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

HELLENiQ ENERGY Holdings SAAnnouncement

10/11/2016 16:25

RNS Number : 9126O
Hellenic Petroleum S.A.
10 November 2016
PRESS RELEASE
10 November 2016
Third quarter / nine month 2016 financial results
Positive results on increased production and exports, despite weaker benchmark refining margins 
Strong operational performance in Refining, Supply & Trading, the Group's main activity, as well as increased exports led 3Q16 HELLENIC PETROLEUM Group Adjusted EBITDA at 191m, despite the considerable decline of benchmark refining margins, compared to last year. Reported EBITDA for 3Q16 amounted to 190m, 74% higher vs 3Q15.
Group refineries reported a 19% production growth, at 3.9m MT, the strongest performance on record, fully capturing the high mechanical availability of units, recording overperformance vs benchmark margins. Petchems reported another quarter of Increased sales, sustaining contribution at high levels, despite weaker international margins. In Fuels Marketing, domestic retail market share growth and higher sales in most activities sustained.
Strong operational performance and relative stability in crude oil prices, led 3Q16 Group Net Income to 80m, 110% higher vs 3Q15, with 9M16 Group Net Income to 184m, the highest in the last few years and up 76% vs last year.
Stable crude oil price, weaker benchmark margins
During 3Q16, supply/demand balances, combined with expectations about OPEC's intention to adjust production, maintained crude oil prices on average at the same levels with 2Q16, at $47/bbl.
Despite higher crude oil supply in the Med, underpinned by Iran's return to international markets and its significantly higher exports in the region, products oversupply led Med benchmark refining margins lower by approximately 36% vs last year, with FCC margins averaging $4.6/bbl ($7.3/bbl), with Hydrocracking margin at $4.0/bbl ($6.2/bbl).
Increased domestic fuels demand 
Domestic fuels demand, according to official market data, was higher by 8% in 3Q16, with total consumption volume at 1.6 million tones, reversing the respective decline recorded in 3Q15, following the imposition of capital controls. Increased tourism supported Aviation & Bunkering market, which also grew by 6% in 3Q16.
In 9M16, total domestic fuels demand was unchanged vs last year, at 5m MT.
Record sales and exports, further diversification of crude sourcing
The increased production of the complex and upgraded Group refineries, led to increased sales by 20%, at (4.388k MT), with exports 45% higher at 2.459k MT, a new record high, highlighting Group's export orientation. 
Furthermore, the implementation of commercial agreements with national oil companies and increased liquidity enabled the diversification in the crude grades and supply terms, as well as realization of additional commercial opportunities in the Med region, with a positive effect on financial results and crude supply risk management.
Successful issue of the new 375m bond reduced interest cost and improved financial risk management
The Group continued the implementation of its financial strategy, with the issue of a new 5-year, 375m Eurobond, maturing in October 2021, with a 4.875% coupon. Significant part of the demand came from existing noteholders, which participated in the tender offer for the 8% May 2017 Bond, which ran in parallel with the new issue, with noteholders in excess of 200m opting to participate to new bond. Furthermore, demand from new investors was strong, significantly oversubscribing the offering, resulting to the upsize of the issue and the tightening of the final yield compared to initial price talk.
Lower finance costs, strong operating cash flows
The new bond issue and tender offer, combined with the material improvement in terms and definitions of bonds and bank facilities, as well as the repayment and refinancing of 1.5bn of borrowings during 2016, improved Group's capital structure and extended maturity profile; furthermore, finance cost is reduced by 15m from 2017, as the new notes have significantly lower interest cost (4.875% vs 8%).
Operating cash flows (Adjusted EBITDA - capex) for 9M16 amounted to 435m, at the same levels as last year, despite lower benchmark margins. High profitability, combined with stronger capital structure led Net Debt to 1.8bn, significantly lower vs last year (3Q15: 2.4bn).
Key strategic developments
On 28 October, following an international tender process, the JV of TOTAL - EDISON - HELLENIC PETROLEUM was announced as preferred bidder for the award of hydrocarbons exploration and exploitation rights in offshore "block 2" in NW Ionian Sea.
Regarding the sale of 66% of DESFA share capital to SOCAR, the parties agreed to extend the long-stop date for the completion of the transaction to 30 November 2016.
Furthermore, on 31 August, the merger of "HELLENIC FUELS SA" and "EKO SA", was successfully completed through the absorption of the latter from the former. 
Key highlights and contribution for each of the main business units in 3Q16 were:
REFINING, SUPPLY & TRADING
Highest quarterly production ever
- Refining, Supply & Trading 3Q16 Adjusted EBITDA at 124m, (2Q15: 166m)
- Production amounted to 3.9 million tonnes, the highest quarterly performance on record with sales at 4.3m tonnes, while exports at 2.5m MT, represent 57% of total sales.
- White products' yield at 84%. 
PETROCHEMICALS
Higher production and sales
- Higher PP production and sales volumes (+16%), maintained profitability at high levels, with Adjusted EBITDA at 25m, despite the decline in benchmark margins. 
MARKETING
Increase in market shares
- Marketing Adjusted EBITDA in 3Q16 amounted to 44m, vs 47m LY.
- Market share gains in retail, aviation and bunkering continued. Domestic Marketing profitability, with Adjusted EBITDA at 26m, was negatively affected by the effect of Platt's prices evolution on international aviation sales pricing formula. 
- International Marketing was impacted by lower margins in the Bulgarian market and weak volumes in Serbia, with Adjusted EBITDA at 18m.
ASSOCIATED COMPANIES
- DEPA Group contribution to consolidated Net Incomecame in at 9m, with higher volumes, as demand from gas-fired electricity generators increased notably.
- Elpedison EBITDA at 16m on higher production and implementation of the flexibility remuneration mechanism from May 2016.


Key consolidated financial indicators (prepared in accordance with IFRS) for 3Q16 are shown below:
 million
3Q15
3Q16
% 
9M15
9M16
% 
P&L figures






Refining Sales Volumes ('000 )
3,622
4,339
20%
10,187
11,788
16%
Sales 
1,836
1,873
2%
5,500
4,813
-12%
EBITDA
115
199
74%
413
533
29%
Adjusted EBITDA 1
240
191
-20%
575
517
-10%
Net Income
38
80
110%
105
184
76%
Adjusted Net Income 1
111
75
-32%
203
183
-10%
Balance Sheet Items






Capital Employed



4,241
3,775
-11%
Net Debt



2,409
1,781
-26%
Debt Gearing (ND/ND+E)



57%
47%
-
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 6 countries.
Further information:
V. Tsaitas, Investor Relations Officer
Tel.:  +30-210-6302399
Email: vtsaitas@helpe.gr
Group Consolidated Statement of Financial Position


As at

Note
30 September 2016
31 December 2015
ASSETS



Non-current assets



Property, plant and equipment
11
3.311.176
3.385.270
Intangible assets
12
108.719
117.062
Investments in associates and joint ventures

684.757
678.637
Deferred income tax assets

166.997
239.538
Available-for-sale financial assets

2.070
523
Loans, advances and other receivables

83.809
85.022


4.357.528
4.506.052
Current assets



Inventories
13
727.523
662.025
Trade and other receivables
14
776.333
752.142
Derivative financial instruments

8.569
-
Cash, cash equivalents and restricted cash
15
1.130.757
2.108.364


2.643.182
3.522.531
Total assets

7.000.710
8.028.583




EQUITY



Share capital
16
1.020.081
1.020.081
Reserves
17
462.219
443.729
Retained Earnings

405.331
220.506
Capital and reserves attributable to owners of the parent

1.887.631
1.684.316




Non-controlling interests

104.694
105.954




Total equity

1.992.325
1.790.270




LIABILITIES



Non-current liabilities



Borrowings
18
1.308.653
1.597.954
Deferred income tax liabilities

42.363
45.287
Retirement benefit obligations

108.443
95.362
Provisions for other liabilities and charges

6.869
6.405
Other long term liabilities

242.074
22.674


1.708.402
1.767.682
Current liabilities



Trade and other payables
19
1.688.124
2.795.378
Derivative financial instruments

-
34.814
Current income tax liabilities

6.021
6.290
Borrowings
18
1.605.196
1.633.033
Dividends payable

642
1.116


3.299.983
4.470.631
Total liabilities

5.008.385
6.238.313
Total equity and liabilities

7.000.710
8.028.583
Group Consolidated statement of comprehensive income


For the nine month period ended

For the three month period ended

Note
30 September 2016
30 September 2015

30 September 2016
30 September 2015
Sales

4.806.983
5.499.837

1.867.173
1.835.815
Cost of sales

(4.139.028)
(4.906.506)

(1.621.542)
(1.656.299)
Gross profit

667.955
593.331

245.631
179.516
Selling and distribution expenses

(215.120)
(248.924)

(71.124)
(87.518)
Administrative expenses

(88.972)
(86.685)

(26.221)
(32.170)
Exploration and development expenses

(2.273)
(1.129)

(88)
(455)
Other operating income / (expenses) - net
5
16.449
12.368

(630)
4.177
Operating profit / (loss)

378.039
268.961

147.568
63.550







Finance (expenses) / income - net
6
(149.589)
(153.068)

(51.338)
(52.628)
Currency exchange gains / (losses)
7
13.084
(17.456)

2.213
3.227
Share of net result of associates
8
12.732
19.612

10.372
8.649
Profit / (loss) before income tax 

254.266
118.049

108.815
22.798
Income tax (expense) / credit
9
(70.438)
(13.473)

(28.685)
15.544
Profit / (loss) for the period

183.828
104.576

80.130
38.342
Other comprehensive income:






Items that will not be reclassified to profit or loss:






Actuarial gains / (losses) on defined benefit pension plans
17
(5.300)
261

-
261


(5.300)
261

-
261
Items that may be reclassified subsequently to profit or loss:






Fair value gains / (losses) on available-for-sale financial assets

(5.977)
(192)

(987)
(18)
Fair value gains / (losses) on cash flow hedges 
17
11.160
1.215

(21.751)
(35.468)
Derecognition of gains / (losses) on hedges through comprehensive income
17
19.642
-

19.642
-
Other movements and currency translation gains / (losses)

(1.032)
(396)

241
83


23.793
627

(2.855)
(35.403)
Other comprehensive (loss) / income for the period, net of tax

18.493
888

(2.855)
(35.142)
Total comprehensive (loss) / income for the period

202.321
105.464

77.275
3.200
Profit attributable to:






 Owners of the parent

184.906
104.614

78.041
38.339
 Non-controlling interests

(1.078)
(38)

2.089
3


183.828
104.576

80.130
38.342
Total comprehensive income attributable to:






 Owners of the parent

203.396
105.683

75.082
3.183
 Non-controlling interests

(1.075)
(219)

2.193
17


202.321
105.464

77.275
3.200
Basic and diluted earnings per share
(expressed in Euro per share)
10
0,60
0,34

0,26
0,13
Group Consolidated statement of cash flows


For the nine month period ended

Note
30 September 2016
30 September 2015
Cash flows from operating activities



Cash generated from operations
20
(427.273)
(893.374)
Income and other taxes paid

(8.902)
(29.422)
Net cash generated (outflow)/inflow operating activities

(436.175)
(922.796)




Cash flows from investing activities



Purchase of property, plant and equipment & intangible assets

(81.752)
(131.026)
Proceeds from disposal of property, plant and equipment & intangible assets

1.422
421
Interest received

3.810
6.604
Dividends received

1.119
18.289
Investments in associates - net

(7)
18
Proceeds from disposal of available for sale financial assets

-
771
Net cash generated (outflow)/inflow investing activities

(75.408)
(104.923)




Cash flows from financing activities



Interest paid

(139.560)
(141.829)
Dividends paid to shareholders of the Company

(473)
(64.004)
Dividends paid to non-controlling interests

(185)
(1.932)
Proceeds from borrowings

275.500
400.605
Repayments of borrowings

(603.009)
(221.034)
Net cash generated (outflow)/inflow financing activities

(467.727)
(28.194)




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

(979.310)
(1.055.913)




Cash,cash equivalents and restricted cash at the beginning of the period
15
2.108.364
1.847.842
Exchange gains / (losses) on cash, cash equivalents and restricted cash

1.703
1.881
Net (decrease) / increase in cash, cash equivalents and restricted cash

(979.310)
(1.055.913)
Cash, cash equivalents and restricted cash at end of the period
15
1.130.757
793.810
Parent Company Statement of Financial Position


As at

Note
30 September 2016
31 December 2015
ASSETS



Non-current assets



Property, plant and equipment
10
2.722.781
2.774.026
Intangible assets
11
6.555
8.371
Investments in subsidiaries, associates and joint ventures
24
651.634
656.326
Deferred income tax assets

105.410
177.639
Available-for-sale financial assets
3
1.550
50
Loans, advances and long-term assets
12
19.670
16.654


3.507.600
3.633.066




Current assets



Inventories
12
647.791
580.747
Trade and other receivables
13
983.200
1.001.818
Derivative financial instruments
3
8.569
-
Cash, cash equivalents and restricted cash
14
913.388
1.839.156


2.552.948
3.421.721
Total assets

6.060.548
7.054.787




EQUITY



Share capital
15
1.020.081
1.020.081
Reserves
16
459.671
438.818
Retained Earnings

(43.932)
(234.008)
Total equity

1.435.820
1.224.891




LIABILITIES



Non- current liabilities



Borrowings
17
1.312.462
1.536.414
Retirement benefit obligations

87.942
77.500
Provisions for other liabilities and charges

3.336
3.000
Other long term liabilities

228.398
12.400


1.632.138
1.629.314
Current liabilities



Trade and other payables
18
1.620.520
2.744.965
Derivative financial instruments
3
-
34.814
Borrowings
17
1.371.428
1.419.687
Dividends payable

642
1.116


2.992.590
4.200.582
Total liabilities

4.624.728
5.829.896
Total equity and liabilities

6.060.548
7.054.787
Parent Company Statement of Comprehensive Income


For the nine month period ended

For the three month period ended

Note
30 September 2016
30 September 2015

30 September 2016
30 September 2015







Sales

4.296.275
4.953.252

1.654.875
1.595.502
Cost of sales

(3.858.659)
(4.596.231)

(1.510.126)
(1.517.100)
Gross profit

437.616
357.021

144.749
78.402
Selling and distribution expenses

(59.780)
(93.525)

(18.488)
(34.294)
Administrative expenses

(54.972)
(55.273)

(15.319)
(21.445)
Exploration and development expenses

(214)
(1.055)

(63)
(385)
Other operating income / (expenses) - net
5
5.518
2.119

(3.182)
198
Dividend income

38.348
32.659

-
-
Operating profit / (loss)

366.516
241.946

107.697
22.476
Finance (expenses) / income -net
6
(124.827)
(125.607)

(43.591)
(43.165)
Currency exchange gains / (losses)
7
13.377
(16.809)

2.072
3.371
Profit / (loss) before income tax 

255.066
99.530

66.178
(17.318)
Income tax expense
8
(64.990)
(9.537)

(21.307)
18.774
Profit / (Loss) for the period

190.076
89.993

44.871
1.456
Other comprehensive income:






Items that will not be reclassified to profit or loss: 






Acruarial gains / (losses) on defined benefit pension plans
16
(3.914)
261

-
261


(3.914)
261

-
261
Items that may be reclassified subsequently to profit or loss:






Fair value gains/(losses) on available-for-sale financial assets
16
(6.035)
-

(1.042)
-
Fair value gains/(losses) on cash flow hedges
16
11.160
(26.235)

(2.109)
(34.309)
Derecognition of gains/(losses) on hedges through comprehensive income
16
19.642
27.449

-
(1.160)


24.767
1.214

(3.151)
(35.469)
Other Comprehensive income/(loss) for the period, net of tax

20.853
1.475

(3.151)
(35.208)
Total comprehensive income/(loss) for the period

210.929
91.468

41.720
(33.752)
Basic and diluted earnings per share
(expressed in Euro per share)
9
0,62
0,29

0,15
0,00
Parent Company Statement of Cash flows


For the nine month period ended

Note
30 September 2016
30 September 2015
Cash flows from operating activities



Cash outflow from operations
19
(502.693)
(837.705)
Income tax paid

(1.279)
(15.933)
Net cash outflow from operating activities

(503.972)
(853.638)




Cash flows from investing activities



Purchase of property, plant and equipment & intangible assets
10,11
(60.445)
(115.454)
Proceeds from disposal of property, plant and equipment & intangible assets

-
812
Dividends received

37.684
32.659
Interest received
6
10.138
16.252
Participation in share capital increase of affiliated companies

(2.408)
(2.100)
Net cash outflow from investing activities

(15.031)
(67.831)




Cash flows from financing activities



Interest paid

(135.877)
(134.075)
Dividends paid

(473)
(64.004)
Proceeds from borrowings

275.500
355.232
Repayments of borrowings

(547.711)
(222.521)




Net cash outflow from financing activities

(408.561)
(65.368)




Net decrease in cash, cash equivalents and restricted cash

(927.564)
(986.837)




Cash, cash equivalents and restricted cash at beginning of the period
14
1.839.156
1.593.262
Exchange gains / (losses) on cash, cash equivalents and restricted cash

1.796
1.908
Net decrease in cash, cash equivalents and restricted cash

(927.564)
(986.837)
Cash, cash equivalents and restricted cash at end of the period
14
913.388
608.333

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