REG - Hellenic Petroleum - 1st Quarter Results

HELLENiQ ENERGY Holdings SAAnnouncement

27/05/2021 15:50

RNS Number : 0907A
  
Hellenic Petroleum S.A.
  
27 May 2021
  
 

27 May 2021
 



First quarter 2021 financial results




 
Positive operating results, amid a negative refining environment that affects core Group business 
Significant recovery of Reported profitability to the highest level in the last few years



 
HELLENIC PETROLEUM Group announced its 1Q21 financial results, with Reported EBITDA at €176m and Reported Net Income amounting to €90m. Adjusted EBITDA came in at €60m, with corresponding Net Income at €2m.
Reported Net Income was strong, mainly driven by the international oil prices recovery and their impact on inventory valuation, offsetting a significant part of the losses recorded in 2020, when the pandemic led to a sharp price decline.
In terms of operating profitability, which excludes the impact of international crude and oil product prices, international refining performance continues to be affected by reduced transport fuels demand and especially aviation fuel, due to travel restrictions. This market segment accounts for a significant part of production and sales, prolonging a period of particularly weak refining margins.
Regarding the Greek fuels market demand, 1Q21  was the lowest on record, as restrictions on travelling were in place throughout the quarter.
In addition, following the introduction of the new EU Emissions Trading System (EU ETS), the volume of rights sourced by the market has increased materially, which, combined with their large price increase, adds significant burden on the operating costs of European refineries and their competitiveness vs non-EU countries.
In this environment, the Group maintained its good operating performance; refining utilisation, supply optimization, options on higher domestic market share and the introduction of new premium fuels in retail, as well as the highest profitability on record for Petchems, partially offset the adverse business environment.
 
Strategy update - Main developments
In April 2021, the Group updated its strategy, considering the accelerating energy transition, clarifying its objectives regarding Environment - Society - Governance (ESG), as well as the levers to achieve them. The new "Vision 2025" strategy is based on 5 main pillars:
§ Setting clear environmental targets, including a 50% improvement in GHG emissions by 2030, with a commitment to net zero by 2050 
§ Adjusting the strategy to develop an additional line of business in clean energy
§ Establishment of a fit-for-purpose Group structure that supports this strategy
§ Upgrading corporate governance, in line with the new legal framework and international best practices 
§ Relaunching of corporate identity, which will highlight the new Group strategy 
In the context of creating a balanced portfolio, the Group intends to drastically decarbonise its activities in the oil products value chain, through energy efficiency projects and use of cleaner forms of energy, transition to cleaner fuels and adoption of blue / green hydrogen technologies. In addition, it aims to develop a significant RES portfolio, targeting 600 MW by 2025 and 2 GW by 2030, initially in PV and onshore wind, with future expansion in offshore wind and storage applications, investing in both organically as well as through acquisitions, both in Greece and internationally. It is noted that the construction works of the 204 MW PV project in Kozani are progressing as scheduled, with approximately 40% completed.
Regarding Petchems, an investment of €35m has already been approved for the capacity increase of the PP production unit at Thessaloniki to 300k MT, targeting implementation in the next two and a half years. This investment increases the vertical integration with refining, increases Group exports and contributes to the Group's environmental footprint improvement.  
Concerning the sale process by the HRADF of the companies DEPA Infrastructure and DEPA Commercial (65% HRADF - 35% HELPE), in which the Group participates as a joint seller in DEPA Infrastructure and as a potential buyer through a joint venture with EDISON in DEPA Commercial, the submission of binding bids is scheduled for July 2021 for DEPA Infrastructure, while for DEPA Commercial the HRADF announced the suspension of the tender process until at least the end of 3Q21.
 
Andreas Shiamishis, Group CEO, commented on results:
«The operating environment we faced in the last 14 months has been the most difficult for years. All businesses, that operating in an economy and society that have been challenged by the pandemic and its impact, were affected and had to adapt their operations and strategy accordingly. The oil industry has been among the hardest hit, as travel restrictions continue to affect demand for our products.
As a result, despite oil prices returning to pre-crisis levels, the international refining environment records, for the fourth quarter in a row, very weak margins, while fuels demand in our key markets remains lower than normal levels. Over the coming months, we expect a substantial improvement, as the progress in vaccinations will increase domestic traffic and air travel in an important period for tourism especially for our country.
The 1Q21 results reflect this environment with low refining profitability, which due to its significant importance, outweighs improvements achieved in other Group business units. Turning on the quarter's positive highlights, the strong IFRS profitability due to the prices' recovery, offsets a material part of the losses recorded last year, while the continued financing costs reduction, allows the planning of a more ambitious growth plan.
In terms of strategy, there is a growing necessity to transform the Group and transition to New Energy, with investments that complement our traditional activities. The Group operates a business model set up during the '90s and although it has proven successful to-date, it has to adopt to changes in environmental goals, as well as expected prevailing conditions in the energy market and the economy in the coming years.
"VISION 2025" aims to position the Group as a key player in this new market, through a holistic improvement and development program, which defines our strategy in all ESG activities, investment strategy, organisational structure, corporate governance and the Group's identity. "VISION 2025" is an ambitious roadmap, which despite the implementation challenges, is a must for the Group's further development and will benefit all stakeholders and the Greek economy».
 
Crude oil prices increase and volatility of refining margins. Further increase in CO2 emission allowance prices
International crude oil prices continued to recover in the first quarter, as global demand increased and the OPEC+ crude oil production cut agreement was extended, with Brent prices averaging at $61/bbl in 1Q21, reaching $66/bbl in March, at pre-COVID-19 crisis levels.
The US dollar continued weakening vs the euro, at the lowest quarterly average of the last two years, mainly reflecting monetary policy; euro came in at 1.20 in 1Q21. 
CO2 emission allowance prices were significantly higher, exceeding €40/MT at the end of 1Q21, at a multiple compared to the last 3 years. This increase, combined with the reduction of allowances for European manufacturing, is a competitive disadvantage for the European refiners, with operational and strategic implications.
Gasoline cracks increased slightly due to demand recovery, while middle distillates remained at multi-year lows as aviation demand is still weak. Brent-Urals margin strengthened against the lows of the previous three quarters; as a result, FCC margins averaged at $2/bbl, with Hydrocracking margins at $-0.1/bbl. 
 
Weak domestic market demand 
Domestic fuel demand in 1Q21 was 14% lower, at 1.5m MT, with auto-fuels consumption recording an even higher decline of 16%, due to the mobility restrictions in the first quarter of the year. Heating gasoil demand also decreased by 10% due to mild weather. Bunkering fuels demand amounted to 575k MT (-4%), with significant drop in aviation (-69%).
 
Strong balance sheet, financing cost reduction 
Following the successful refinancing of €900m credit facilities, the Group significantly improved its financing mix, increasing the percentage of committed credit lines and expanding their maturity profile. In addition, the financing cost in 1Q21 amounted to €24m, the lowest level in recent years, falling below €100m on an annual basis. Regarding the refinancing of bonds maturing in October '21, amounting to €200m, the Group is reviewing its options, considering the "2025 Vision" strategy program.
Net Debt came in at €2.2bn, mainly due to the increase of international prices and higher working capital.
  
 
Key highlights and contribution for each of the main business units in 1Q21 were:
 
REFINING, SUPPLY & TRADING
-  Refining, Supply & Trading 1Q21 Adjusted EBITDA at €6m.
-  Production at 3.4m MT (-13%), with respective sales which came in at 3.4m MT (-12%).
-  HELPE's system flexibility allowed the materialisation of opportunities in the IMO fuel trading and production optimization at Aspropyrgos refinery.
 
PETROCHEMICALS
-  Petrochemicals achieved its highest performance historically, capturing strong PP margins, with Adjusted EBITDA amounting to €36m (+ 84%) in 1Q21.
-  HELPE's BoD approved the investment of €35m to increase the capacity of the polypropylene plant in Thessaloniki, by 25%, to 300k MT.
 
MARKETING
-  In domestic marketing, cost control efforts and improved operational performance with the introduction of the new 98-octane gasoline in the EKO petrol station network, mitigated the impact of weak demand for auto and aviation fuels, with the 1Q21 Adjusted EBITDA at €11m.
-  In international marketing, the results were mainly affected by the significant sales volumes decline due to travel restrictions which led 1Q21 Adjusted EBITDA to €10m.
 
ASSOCIATE COMPANIES
-  DEPA Group contribution to 1Q21 consolidated Net Income came in at €11m. 
-  ELPEDISON 1Q21 EBITDA was 37% higher, at €23m, due to due to improved performance of the upgraded Thessaloniki plant and exploitation of gas trading opportunities.




 
 
HELLENIC PETROLEUM GROUP
Key consolidated financial indicators (prepared in accordance with IFRS) for 1Q21 are shown below:
 



€ million


1Q20


1Q21


% Δ








P&L figures
















Refining Sales Volumes ('000 ΜΤ)


3,883


3,410


-12%








Sales 


1,919


1,722


-10%








EBITDA


-416


176


-








Adjusted EBITDA 1


128


60


-53%








Net Income


-341


90


-








Adjusted Net Income 1


44


2


-








Balance Sheet Items




















Capital Employed


3,866


4,183


8%








Net Debt


1,906


2,244


18%








Debt Gearing (ND/ND+E)


49%


54%


-







 
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


31 March 2021


31 December 2020




ASSETS
















Non-current assets
















Property, plant and equipment


10


3.368.517


3.379.813




Right-of-use assets


11


225.750


235.541




Intangible assets


12


104.804


105.841




Investments in associates and joint ventures


7


436.253


416.542




Deferred income tax assets






75.779


72.161




Investment in equity instruments


3


905


959




Loans, advances and long term assets






68.859


71.676












4.280.867


4.282.533




Current assets
















Inventories


13


1.086.847


694.410




Trade and other receivables


14


593.043


544.795




Income tax receivables 






36.893


37.699




Assets held for sale 






2.674


2.466




Derivative financial instruments


3


9.875


9.945




Cash and cash equivalents


15


683.332


1.202.900












2.412.664


2.492.215




Total assets






6.693.531


6.774.748






















EQUITY
















Share capital and share premium


16


1.020.081


1.020.081




Reserves


17


274.651


273.959




Retained Earnings






582.482


492.457




Equity attributable to equity holders of  the parent






1.877.214


1.786.497






















Non-controlling  interests






62.028


62.340






















Total equity






1.939.242


1.848.837






















LIABILITIES
















Non-current liabilities
















Interest bearing loans & borrowings


18


2.128.387


2.131.371




Lease liabilities






162.943


170.896




Deferred income tax liabilities






56.887


32.572




Retirement benefit obligations






195.634


194.887




Provisions 






38.247


39.022




Other non-current liabilities






27.771


27.957












2.609.869


2.596.705




Current liabilities
















Trade and other payables


19


1.306.312


1.546.844




Derivative financial instruments






6.992


4.635




Income tax payable






2.179


1.673




Interest bearing loans & borrowings


18


799.359


744.561




Lease liabilities






28.330


30.240




Dividends payable






1.248


1.253












2.144.420


2.329.206




Total liabilities






4.754.289


4.925.911




Total equity and liabilities






6.693.531


6.774.748



 
 
 
 
 
Group Consolidated statement of comprehensive income
 











For the three month period ended








Note


31 March 2021


31 March 2020








































Revenue from contracts with customers


4


1.722.327


1.918.964






















Cost of sales






(1.507.622)


(2.287.093)




Gross profit / (loss)






214.705


(368.129)




Selling and distribution expenses






(70.691)


(80.846)




Administrative expenses






(31.459)


(34.437)




Exploration and development expenses






(861)


(1.305)




Other operating income and other gains


5


5.861


8.629




Other operating expense and other losses


5


(3.844)


(2.960)




Operating profit /(loss)






113.711


(479.048)






















Finance income






723


1.062




Finance expense






(24.904)


(26.707)




Finance expense - lease finance cost 






(2.550)


(2.748)




Currency exchange gain / (loss)


6


5.162


2.262




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


7


19.687


45.407




Profit / (loss)  before income tax 






111.829


(459.772)






















Income tax credit / (expense)


8


(21.452)


119.074






















Profit / (loss) for the period






90.377


(340.698)






















Profit / (loss) attributable to:
















     Equity holders of the parent






90.067


(339.809)




     Non-controlling interests






310


(889)












90.377


(340.698)




Other comprehensive income / (loss):
















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
















Share of other comprehensive income / (loss) of associates


17


24


(224)




Changes in the fair value of equity instruments 


17


(41)


(436)




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






(17)


(660)






















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
















Fair value gains / (losses) on cash flow hedges 


17


649


(25.474)




Currency translation differences and other movements


17


75


(216)




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






724


(25.690)






















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






707


(26.350)




Total comprehensive income / (loss) for the period






91.084


(367.048)




Total comprehensive income / (loss) attributable to:
















     Equity holders of the parent






90.759


(366.098)




     Non-controlling interests






325


(949)












91.084


(367.048)




Basic and diluted earnings / (losses) per share

(expressed in Euro per share)


9


0,29


(1,11)



 
 
 
 
 
 
 
 
Group Consolidated statement of cash flows
 











For the three month period ended








Note


31 March 2021


31 March 2020




Cash flows from operating activities
















Cash generated from / (used in) operations


20  


(518.426)


(221.655)




Income tax received / (paid)






390


(3.590)




Net cash generated from / (used in) operating activities






(518.037)


(225.245)






















Cash flows from investing activities
















Purchase of property, plant and equipment & intangible assets


10,12


(39.830)


(35.532)




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






133


665




Share capital issue expenses 






(4)


-




Grants received






21


43




Interest received






723


1.062




Prepayments for right-of-use assets






(234)


(215)




Net cash generated from / (used in) investing activities






(39.193)


(33.977)






















Cash flows from financing activities
















Interest paid






(8.765)


(15.659)




Dividends paid to shareholders of the Company






(5)


(76.215)




Proceeds from borrowings






55.148


239.681




Repayments of borrowings






(1.089)


68




Payment of lease liabilities - principal, net






(10.134)


(10.015)




Payment of lease liabilities - interest






(2.550)


(2.748)




Net cash generated from / (used in) financing activities






32.605


135.112






















Net increase / (decrease) in cash and cash equivalents 






(524.625)


(124.110)






















Cash and cash equivalents at the beginning of the period


15


1.202.900


1.088.198




Exchange gain / (loss) on cash and cash equivalents 






5.056


6.564




Net increase / (decrease) in cash and cash equivalents 






(524.625)


(124.110)




Cash and cash equivalents at end of the period


15


683.332


970.652



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent Company Statement of Financial Position
 











As at








Note


31 March 2021


31 December 2020




ASSETS
















Non-current assets
















Property, plant and equipment


9


2.752.646


2.766.635




Right-of-use assets


10


29.892


32.157




Intangible assets


11


7.558


8.094




Investments in subsidiaries, associates and joint ventures






1.066.366


1.064.566




Investment in equity instruments


3


535


587




Loans, advances and long-term assets






41.605


42.956












3.898.602


3.914.995






















Current assets
















Inventories


12


988.426


599.613




Trade and other receivables


13


516.941


489.979




Income tax receivables






33.830


33.830




Derivative financial instruments


3


9.875


9.945




Cash and cash equivalents


14


493.793


992.748












2.042.865


2.126.115




Total assets






5.941.467


6.041.110






















EQUITY
















Share capital and share premium


15


1.020.081


1.020.081




Reserves


16


280.186


279.576




Retained Earnings






594.480


520.475




Total equity






1.894.747


1.820.132






















LIABILITIES
















Non-current liabilities
















Interest bearing loans and borrowings


17


1.929.658


2.064.808




Lease liabilities






19.842


21.279




Deferred income tax liabilities






27.410


2.773




Retirement benefit obligations






160.338


159.782




Provisions






22.287


22.287




Other non-current liabilities






12.558


12.685












2.172.093


2.283.614




Current liabilities
















Trade and other payables


18


1.185.239


1.427.067




Derivative financial instruments


3


6.992


4.635




Income tax payable






450


450




Interest bearing loans and borrowings


17


672.855


494.675




Lease liabilities






7.843


9.284




Dividends payable






1.248


1.253












1.874.627


1.937.364




Total liabilities






4.046.720


4.220.978




Total equity and liabilities






5.941.467


6.041.110



 
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent Company Statement of Comprehensive Income
 











For the three-month period ended








Note


31 March 2021


31 March 2020






















Revenue from contracts with customers


4


1.572.464


1.740.600




Cost of sales






(1.419.307)


(2.173.932)




Gross profit / (loss)






153.157


(433.332)




Selling and distribution expenses






(20.780)


(27.553)




Administrative expenses






(18.653)


(20.612)




Exploration and development expenses






(30)


(1.017)




Other operating income and other gains


5


3.838


5.014




Other operating expense and other losses


5


(2.599)


(550)




Operating profit/(loss)






114.933


(478.050)






















Finance income






1.511


2.220




Finance expense






(22.788)


(25.392)




Finance expense - Lease finance cost






(305)


(358)




Currency exchange gains/(losses)


6


5.098


2.295




Profit/(Loss) before income tax 






98.449


(499.285)






















Income tax 


7


(24.444)


118.642






















Profit/(Loss) for the period






74.005


(380.643)






















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


(39)


(338)




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


649


(25.474)






















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






610


(25.812)






















Total comprehensive income/(loss) for the period






74.615


(406.455)






















Basic and diluted earnings/(losses) per share

(expressed in Euro per share)


8


0,24


(1,25)



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent Company Statement of Cash flows
 
 











For the three-month period ended








Note


31 March 2021


31 March 2020




Cash flows from operating activities
















Cash generated from / (used in) operations


19


(501.338)


(246.288)




Income tax received / (paid)






-


(795)




Net cash generated from / (used in) operating activities






(501.338)


(247.083)






















Cash flows from investing activities
















Purchase of property, plant and equipment & intangible assets


9,11


(24.732)


(24.360)




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






29


-




Dividends received






-


150.000




Interest received






1.511


2.220




Participation in share capital increase of subsidiaries, associates and joint ventures






(1.799)


(10.000)




Net cash generated from / (used in) investing activities






(24.991)


117.860






















Cash flows from financing activities
















Interest paid






(15.956)


(14.237)




Dividends paid






(5)


(76.215)




Proceeds from borrowings






51.040


218.120




Repayments of borrowings






(9.540)


(152.002)




Payment of lease liabilities - principal






(2.958)


(2.759)




Payment of lease liabilities - interest






(305)


(358)




Net cash generated from /(used in) financing activities






22.276


(27.451)






















Net increase / (decrease) in cash and cash equivalents






(504.053)


(156.674)






















Cash and cash equivalents at the beginning of the period


14


992.748


888.564




Exchange gains / (losses) on cash and cash equivalents






5.098


6.498




Net increase / (decrease) in cash and cash equivalents






(504.053)


(156.674)




Cash and cash equivalents at end of the period


14


493.793


738.388



 

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