REG - Hellenic Petroleum - Half-year Report

HELLENiQ ENERGY Holdings SAAnnouncement

29/08/2019 17:55

RNS Number : 6269K
Hellenic Petroleum S.A.
29 August 2019
 


PRESS RELEASE
29 August 2019




Second quarter / first half 2019 financial results




 
 
Operating performance helps to mitigate weakest refining environment in five years and leads to strong cashflow and improved balance sheet
 
HELLENIC PETROLEUM Group announced its 2Q/1H19 financial results in accordance with IFRS. 2Q19 Adjusted EBITDA came in at €130m and 2Q19 Adjusted Net Income amounted to €33m, recording another quarter of positive performance.  Despite a weak refining environment, results were positive on account of continued strong refining performance, the highest Petchems contribution on record, as well as continuous reduction in financing cost. International refining macro environment deteriorated to its lowest level in the last five years, as evidenced by record low benchmark refining margins and problems with Russian crude supplies into Europe due to the Druzhba incident. In this environment, the flexibility of the Group's refineries to process a wide range of crude grades, enabled uninterrupted supply and optimized operation, as well as capturing opportunities in lighter crudes pricing. Production remained at high levels (3.7m MT) and sales at 4.1m MT, flat y-o-y, with 57% of total sales directed to exports markets underlying the strength of Greek refineries in the region.
Contribution by Fuels Marketing and Petrochemicals was also increased, with Petchems recording an historical record Adjusted EBITDA of €28m. Furthermore, Marketing companies' performance improved and interest costs reduction continued, as refinancing plans were implemented and balance sheet remains very strong.
IFRS Reported Net Income amounted at €75m, affected by inventory gains of €59m, while 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.
With regard to the upcoming changes to bunkering fuel specifications, (IMO 2020), one of the most significant challenges for the global refining industry in recent years, the Group is on track with its plans to be able to deliver very low sulphur fuel oil by the beginning of 2020. An extensive test of new crude grades mix was conducted recently at Aspropyrgos refinery, yielding positive results, in terms of both quality and specs of the new 0.5% fuel oil, as well as the operation of the refinery's conversion units. We expect that HELPE refining system will be ready on time to cover the Greek bunkering market with the new type of fuel, as well as maintaining its ability to serve customers who opt for the scrubber solution and require high Sulphur fuels.
 
 
 
Complex refining margins at the lowest levels in five years
International crude oil prices increased from $64/bbl on average in 1Q19 to $69/bbl in 2Q19, with volatility during the period, reflecting global macroeconomic and geopolitical developments.
In the European oil market, the contamination of significant quantities of Russian crude oil in the Druzhba pipeline, which supplies Central and Eastern European countries, disrupted the supply of Russian crude in the wider region, for most in 2Q19. As a result, the availability and pricing of Urals, as well as other high sulphur grades, which were called to substitute Urals deliveries shortfall, presented significant challenges during this quarter.  This, combined with weaker cracks for most products, led complex refinery margins to multi-year lows. FCC margins were 40% lower to $3.2/bbl. Naphtha cracks drop to the lowest level in the past seven years led Hydrocracking margins to $1.3/bbl, while Aspropyrgos and Thessaloniki refineries benefitted from the reforming spread, highlighting HELPE's refinery system ability to capture opportunities from changing market conditions. With the restoration of the Russian crude oil supply infrastructure in eastern Europe, the market appears to gradually recover, with margins normalising as early as the end of 2Q19.
The Euro/USD exchange rate averaged at €1.12, with the dollar strengthening further to a two-year high, with a positive impact for European refining sector.
 
Increasing demand for domestic fuels market
Domestic fuel demand in 2Q19 amounted to 1.6m MT (+4%), mainly due to increased heating gasoil consumption, while auto-fuels demand was flat. Aviation and bunkering fuels rose 9% to 1.2m MT, mainly on account of increased international marine consumption, with all markets improving.
 
Strong balance sheet, considering options for improving capital structure
Net Debt at €1.4bn, c.€500m lower y-o-y and Gearing at 37%, an additional drop vs 1Q19, further strengthened the Group's balance sheet.
It is noted that the Group fully repaid its €325m 5.25% Eurobond issued in 2014, out of own cash balances, which will lead to additional drop in finance costs.
The Group, as part of its financial plan for capital structure optimization and taking into account improved capital markets conditions and yields of its existing bonds, is considering a new bond issue in 2019, subject to market conditions.
 
Key strategic developments
In E&P, on 27 June 2019 the Lease Agreements for the two offshore areas of 'West Crete' and 'Southwest Crete' were signed (Total 40% - Operator, ExxonMobil 40%, HELLENIC PETROLEUM 20%) and are expected to be ratified by the Greek parliament, in order for the exploration works to commence. During 2Q19, planned environmental and exploration studies in other Western Greece concessions continued.
In addition, on 26 July 2019, ELPEDISON BV, in which HELLENIC PETROLEUM Group holds 50%, completed the acquisition of a 24.22% stake in ELPEDISON SA from the ELLAKTOR and ELVAL-HALCOR groups for a consideration of €20m in cash, with ELPEDISON BV now owning 100% of ELPEDISON SA's share capital.
Finally, on 07 August 7 2019, a new Board of Directors of HELLENIC PETROLEUM SA was put in place with Mr. Ioannis Papathanassiou elected as Non-Executive Chairman and Mr. Andreas Shiamishis as the Group CEO.
 
Key highlights and contribution for each of the main business units in 2Q19 were:
REFINING, SUPPLY & TRADING
-     Refining, Supply & Trading 2Q19 Adjusted EBITDA at €69m (-50%), on account of significant benchmark margins drop.
 -    White products' yield remained at 84%.
-  Sales remained at the same level as of 2Q18, leading to total 2Q19 sales of 4.1m MT (-1%).
 
PETROCHEMICALS
-  PP sales growth led to a record high Adjusted EBITDA of €28m (+ 3%) in 2Q.
 
MARKETING
-  2Q19 Marketing Adjusted EBITDA at €36m (+44%), following IFRS 16 implementation, while comparable performance improving vs LY.
-  In Domestic Marketing, sales volumes were flat vs 2Q18, with 2Q19 EBITDA at €21m (+81%).
-  International Marketing volumes increased by 3%, with EBITDA at €15m (+12%).
 
ASSOCIATED COMPANIES
-  2Q19 DEPA Group contribution to consolidated Net Income was reduced (€0m vs €4. In 2Q18), following the de-consolidation of DESFA.
-  Lower production due to Thisvi plant shut-down, as well as the absence of a Flexibility Compensation Mechanism, led Elpedison's 2Q EBITDA to negative levels (€-4m). 
 
 
Key consolidated financial indicators (prepared in accordance with IFRS) for 2Q/1H19 are shown below:




€ million


2Q18


2Q19


% Δ


1H18


1H19


% Δ




P&L figures


 


 


 


 


 


 




Refining Sales Volumes ('000 ΜΤ)


4,165


4,139


-1%


8,267


7,690


-7%




Sales


2,499


2,465


-1%


4,667


4,457


-5%




EBITDA


307


187


-39%


473


323


-32%




Adjusted EBITDA 1


187


130


-31%


336


252


-25%




Net Income


151


75


-50%


225


121


-46%




Adjusted Net Income 1


66


33


-50%


128


70


-45%




Balance Sheet Items


 


 


 


 


 


 




Capital Employed


 


 


 


4,431


3,766


-15%




Net Debt


 


 


 


1,916


1,398


-27%




Debt Gearing (ND/ND+E)


 


 


 


43%


37%


-




 
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 June 2019


31 December 2018




ASSETS


 


 


 




Non-current assets


 


 


 




Property, plant and equipment


10


3.243.091


3.268.928




Right-of-use assets


2,11


220.447


-




Intangible assets


12


109.813


105.617




Investments in associates and joint ventures


 


403.098


390.091




Deferred income tax assets


 


61.382


64.109




Investment in equity instruments


3


1.566


634




Loans, advances and long term assets


2


54.250


73.922




 


 


4.093.647


3.903.301




Current assets


 


 


 




Inventories


13


1.025.159


993.031




Trade and other receivables


2,14


852.226


822.805




Assets held for sale


 


3.361


3.133




Derivative financial instruments


3


2.107


-




Cash and cash equivalents


15


1.319.688


1.275.159




 


 


3.202.541


3.094.128




Total assets


 


7.296.188


6.997.429




 


 


 


 




EQUITY


 


 


 




Share capital and share premium


16


1.020.081


1.020.081




Reserves


17


265.889


258.527




Retained Earnings


 


1.020.202


1.052.164




Equity attributable to equity holders of  the parent


 


2.306.172


2.330.772




Non-controlling  interests


 


61.747


63.959




Total equity


 


2.367.919


2.394.731




 


 


 


 




LIABILITIES


 


 


 




Non-current liabilities


 


 


 




Interest bearing loans & borrowings


18


1.606.607


1.627.171




Lease liabilities


2


154.464


-




Deferred income tax liabilities


 


204.397


185.744




Retirement benefit obligations


 


167.566


163.514




Provisions


 


29.994


42.038




Other non-current liabilities


 


28.911


28.852




 


 


2.191.939


2.047.319




Current liabilities


 


 


 




Trade and other payables


19


1.330.527


1.349.153




Derivative financial instruments


 


7.034


16.387




Income tax payable


 


106.591


80.171




Interest bearing loans & borrowings


18


1.112.819


1.108.785




Lease liabilities


2


28.313


-




Dividends payable


 


151.046


883




 


 


2.736.330


2.555.379




Total liabilities


 


4.928.269


4.602.698




Total equity and liabilities


 


7.296.188


6.997.429




 
 
Group Consolidated statement of comprehensive income
  




 


 


For the 6 month period ended


For the 3 month period ended




 


Note


30 June 2019


30 June 2018


30 June 2019


30 June 2018




Revenue from contracts with customers


4


4.456.629


4.666.909


2.465.413


2.498.523




Cost of sales


 


(4.037.224)


(4.071.307)


(2.232.323)


(2.126.620)




Gross profit


 


419.405


595.602


233.090


371.903




Selling and distribution expenses


 


(157.434)


(154.463)


(81.887)


(79.988)




Administrative expenses


 


(65.660)


(66.393)


(31.696)


(34.264)




Exploration and development expenses


 


(1.712)


(29)


(1.262)


97




Other operating income


5


20.492


13.083


14.812


7.750




Other operating expense


5


(7.412)


(8.435)


(4.648)


(5.124)




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


5


13.080


4.646


10.164


2.623




 


 


 


 


 


 




Operating profit


 


207.679


379.363


128.409


260.371




Finance income


 


2.956


1.750


1.956


775




Finance expense


 


(66.444)


(77.766)


(33.149)


(38.258)




Fiunance expense - lease finance cost


 


(4.705)


-


(2.432)


-




 


 


 


 


 


 




Currency exchange gain/(loss)


6


743


4.528


(512)


6.646




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


7


14.445


15.083


(3.646)


1.188




Profit  before income tax


 


154.674


322.958


90.626


230.722




Income tax expense


8


(33.313)


(97.785)


(15.881)


(79.769)




Profit for the period


 


121.361


225.173


74.745


150.953




Profit attributable to:


 


 


 


 


 




     Equity holders of the parent


 


121.321


223.613


74.205


149.341




     Non-controlling interests


 


40


1.560


540


1.612




 


 


121.361


225.173


74.745


150.953




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


(56)


-


-


-




Share of other comprehensive income of associates


17


(41)


-


(41)


-




Changes in the fair value of equity instruments


17


700


(442)


704


(324)




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


 


603


(442)


663


(324)




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


5.186


16.256


(1.202)


(548)




Currency translation differences and other movements


17


66


(357)


36


(232)




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


 


6.753


979


(1.166)


(780)




Other comprehensive income  for the period, net of tax


 


7.356


537


(503)


(1.104)




Total comprehensive income for the period


 


128.717


225.710


74.242


149.849




Total comprehensive income/(loss) attributable to:


 


 


 


 


 




     Equity holders of the parent


 


128.683


224.152


73.695


148.299




     Non-controlling interests


 


34


1.558


547


1.551




 


 


128.717


225.710


74.242


149.849




Basic and diluted earnings per share

(expressed in Euro per share)


9


0,40


0,73


0,24


0,49




Group Consolidated statement of cash flows




 


 


For the 6 month period ended




 


Note


30 June 2019


30 June 2018




Cash flows from operating activities


 


 


 




Cash generated from operations


20 


228.949


31.448




Income tax (paid)/received


 


(3.052)


2.572




Net cash generated from / (used in) operating activities


 


225.897


34.020




 


 


 


 




Cash flows from investing activities


 


 


 




Purchase of property, plant and equipment & intangible assets


10,12


(78.262)


(60.531)




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


 


363


40




Participation in share capital increase of associates


 


(342)


-




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)




Grants received


 


199


80




Interest received


 


2.956


1.750




Prepayments for right-of-use assets


 


(463)


-




Dividends received


 


1.347


-




Proceeds from disposal of investments in equity instruments


 


21


266




Net cash used in investing activities


 


(79.522)


(75.693)




 


 


 


 




Cash flows from financing activities


 


 


 




Interest paid


 


(63.127)


(69.941)




Dividends paid to shareholders of the Company


 


(122)


(214)




Dividends paid to non-controlling interests


 


(2.246)


(2.061)




Movement in restricted cash


15 


-


144.445




Acquisition of treasury shares


17 


-


(511)




Proceeds from borrowings


 


10.000


407.810




Repayments of borrowings


 


(27.671)


(407.272)




Payment of lease liabilities


 


(19.729)


-




Net cash (used in) / generated from financing activities


 


(102.895)


72.256




 


 


 


 




Net increase in cash and cash equivalents


 


43.480


30.583




 


 


 


 




Cash and cash equivalents at the beginning of the period


15


1.275.159


873.261




Exchange gain on cash and cash equivalents


 


1.049


4.272




Net increase in cash and cash equivalents


 


43.480


30.583




Cash and cash equivalents at end of the period


15


1.319.688


908.116




 
 
 
 
 
 
 
 
 
 
Parent Company Statement of Financial Position




 


 


As at




 


Note


30 June 2019


31 December 2018




ASSETS


 


 


 




Non-current assets


 


 


 




Property, plant and equipment


9


2.666.689


2.684.237




Right of use assets


2,10


23.165


-




Intangible assets


11


5.637


4.799




Investments in subsidiaries, associates and joint ventures


 


1.040.473


1.032.372




Investment in equity instruments


3


1.203


318




Loans, advances and long-term assets


 


19.974


8.887




 


 


3.757.141


3.730.613




 


 


 


 




Current assets


 


 


 




Inventories


12


905.543


893.859




Trade and other receivables


13


718.215


681.555




Derivative financial instruments


3


2.107


-




Cash and cash equivalents


14


827.875


1.070.377




 


 


2.453.740


2.645.791




Total assets


 


6.210.881


6.376.404




 


 


 


 




EQUITY


 


 


 




Share capital and share premium


15


1.020.081


1.020.081




Reserves


16


269.601


262.263




Retained Earnings


 


807.464


864.333




Total equity


 


2.097.146


2.146.677




 


 


 


 




LIABILITIES


 


 


 




Non-current liabilities


 


 


 




Interest bearing loans and borrowings


17


1.641.415


1.657.598




Lease liabilities


2


16.761


-




Deferred income tax liabilities


 


171.510


151.873




Retirement benefit obligations


 


136.074


132.539




Provisions


 


24.179


37.858




Other non-current liabilities


 


14.497


14.810




 


 


2.004.436


1.994.678




Current liabilities


 


 


 




Trade and other payables


18


1.200.868


1.226.107




Derivative financial instruments


3


7.034


16.387




Income tax payable


 


100.971


76.322




Interest bearing loans and borrowings


17


642.740


915.350




Lease liabilities


2


6.640


-




Dividends payable


 


151.046


883




 


 


2.109.299


2.235.049




Total liabilities


 


4.113.735


4.229.727




Total equity and liabilities


 


6.210.881


6.376.404




 
 
 
 
 
Parent Company Statement of Comprehensive Income
  




 


 


For the 6 month period ended


For the 3 month period ended




 


Note


30 June 2019


30 June 2018


30 June 2019


30 June 2018




 


 


 


 


 


 




Revenue from contracts with customers


4


4.087.415


4.322.650


2.263.042


2.312.015




 


 


 


 


 


 




Cost of sales


 


(3.826.905)


(3.877.253)


(2.123.081)


(2.021.461)




Gross profit


 


260.510


445.397


139.961


290.554




 


 


 


 


 


 




Selling and distribution expenses


 


(49.637)


(48.132)


(25.343)


(25.894)




 


 


 


 


 


 




Administrative expenses


 


(39.110)


(40.142)


(18.067)


(20.585)




 


 


 


 


 


 




Exploration and development expenses


 


(52)


(162)


(23)


(141)




 


 


 


 


 


 




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


5


(485)


1.044


(3.336)


425




 


 


 


 


 


 




Operating profit


 


171.226


358.005


93.192


244.359




 


 


 


 


 


 




Finance income


 


5.509


4.614


3.121


2.127




 


 


 


 


 


 




Finance expense


 


(60.605)


(71.584)


(30.038)


(35.165)




 


 


 


 


 


 




Lease finance cost


 


(464)


-


(245)


-




 


 


 


 


 


 




Dividend income


 


7.917


35.083


7.917


35.083




 


 


 


 


 


 




Currency exchange gains/(losses)


6


1.032


4.243


(531)


6.744




 


 


 


 


 


 




Profit before income tax


 


124.615


330.361


73.416


253.148




 


 


 


 


 


 




Income tax expense


7


(28.666)


(96.634)


(13.522)


(79.236)




 


 


 


 


 


 




Profit for the period


 


95.949


233.727


59.894


173.912




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


651


(468)


668


(345)




 


 


651


(468)


668


(345)




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


5.186


16.256


(2.703)


14.372




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


16


1.501


(14.920)


1.501


(14.920)




 


 


6.687


1.336


(1.202)


(548)




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


 


7.338


868


(534)


(893)




Total comprehensive income for the period


 


103.287


234.595


59.360


173.019




Basic and diluted earnings per share

(expressed in Euro per share)


8


0,31


0,76


0,20


0,57




 
Parent Company Statement of Cash flows




 


 


For the 6 month period ended




 


Note


30 June 2019


30 June 2018




Cash flows from operating activities


 


 


 




Cash generated from operations


19


172.120


159.512




Income tax (paid)/received


 


(1.768)


4.184




Net cash generated from/(used in) operations


 


170.352


163.696




 


 


 


 




Cash flows from investing activities


 


 


 




Purchase of property, plant and equipment & intangible assets


9,11


(55.856)


(41.992)




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


 


1.074


-




Dividends received


 


6.571


-




Interest received


 


5.509


4.614




Settlement of consideration of acquisition of further equity interest in subsidiary


 


-


(16.000)




Participation in share capital increase of subsidiaries & associates


 


(10.014)


(15.853)




Net cash used in investing activities


 


(52.716)


(69.231)




 


 


 


 




Cash flows from financing activities


 


 


 




Interest paid


 


(66.132)


(65.164)




Dividends paid


 


(122)


(214)




Acquisition of treasury stock


 


-


(511)




Proceeds from borrowings


 


10.067


442.698




Repayments of borrowings


 


(302.423)


(406.866)




Payment of lease liabilities


 


(3.527)


-




Net cash (used in)/generated from financing activities


 


(362.137)


(30.057)




 


 


 


 




Net (decrease)/increase in cash and cash equivalents


 


(244.501)


64.408




 


 


 


 




Cash and cash equivalents at the beginning of the period


14


1.070.377


667.599




Exchange losses on cash and cash equivalents


 


1.999


4.243




Net (decrease)/increase in cash and cash equivalents


 


(244.501)


64.408




Cash and cash equivalents at end of the period


14


827.875


736.250




 




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