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

HELLENiQ ENERGY Holdings SAAnnouncement

09/11/2017 16:11

RNS Number : 0961W
Hellenic Petroleum S.A.
09 November 2017
PRESS RELEASE
09 November 2017
Third quarter / Nine month 2017 financial results
Positive operating results on crude mix optimization and improved benchmark refining margins. Significant reduction on financing costs and interim dividend distribution of  0.15 per share. 
HELLENIC PETROLEUM Group announced third quarter and nine month financial results. 3Q17 Adjusted EBITDA at 206m (+8%) continued a series of strong quarters and 9M17 Adjusted EBITDA reached 663m (+28%), while 3Q17 Adjusted Net Income came in at 89m (+19%) and 9M17 Adjusted NI at 313m (+71%).
The key drivers for the results were the good performance of Aspropyrgos and Thessaloniki refineries, which partly offset the negative impact of the Elefsina refinery maintenance shutdown, strong benchmark refining margins, lower cost of crude mix and increased sales in the domestic market. Sales in domestic as well as aviation & bunkering markets continued to grow by 16% and 14% respectively, with total Refining, Supply and Trading sales at 3.8m MT. All business units reported positive contribution. Domestic Marketing recorded improved profitability on account of higher sales, while international subsidiaries also reported improved performance. Adjusted EBITDA for Fuels Marketing business was 46m (+ 5%), while Petrochemicals maintained its Adjusted EBITDA at 24m.
In terms of Reported IFRS results, the recovery in crude oil prices had a positive impact on inventory valuation, with 3Q17 IFRS Reported Net Income at 106m (+32%) and 9M17 NI at 273m (+ 49%). Financing costs continued to drop with 3Q17 reporting a 22% reduction on account of lower Gross Debt and interests rates; Gross Debt was 260m lower than last year, while Net Debt remained at similar levels.
In light of the reported results, the financial position and full year outlook, the Board of Directors approved a distribution of 0.15 per share as interim dividend for 2017.
Stronger benchmark refining margins and recovery of crude oil prices 
Increased demand led to a recovery in crude oil prices. Brent averaged $52/bbl in 3Q17, higher than both 2Q17 ($51/bbl) and 3Q16 ($47/bbl). 
Reduced oil products supply, due to unplanned refining shutdowns in Europe and particularly in the US, led to stronger Med benchmark margins, at levels significantly higher than 3Q16. Med FCC benchmark margins averaged $7.1/ bbl (+ 56%), while Hydrocracking came in at $5.9/bbl (+47%).
The Euro appreciated significantly vs the USD in 3Q17, averaging $1.17, the highest since 2014.
Increased aviation & bunkering fuels demand 
Domestic fuels demand stood at 1.6m MT, flat vs last year, as transport fuels consumption remained unchanged. The marine & aviation market recorded a new significant increase in 3Q16, with bunkering demand improving by 14% and aviation by 9%, mainly due to tourism.
Lower financing costs, strong operating cash flows
Financial expenses in 3Q17 amounted to 40m, 22% lower than last year, following the latest bond issues and bank loan renegotiations for interest rate reduction. The Group has initiated the process of refinancing bank debt, due in 2018, with expected further positive impact on cost of funding and maturities' extension. 
Operating cash flows (Adjusted EBITDA - Capex) amounted to 525m in 9M17, increased by 21% vs 9M16. Net Debt in 3Q17 maintained at 1.8bn, unchanged compared to previous quarters. The positive results and reduced market risk allow for a reduction in Gross Debt and cash reserves held for risk management and other considerations.
Key developments
In E&P, the scheduled exploration works at the Patraikos Gulf concession continue, whilst the Lease Agreement with the joint venture TOTAL - EDISON - HELLENIC PETROLEUM for offshore Block 2, west of Corfu was signed on 31 October. In the following weeks, the Greek Parliament is expected to ratify the Lease Agreements for offshore Block 2, as well as for onshore areas Arta-Preveza and North - West Peloponnese in order for the scheduled exploration program to begin. 
The sale process for 66% of DESFA, which includes Hellenic Petroleum's indirect holding of 35% and 31% owned by the State, is in progress. The two international bidders that qualified to submit binding offers are currently in the due diligence phase. DEPA Group is included in the consolidated financial statements of ELPE, as investment in affiliated companies, with a net carrying value of 659m, while its participation in 9M17 results amounted to 47m, with DESFA significantly increasing its profitability. 
In addition, during 3Q17, the construction for 3 photovoltaic parks with total installed capacity of 8.6 MW was completed, with two of them already in operation, while the third is expected to start operating in the next days.
Key highlights and contribution for each of the main business units in 3Q/9M17 were:
REFINING, SUPPLY & TRADING
- Refining, Supply & Trading 3Q17 Adjusted EBITDA at 138m (+12%), with 9M17 at 509m (+38%) 
- The maintenance shut-down of Elefsina refinery affected total production and sales, that amounted to 3.4m (3.9 in 3Q16) and 3.9m (4.3 in 3Q16) MT respectively.
- 9M17 total sales came in at 12.1m MT (+3%).
PETROCHEMICALS
- Flat PP benchmark margins and stronger EUR led to a small decline in Petchems operating profitability, with Adjusted EBITDA at 24m (-6%).
MARKETING
- 9M17 Marketing Adjusted EBITDA at 85m (+6%)
- Domestic Marketing sales continued increasing, with volumes of 1.2m MT in 3Q17 and Adjusted EBITDA at 27m (+5%). 
- International Marketing recorded a small increase in operating profitability, despite weaker volumes, with 3Q17 Adjusted EBITDA at 19m (+6%). 
ASSOCIATED COMPANIES
- DEPA Group participation to consolidated Net Incomecame in at 12m, as DESFA's increased profitability offset DEPA's reduced contribution. 
- The delay in re-establishing the flexibility remuneration mechanism for gas-fired units, affected Elpedison's results for the quarter, with 3Q17 EBITDA at 2m. 
Key consolidated financial indicators (prepared in accordance with IFRS) for 3Q/9M17 are shown below:
 million
3Q16
3Q17
% 
9M16
9M17
% 
P&L figures






Refining Sales Volumes ('000 )
4,339
3,851
-11%
11,788
12,135
3%
Sales 
1,867
1,846
-1%
4,807
5,942
24%
EBITDA
199
230
16%
538
608
13%
Adjusted EBITDA 1
191
206
8%
517
663
28%
Net Income
80
106
32%
184
273
49%
Adjusted Net Income 1
75
89
19%
183
313
71%
Balance Sheet Items






Capital Employed



3,775
4,142
10%
Net Debt



1,781
1,811
2%
Debt Gearing (ND/ND+E)



47%
44%

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

Note
30 September 2017
31 December 2016
ASSETS



Non-current assets



Property, plant and equipment
11
3.305.255
3.302.923
Intangible assets
12
106.718
108.294
Investments in associates and joint ventures

705.364
689.607
Deferred income tax assets

59.471
100.973
Available-for-sale financial assets
3
2.806
1.626
Loans, advances and long term assets

88.092
91.131


4.267.706
4.294.554
Current assets



Inventories
13
920.681
929.164
Trade and other receivables
14
817.135
868.331
Derivative financial instruments
3
-
15.192
Cash, cash equivalents and restricted cash
15
849.697
1.081.580


2.587.513
2.894.267
Total assets

6.855.219
7.188.821




EQUITY



Share capital
16
1.020.081
1.020.081
Reserves
17
392.365
469.788
Retained Earnings

813.907
549.891
Capital and reserves attributable to owners of the parent

2.226.353
2.039.760




Non-controlling interests

100.998
101.875




Total equity

2.327.351
2.141.635




LIABILITIES



Non-current liabilities



Borrowings
18
941.787
1.456.204
Deferred income tax liabilities

82.127
42.736
Retirement benefit obligations

123.520
110.912
Provisions for other liabilities and charges

9.788
9.306
Trade and other payables

121.987
259.644


1.279.209
1.878.802
Current liabilities



Trade and other payables
19
1.519.421
1.777.909
Derivative financial instruments
3
352
-
Current income tax liabilities

6.108
3.534
Borrowings
18
1.722.170
1.386.299
Dividends payable

608
642


3.248.659
3.168.384
Total liabilities

4.527.868
5.047.186
Total equity and liabilities

6.855.219
7.188.821
Group Consolidated statement of comprehensive income


For the nine month period ended
For the three month period ended

Note
30 September 2017
30 September 2016
30 September 2017
30 September 2016
Sales
4
5.941.770
4.806.983
1.846.466
1.867.173
Cost of sales

(5.163.248)
(4.139.028)
(1.570.835)
(1.621.542)
Gross profit

778.522
667.955
275.631
245.631
Selling and distribution expenses

(197.878)
(215.120)
(64.391)
(71.124)
Administrative expenses

(93.852)
(88.972)
(30.807)
(26.221)
Exploration and development expenses

(249)
(2.273)
(40)
(88)
Other operating income / (losses) - net
5
(17.540)
21.949
(2.842)
(630)






Operating profit 

469.003
383.539
177.551
147.568
Finance (expenses) / income - net
6
(128.393)
(149.589)
(40.293)
(51.338)
Currency exchange (losses) / gains 
7
(8.317)
13.084
(1.468)
2.213






Share of profit of investments in associates and joint ventures
8
34.956
7.232
4.297
10.372
Profit before income tax 

367.249
254.266
140.087
108.815
Income tax expense
9
(94.043)
(70.438)
(34.525)
(28.685)
Profit for the period

273.206
183.828
105.562
80.130
Other comprehensive income/ (loss) :





Items that will not be reclassified to 





profit or loss:





Actuarial losses on defined benefit pension plans
17
(2.219)
(5.300)
-
-


(2.219)
(5.300)
-
-
Items that may be reclassified 





subsequently to profit or loss:





Changes in the fair value on available-for-sale financial assets

849
(5.977)
(1.276)
(987)
Derecognition of gains on hedges through comprehensive income
17
1.979
19.642
-
19.642
Revaluation of land and buildings

(1.669)
-
-
-
Fair value (losses) / gains on cash flow hedges 
17
(13.014)
11.160
8.416
(21.751)
Currency translation differences and other movements

577
(1.032)
412
241


(11.278)
23.793
7.552
(2.855)
Other comprehensive (loss) / income for the period, net of tax

(13.497)
18.493
7.552
(2.855)
Total comprehensive income for the period

259.709
202.321
113.114
77.275
Profit attributable to:





 Owners of the parent

270.905
184.906
103.454
78.041
 Non-controlling interests

2.301
(1.078)
2.108
2.089


273.206
183.828
105.562
80.130
Total comprehensive income attributable to:





 Owners of the parent

258.101
203.396
110.885
75.082
 Non-controlling interests

1.608
(1.075)
2.229
2.193


259.709
202.321
113.114
77.275
Basic and diluted earnings per share
(expressed in Euro per share)
10
0,89
0,60
0,48
0,26
Group Consolidated statement of cash flows


For the nine month period ended

Note
30 September 2017
30 September 2016
Cash flows from operating activities



Cash generated from / (used in) operations
20
284.711
(427.273)
Income tax paid

(5.626)
(8.902)
Net cash generated from / (used in) operating activities

279.085
(436.175)




Cash flows from investing activities



Purchase of property, plant and equipment & intangible assets
11,1
(137.539)
(81.752)
Proceeds from disposal of property, plant and equipment & intangible assets

401
1.422
Interest received
6
3.020
3.810
Dividends received

19.346
1.119
Investments in associates - net

(147)
(7)
Net cash used in investing activities

(114.919)
(75.408)




Cash flows from financing activities



Interest paid

(126.677)
(139.560)
Dividends paid to shareholders of the Company

(59.578)
(473)
Dividends paid to non-controlling interests

(2.561)
(185)
Movement in restricted cash
15 
11.873
(1.969)
Acquisition of treasury stock 
17 
(10.245)
-
Participation of minority shareholders in share capital increase of subsidiary

76
-
Proceeds from borrowings

285.800
275.500
Repayments of borrowings

(473.400)
(603.009)
Net cash used in financing activities

(374.712)
(469.696)




Net decrease in cash and cash equivalents 

(210.546)
(981.279)




Cash and cash equivalents at the beginning of the period
15
924.055
1.952.808
Exchange losses on cash and cash equivalents 

(9.464)
1.703
Net decrease in cash and cash equivalents 

(210.546)
(981.279)
Cash and cash equivalents at end of the period
15
704.045
973.232
Parent Company Statement of Financial Position


As at

Note
30 September 2017
31 December 2016
ASSETS



Non-current assets



Property, plant and equipment
10
2.726.209
2.718.798
Intangible assets
11
6.897
6.490
Investments in subsidiaries, associates and joint ventures

657.577
655.265
Deferred income tax assets

-
38.839
Available-for-sale financial assets
3
2.152
1.017
Loans, advances and long-term assets

18.571
35.109


3.411.406
3.455.518




Current assets



Inventories
12
831.975
839.306
Trade and other receivables
13
963.817
1.036.420
Derivative financial instruments
3
-
15.192
Cash, cash equivalents and restricted cash
14
685.978
888.783


2.481.770
2.779.701
Total assets

5.893.176
6.235.219




EQUITY



Share capital
15
1.020.081
1.020.081
Reserves
16
393.129
469.754
Retained Earnings

328.700
100.315
Total equity

1.741.910
1.590.150




LIABILITIES



Non-current liabilities



Borrowings
17
931.801
1.460.281
Deferred income tax liabilities

39.796
-
Retirement benefit obligations

99.090
88.521
Provisions for other liabilities and charges

7.133
6.829
Trade and other payables

108.732
246.405


1.186.552
1.802.036
Current liabilities



Trade and other payables
18
1.427.052
1.691.973
Derivative financial instruments
3
352
-
Current income tax liabilities

1.584
-
Borrowings
17
1.535.118
1.150.418
Dividends payable

608
642


2.964.714
2.843.033
Total liabilities

4.151.266
4.645.069
Total equity and liabilities

5.893.176
6.235.219
Parent Company Statement of Comprehensive Income


For the nine-month period ended
For the three month period ended

Note
30 September 2017
30 September 2016
30 September 2017
30 September 2016
Sales

5.376.078
4.296.275
1.622.422
1.654.875
Cost of sales

(4.848.417)
(3.858.659)
(1.448.885)
(1.510.126)
Gross profit

527.661
437.616
173.537
144.749
Selling and distribution expenses

(44.123)
(59.780)
(12.352)
(18.488)
Administrative expenses

(56.249)
(54.972)
(19.101)
(15.319)
Exploration and development expenses

(95)
(214)
(29)
(63)
Other operating income / (expenses) - net
5
(24.571)
5.518
(3.502)
(3.182)
Operating profit

402.623
328.168
138.553
107.697
Finance (expenses) / income - net
6
(109.025)
(124.827)
(33.759)
(43.591)
Dividend income

33.724
38.348
-
-
Currency exchange (losses) / gains
7
(8.625)
13.377
(1.601)
2.072
Profit before income tax 

318.697
255.066
103.193
66.178
Income tax expense
8
(83.559)
(64.990)
(29.156)
(21.307)
Profit for the period

235.138
190.076
74.037
44.871
Other comprehensive income / (loss):





Items that will not be reclassified to profit or loss: 





Acruarial losses on defined benefit pension plans
16
(1.775)
(3.914)
-
-


(1.775)
(3.914)
-
-
Items that may be reclassified subsequently to profit or loss:





Changes in the fair value on available-for-sale financial assets
16
804
(6.035)
(1.325)
(1.042)
Fair value (losses) / gains on cash flow hedges
16
(13.014)
11.160
8.416
(2.109)
Derecognition of gains/(losses) on hedges through comprehensive income
16
1.979
19.642
-
-


(10.231)
24.767
7.091
(3.151)
Other Comprehensive (loss) / income for the period, net of tax

(12.006)
20.853
7.091
(3.151)
Total comprehensive income for the period

223.132
210.929
81.128
41.720
Basic and diluted earnings per share
(expressed in Euro per share)
9
0,77
0,62
0,24
0,15
Parent Company Statement of Cash flows


For the nine-month period ended

Note
30 September 2017
30 September 2016
Cash flows from operating activities



Cash generated from / (used in) operations
19
219.205
(502.693)
Income tax paid

(20)
(1.279)
Net cash generated from / (used in) operations

219.185
(503.972)




Cash flows from investing activities



Purchase of property, plant and equipment & intangible assets
10,11
(110.018)
(60.445)
Dividends received

33.724
37.684
Interest received
6
9.278
10.138
Participation in share capital increase of affiliated companies

(3.917)
(2.408)
Net cash used in investing activities

(70.933)
(15.031)




Cash flows from financing activities



Interest paid

(128.829)
(135.877)
Dividends paid

(59.578)
(473)
Movement in restricted cash
14
11.872
(1.969)
Acquisition of treasury stock 
16
(10.245)
-
Proceeds from borrowings

303.157
275.500
Repayments of borrowings

(446.937)
(547.711)
Net cash used in financing activities

(330.560)
(410.530)




Net decrease in cash and cash equivalents

(182.308)
(929.533)




Cash and cash equivalents at the beginning of the period
14
731.258
1.683.600
Exchange losses on cash and cash equivalents

(8.625)
1.796
Net decrease in cash and cash equivalents

(182.308)
(929.533)
Cash and cash equivalents at end of the period
14
540.325
755.863

This information is provided by RNS
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