)
(6.888.853)

(2.405.125)
(2.382.459)







Gross profit

78.651
17.216

9.105
60.471







Selling and distribution expenses

(82.982)
(82.559)

(28.707)
(28.482)







Administrative expenses

(52.222)
(57.127)

(17.944)
(18.899)







Exploration and development expenses

(2.310)
(2.117)

(993)
(269)







Other operating income / (expenses) - net
5
(2.021)
(31.941)

(18)
(5.894)







Dividend income

47.545
17.122

-
-







Operating profit / (loss)

(13.339)
(139.406)

(38.557)
6.927







Finance (expenses) / income -net
6
(132.162)
(124.186)

(46.717)
(43.182)







Currency exchange gains / (losses)
7
(5.047)
2.925

(4.538)
(269)







Profit / (loss) before income tax 

(150.548)
(260.667)

(89.812)
(36.524)







Income tax expense
8
40.044
57.199

32.015
13.336







Profit / (Loss) for the period

(110.504)
(203.468)

(57.797)
(23.188)







Other comprehensive income:






Items that will not be reclassified to profit or loss: 






Acruarial gains / (losses) on defined benefit pension plans

-
-

-
-


-
-

-
-
Items that may be reclassified subsequently to profit or loss:






Fair value gains/(losses) on cash flow hedges

(4.976)
7.276

(10.146)
(112)
Derecognition of gains/(losses) on hedges through comprehensive income

-
29.638

-
10.406


(4.976)
36.914

(10.146)
10.294
Other Comprehensive income/(loss) for the period, net of tax

(4.976)
36.914

(10.146)
10.294







Total comprehensive income/(loss) for the period

(115.480)
(166.554)

(67.943)
(12.894)







Basic and diluted earnings per share
(expressed in Euro per share)
9
(0,36)
(0,67)

(0,19)
(0,08)
Parent Company Statement of Cash Flows


For the nine month period ended

Note
30 September 2014
30 September 2013
Cash flows from operating activities



Cash used in operations
19
32
(441.070)
Income tax paid

(13.376)
-
Net cash generated from / (used in) operating activities

(13.344)
(441.070)




Cash flows from investing activities



Purchase of property, plant and equipment & intangible assets
10,11
(72.147)
(46.757)
Dividends received

47.545
13.748
Interest received
6
14.193
10.904
Participation in share capital increase of affiliated companies

(13)
(2.504)
Net cash used in investing activities

(10.422)
(24.609)




Cash flows from financing activities



Interest paid

(120.540)
(102.105)
Dividends paid

(359)
(43.703)
Loans to affiliated companies

-
(137.900)
Proceeds from borrowings

1.041.015
1.151.170
Repayments of borrowings

(593.137)
(632.374)
Net cash generated from financing activities

326.979
235.088




Net increase in cash, cash equivalents and restricted cash

303.213
(230.591)




Cash, cash equivalents and restricted cash at beginning of the period
14
739.311
627.738
Exchange gains / (losses) on cash, cash equivalents and restricted cash

21.903
(1.989)
Net increase in cash, cash equivalents and restricted cash

303.213
(230.591)
Cash, cash equivalents and restricted cash at end of the period
14
1.064.427
395.158
Full set of Group and Parent Company Financial Statements can be found on the Group's website: www.helpe.gr

This information is provided by RNS
The company news service from the London Stock Exchange
  END
QRTKMMMMKGNGDZM