REG - Hellenic Petroleum - 3rd Quarter Results

HELLENiQ ENERGY Holdings SAAnnouncement

05/11/2019 16:45

RNS Number : 3731S
Hellenic Petroleum S.A.
05 November 2019
 


PRESS RELEASE
5 November 2019




Third quarter / Nine month 2019 financial results




 
 
Operating profitability significantly higher vs 1H19, with consistent improvement in financials; Interim dividend of €0.25/share
 
HELLENIC PETROLEUM Group announced its 3Q/9M19 financial results in accordance with IFRS. 3Q19 Adjusted EBITDA came in at €201m, a notable improvement vs last quarters, while Adjusted Net Income amounted to €90m. Higher total production, at 4.3m MT and good operations at refining units, despite end of run performance ahead of scheduled shut-downs and IMO test runs, resulted to sales exceeding 4m MT. Equally, improved performance in Domestic and International Fuels Marketing had a positive contribution.
The BoD, considering the strong results, as well as positive outlook for the Group, decided the distribution of an interim dividend of €0.25/share, payable in January 2020.
Performance was also positively affected by improved refining environment, despite weaker benchmark refining margins compared to historical highs recorded in recent years, as well as the restoration of the Russian crude oil supply infrastructure in Central Europe and a strong US dollar vs the Euro.
IFRS Reported Results were affected by crude price movements, which in 3Q19 dropped to the lower levels of the last two years, leading to a 12% drop in Revenues to €2.3bn. Equally, impact on Net Income was also negative, with inventory valuation losses of €43m, vs €53m gains recorded in 3Q18, as prices then increased. It should be noted that the results include for the first time the impact of new IFRS 16 on operating leases of retail fuel stations and other equipment.
The Group continued to improve its financial position, with finance cost further dropping by 25% y-o-y in 3Q19, at €27m, mainly on account of repayment of the €325m Eurobond issued in 2014. Furthermore, during the quarter, the Group proceeded to the successful issue of a new €500m, 2% Eurobond, with partial refinancing of existing bonds maturing in 2021. The transaction is expected to lead to an additional annual decrease in finance costs of approximately €15m, with total reduction exceeding 50% in the last 3 years, with a notable impact on the Group's cash flow profile and dividend distribution capacity.
Andreas Shiamishis, Group CEO, commented on results:
"Improved 3Q19 results, the strongest of last 3 quarters, are particularly encouraging, on the back of a material improvement in environment. We are operating in a highly cyclical industry, without the ability to influence international developments. As a result, it is important to focus on issues we can control through strategic direction, managing and operating our business units and improving competitiveness. Despite 2019 being the most challenging refining environment in the last few years, our results and financial position are strong. On a positive note, domestic fuels market recorded a 3% growth. We consider the short term outlook to be positive, with the introduction of new bunkering fuel specs; our recent performance in capital markets, with the successful Eurobond issue in 3Q19, further confirms the confidence of the domestic and international investor community in HELLENIC PETROLEUM. I would like to thank once again the management and employees for their significant contribution to our successful performance."
 
Volatile refining environment and stronger USD
Global macroeconomic developments, especially around international trade relations, led to weaker crude oil prices, with Brent averaging at $62/bbl, lower vs both 2Q19 ($69/bbl), as well as 3Q18 ($76/bbl).
The US dollar strengthened for one more quarter, with average Euro/USD exchange rate at €1.11, mainly driven by central banks monetary policy.
In product markets, an important development was the drop in HSFO cracks, in contrast with other products, that were notably stronger q-o-q, leading refining benchmark margins higher vs 1H19. This trend, was sustained in 4Q19, especially for diesel, ahead of IMO regulation implementation, confirming the Group's strategy for structural minimization of HSFO production, while increasing high value products output, through the investment in Elefsina refinery upgrade, as well as the new Aspropyrgos refinery operating model for bunkering fuels in 2020.
Urals pricing at parity to Brent, albeit with volatility during the quarter, led to weaker refining margins vs last year. FCC margins averaged at $4.9/bbl, vs $5.7/bbl in 3Q18, with Hydrocracking margins at $4.8/bbl (3Q18: $5.6/bbl).
 
Increasing demand for domestic fuels market
Domestic fuel demand in 3Q19 amounted to 1.6m MT (+3%), with a respective increase in auto-fuels, the highest in the last few quarters. Aviation and bunkering fuels grew significantly (+14%), mainly on account of higher marine fuel offtake (+22%).
 
Strong balance sheet, improved capital structure, reduction in finance costs
The new €500m Eurobond issue, at the lowest cost for the Group in more than 10 years, combined with the partial refinancing of 2021 eurobonds through a tender offer, as well as the repayment of the €325m notes in 3Q19, are expected to have a positive impact on finance costs of over €30m. Furthermore, the new issue has improved commercial terms vs previous, enhancing flexibility, while extending the Group's maturity profile.
Net Debt at €1.5bn, significantly lower y-o-y, with gearing ratio at 39%.
 
 
Key strategic developments
Aspropyrgos refinery is planning its transition to the new operating model in November, in view of new MARPOL regulation implementation for bunkering fuels, in order to effectively respond to the new market needs. A material part of feedstock required to operate the new model has already been secured, de-risking our planning.
During October 2019 a full turnaround, involving extended maintenance at all units, was successfully completed at Elefsina refinery, safely and in line with timetable. Works are now concluded and the refinery will resume operations in the next days.
In E&P, the Greek parliament proceeded to the ratification of the Lease Agreements (effective 10 October 2019) for the offshore areas of 'West Crete' and 'Southwest Crete' (Total 40% - Operator, ExxonMobil 40%, HELLENIC PETROLEUM 20%), as well as 'Ionio' (REPSOL 50% - Operator, HELLENIC PETROLEUM 50%) and 'Kyparissiakos Gulf' (HELLENIC PETROLEUM 100%), while planned environmental and exploration studies in the other Western Greece concessions continued.
 
Key highlights and contribution for each of the main business units in 3Q19 were:
REFINING, SUPPLY & TRADING
-     Refining, Supply & Trading 3Q19 Adjusted EBITDA at €129m (-25%).
-  Net production amounted to 3.8m MT (-5%), with sales at 4m MT (-1%).
-  Realised ELPE system margin came in at $10.1/bbl, a significant recovery vs 1H19.
-  During 3Q19, the IMO test run led to further diversify crude slate.
 
PETROCHEMICALS
-  Lower PP sales (-5%), as well as inventory losses, led EBITDA to €20m (- 20%).
 
MARKETING
-  3Q19 Marketing Adjusted EBITDA at €51m, with 9M at €111m. Excluding the impact of IFRS 16 implementation, Comparable EBITDA was €46m (+9%), with 9M at €86m (+7%).
-  In Domestic Marketing, improved performance in Retail and Aviation led 3Q19 Comparable EBITDA at €27m (+5%).
-  Profitability improved in most markets the Group operates, with 3Q19 International Marketing Comparable EBITDA at €19m (+16%).
ASSOCIATE COMPANIES
- DEPA Group contribution to consolidated Net Income was €17m for 9M19.
- Higher production in both ELPEDISON plants, led EBITDA to €8m (+79%). 
 
Key consolidated financial indicators (prepared in accordance with IFRS) for 3Q/9M19 are shown below:




€ million


3Q18


3Q19


% Δ


9M18


1H19


% Δ




P&L figures


 


 


 


 


 


 




Refining Sales Volumes ('000 ΜΤ)


4,087


4,037


-1%


12,354


11,727


-5%




Sales


2,674


2,348


-12%


7,341


6,805


-7%




EBITDA


258


141


-45%


731


464


-37%




Adjusted EBITDA 1


237


201


-15%


574


453


-21%




Net Income


135


46


-66%


360


167


-53%




Adjusted Net Income 1


111


90


-19%


239


160


-33%




Balance Sheet Items


 


 


 


 


 


 




Capital Employed


 


 


 


4,421


3,916


-11%




Net Debt


 


 


 


1,773


1,509


-15%




Debt Gearing (ND/ND+E)


 


 


 


40%


39%


-




 
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


30 September 2019


31 December 2018




ASSETS


 


 


 




Non-current assets


 


 


 




Property, plant and equipment


10


3.252.412


3.268.928




Right-of-use assets


2,11


225.633


-




Intangible assets


12


109.774


105.617




Investments in associates and joint ventures


 


383.207


390.091




Deferred income tax assets


 


61.600


64.109




Investment in equity instruments


3


1.455


634




Loans, advances and long term assets


2


56.254


73.922




 


 


4.090.335


3.903.301




Current assets


 


 


 




Inventories


13


1.088.501


993.031




Trade and other receivables


2,14


830.989


822.805




Assets held for sale


 


2.581


3.133




Cash and cash equivalents


15


902.663


1.275.159




 


 


2.824.734


3.094.128




Total assets


 


6.915.069


6.997.429




 


 


 


 




EQUITY


 


 


 




Share capital and share premium


16


1.020.081


1.020.081




Reserves


17


258.536


258.527




Retained Earnings


 


1.063.258


1.052.164




Equity attributable to equity holders of  the parent


 


2.341.875


2.330.772




Non-controlling  interests


 


63.514


63.959




Total equity


 


2.405.389


2.394.731




 


 


 


 




LIABILITIES


 


 


 




Non-current liabilities


 


 


 




Interest bearing loans & borrowings


18


1.615.278


1.627.171




Lease liabilities


2


163.947


-




Deferred income tax liabilities


 


209.272


185.744




Retirement benefit obligations


 


177.552


163.514




Provisions


 


30.455


42.038




Other non-current liabilities


 


29.066


28.852




 


 


2.225.570


2.047.319




Current liabilities


 


 


 




Trade and other payables


19


1.402.867


1.349.153




Derivative financial instruments


 


10.133


16.387




Income tax payable


 


46.214


80.171




Interest bearing loans & borrowings


18


797.665


1.108.785




Lease liabilities


2


26.140


-




Dividends payable


 


1.091


883




 


 


2.284.110


2.555.379




Total liabilities


 


4.509.680


4.602.698




Total equity and liabilities


 


6.915.069


6.997.429




 
Group Consolidated statement of comprehensive income




 


 


For the 9 month period ended


For the 3 month period ended




 


Note


30 September 2019


30 September 2018


30 September 2019


30 September 2018




Revenue from contracts with customers


4


6.804.877


7.341.129


2.348.248


2.674.220




Cost of sales


 


(6.186.569)


(6.420.913)


(2.149.345)


(2.349.606)




 


 


 


 


 


 




Gross profit


 


618.308


920.216


198.903


324.614




Selling and distribution expenses


 


(238.828)


(234.407)


(81.394)


(79.945)




Administrative expenses


 


(102.154)


(104.294)


(36.494)


(37.899)




Exploration and development expenses


 


(624)


(660)


1.087


(631)




Other operating income and other gains-net


5


14.545


7.176


1.465


2.529




Operating profit


 


291.247


588.031


83.567


208.668




Finance income


 


4.427


2.783


1.471


1.034




Finance expense


 


(94.185)


(114.569)


(27.741)


(36.804)




Fiunance expense - lease finance cost


 


(7.320)


-


(2.615)


-




Currency exchange gain/(loss)


6


833


2.540


90


(1.988)




Share of profit of investments in associates and joint ventures


7


15.012


28.484


567


13.402




Profit  before income tax


 


210.014


507.269


55.339


184.312




Income tax expense


8


(42.577)


(147.341)


(9.264)


(49.556)




Profit for the period


 


167.437


359.928


46.075


134.756




Profit attributable to:


 


 


 


 


 




     Equity holders of the parent


 


165.690


356.936


44.367


133.325




     Non-controlling interests


 


1.747


2.992


1.708


1.431




 


 


167.437


359.928


46.075


134.756




Other comprehensive income:


 


 


 


 


 




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


 


 


 


 


 




Actuarial losses on defined benefit pension plans


17


(6.494)


(7.579)


(6.438)


(7.579)




Share of other comprehensive income of associates


17


(41)


-


-


-




Changes in the fair value of equity instruments


17


626


(524)


(74)


(82)




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


 


(5.909)


(8.103)


(6.512)


(7.661)




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


 


 


 


 


 




Recycling of (gains)/losses on hedges through comprehensive income


17


1.501


(14.920)


-


-




Fair value gains/(losses) on cash flow hedges


17


4.149


21.537


(1.037)


5.281




Currency translation differences and other movements


17


288


(481)


222


(355)




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


 


5.938


6.136


(815)


4.926




Other comprehensive income  for the period, net of tax


 


29


(1.967)


(7.327)


(2.735)




Total comprehensive income for the period


 


167.466


357.961


38.748


132.021




Total comprehensive income attributable to:


 


 


 


 


 




     Equity holders of the parent


 


165.699


354.967


37.021


130.651




     Non-controlling interests


 


1.767


2.994


1.727


1.371




 


 


167.466


357.961


38.748


132.021




Basic and diluted earnings per share

(expressed in Euro per share)


9


0,54


1,17


0,15


0,44




Group Consolidated statement of cash flows
 




 


 


For the 9 month period ended




 


Note


30 September 2019


30 September 2018




Cash flows from operating activities


 


 


 




Cash generated from operations


20 


398.880


296.902




Income tax paid


 


(63.874)


(2.571)




Net cash generated from operating activities


 


335.006


294.331




 


 


 


 




Cash flows from investing activities


 


 


 




Purchase of property, plant and equipment & intangible assets


10,12


(135.382)


(94.985)




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


 


1.048


227




Participation in share capital increase of associates


 


(10.292)


-




Purchase of subsidiary, net of cash acquired


25


(5.341)


(1.298)




Settlement of consideration of acquisition of further equity interest in subsidiary


 


-


(16.000)




Sale of subsidiary, net of cash owned


 


-


-




Grants received


 


274


80




Interest received


 


4.427


2.783




Prepayments for right-of-use assets


 


(432)


-




Dividends received


 


30.490


24.023




Proceeds from disposal of assets held for sale


 


1.334


-




Proceeds from disposal of investments in equity instruments


 


18


263




Net cash used in investing activities


 


(113.856)


(84.907)




 


 


 


 




Cash flows from financing activities


 


 


 




Interest paid


 


(87.938)


(99.981)




Dividends paid to shareholders of the Company


 


(150.077)


(74.480)




Dividends paid to non-controlling interests


 


(2.246)


(2.061)




Movement in restricted cash


15 


-


144.445




Acquisition of treasury shares


17 


-


(561)




Participation of minority shareholders in share capital increase of subsidiary


 


34


17




Proceeds from borrowings


 


12.808


408.089




Repayments of borrowings


 


(346.543)


(409.724)




Payment of lease liabilities


 


(29.132)


-




Net cash used in financing activities


 


(603.094)


(34.256)




 


 


 


 




Net (decrease)/increase in cash and cash equivalents


 


(381.944)


175.168




 


 


 


 




Cash and cash equivalents at the beginning of the period


15


1.275.159


873.261




Exchange gain on cash and cash equivalents


 


9.448


3.813




Net (decrease)/increase in cash and cash equivalents


 


(381.944)


175.168




Cash and cash equivalents at end of the period


15


902.663


1.052.242




  
 
 
Parent Company Statement of Financial Position
 




 


 


As at




 


Note


30 September 2019


31 December 2018




ASSETS


 


 


 




Non-current assets


 


 


 




Property, plant and equipment


9


2.667.587


2.684.237




Right of use assets


2,10


21.458


-




Intangible assets


11


6.291


4.799




Investments in subsidiaries, associates and joint ventures


 


1.048.135


1.032.372




Investment in equity instruments


3


1.053


318




Loans, advances and long-term assets


 


22.865


8.887




 


 


3.767.389


3.730.613




 


 


 


 




Current assets


 


 


 




Inventories


12


985.738


893.859




Trade and other receivables


13


675.129


681.555




Cash and cash equivalents


14


718.412


1.070.377




 


 


2.379.279


2.645.791




Total assets


 


6.146.668


6.376.404




 


 


 


 




EQUITY


 


 


 




Share capital and share premium


15


1.020.081


1.020.081




Reserves


16


262.265


262.263




Retained Earnings


 


858.314


864.333




Total equity


 


2.140.660


2.146.677




 


 


 


 




LIABILITIES


 


 


 




Non-current liabilities


 


 


 




Interest bearing loans and borrowings


17


1.642.845


1.657.598




Lease liabilities


2


14.952


-




Deferred income tax liabilities


 


176.751


151.873




Retirement benefit obligations


 


145.648


132.539




Provisions


 


24.179


37.858




Other non-current liabilities


 


14.416


14.810




 


 


2.018.791


1.994.678




Current liabilities


 


 


 




Trade and other payables


18


1.282.423


1.226.107




Derivative financial instruments


3


10.133


16.387




Income tax payable


 


40.165


76.322




Interest bearing loans and borrowings


17


646.727


915.350




Lease liabilities


2


6.679


-




Dividends payable


 


1.090


883




 


 


1.987.217


2.235.049




Total liabilities


 


4.006.008


4.229.727




Total equity and liabilities


 


6.146.668


6.376.404




 
 
 
 
 
 
Parent Company Statement of Comprehensive Income
 




 


 


For the 9month period ended


 


For the 3month period ended




 


Note


30 September 2019


30 September 2018


 


30 September 2019


30 September 2018




 


 


 


 


 


 


 




Revenue from contracts with customers


4


6.172.545


6.734.332


 


2.085.130


2.411.682




 


 


 


 


 


 


 




Cost of sales


 


(5.814.449)


(6.068.484)


 


(1.987.544)


(2.191.231)




 


 


 


 


 


 


 




Gross profit


 


358.096


665.848


 


97.586


220.451




 


 


 


 


 


 


 




Selling and distribution expenses


 


(75.320)


(71.742)


 


(25.683)


(23.610)




 


 


 


 


 


 


 




Administrative expenses


 


(62.763)


(64.675)


 


(23.653)


(24.533)




 


 


 


 


 


 


 




Exploration and development expenses


 


(79)


(834)


 


(27)


(672)




 


 


 


 


 


 


 




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


5


1.215


3.963


 


1.700


2.919




 


 


 


 


 


 


 




Operating profit


 


221.149


532.560


 


49.923


174.555




 


 


 


 


 


 


 




Finance income


 


8.141


7.026


 


2.632


2.412




 


 


 


 


 


 


 




Finance expense


 


(86.707)


(105.089)


 


(26.102)


(33.505)




 


 


 


 


 


 


 




Lease finance cost


 


(669)


-


 


(205)


-




 


 


 


 


 


 


 




Dividend income


 


38.416


35.083


 


30.499


-




 


 


 


 


 


 


 




Currency exchange gains/(losses)


6


1.175


2.721


 


143


(1.522)




 


 


 


 


 


 


 




Profit before income tax


 


181.505


472.301


 


56.890


141.940




 


 


 


 


 


 


 




Income tax expense


7


(34.706)


(139.575)


 


(6.040)


(42.941)




Profit for the period


 


146.799


332.726


 


50.850


98.999




 


 


 


 


 


 


 




Other comprehensive income/(loss):


 


 


 


 


 


 




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


 


 


 


 


 


 




Acruarial losses on defined benefit pension plans


16


(6.188)


(6.200)


 


(6.188)


(6.200)




Changes in the fair value of equity instruments


16


540


(565)


 


(111)


(97)




 


 


(5.648)


(6.765)


 


(6.299)


(6.297)




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


4.149


(8.303)


 


(1.037)


(24.559)




Recycling of losses / (gains) on hedges through comprehensive income


16


1.501


14.920


 


-


29.840




 


 


5.650


6.617


 


(1.037)


5.281




 


 


 


 


 


 


 




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


 


2


(148)


 


(7.336)


(1.016)




 


 


 


 


 


 


 




Total comprehensive income for the period


 


146.801


332.578


 


43.514


97.983




 


 


 


 


 


 


 




Basic and diluted earnings per share

(expressed in Euro per share)


8


0,48


1,09


 


0,17


0,32




 
 
Parent Company Statement of Cash flows
 




 


 


For the 9month period ended




 


Note


30 September 2019


30 September 2018




Cash flows from operating activities


 


 


 




Cash generated from operations


19


296.793


404.490




Income tax (paid)/received


 


(59.292)


2.224




Net cash generated from/(used in) operations


 


237.501


406.714




 


 


 


 




Cash flows from investing activities


 


 


 




Purchase of property, plant and equipment & intangible assets


9,11


(92.176)


(63.368)




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


 


1.074


35.083




Dividends received


 


38.416


-




Interest received


 


8.141


7.026




Settlement of consideration of acquisition of further equity interest in subsidiary


 


-


(16.000)




Participation in share capital increase of subsidiaries & associates


 


(22.702)


(21.054)




Net cash used in investing activities


 


(67.247)


(58.313)




 


 


 


 




Cash flows from financing activities


 


 


 




Interest paid


 


(80.672)


(92.376)




Dividends paid


 


(150.078)


(74.480)




Loans to affiliated companies


 


-


(2.925)




Acquisition of treasury stock


 


-


(561)




Proceeds from borrowings


 


11.577


436.284




Repayments of borrowings


 


(306.946)


(406.857)




Payment of lease liabilities


 


(5.366)


-




Net cash (used in)/generated from financing activities


 


(531.485)


(140.915)




 


 


 


 




Net (decrease)/increase in cash and cash equivalents


 


(361.231)


207.486




 


 


 


 




Cash and cash equivalents at the beginning of the period


14


1.070.377


667.599




Exchange losses on cash and cash equivalents


 


9.266


3.815




Net (decrease)/increase in cash and cash equivalents


 


(361.231)


207.486




Cash and cash equivalents at end of the period


14


718.412


878.900




 




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