1st Quarter Results

Helleniq Energy Holdings S.A.
18 May 2023
 

Maroussi, 18 May 2023

 

First Quarter 2023 financial results

 

Strong profitability on increased refinery utilization and

higher exports amid positive international refining environment -

Focus on Energy Transition strategy implementation

 

 

HELLENiQ. ENERGY Holdings S.A. ("Company") announced its 1Q23 consolidated financial results, with Adjusted EBITDA at €404m and Adjusted Net Income at €252m.

Despite a slight weakening of the international refining environment, the Company continues to report strong results, driven mainly by high refining margins and improved operational performance across its businesses. Compared to a relatively weak 1Q22, current year performance improves on most areas with higher sales volume and increased profitability. Refining sales volume reached 3.7m MT (+12%), with exports increasing by 27%, making up for 60% of total sales volume.

1Q23 Reported Net Income at €155m, reflects the impact of volatile crude oil and product prices on reported results, as the difference vs last year's first quarter due to inventory effect is €426m; 1Q23 reported inventory losses in Refining and Marketing in Greece of €145m vs inventory gains of €281m in 1Q22.

 

Strategy Implementation - Vision 2025

During 2022, the Company implemented a transformation strategy across most sectors, in response to changing environment and future projections. In particular, developing a second pillar of growth in cleaner forms of energy became an integrated part of the Group's strategic plan while corporate governance framework was upgraded, a more appropriate corporate structure was established and, finally, a new corporate identity was introduced.

Having successfully completed the first phase of these initiatives, the focus is firmly on four priorities, namely: (a) promote operational excellence in our activities throughout the Group, (b) develop a value enhancing RES and power storage portfolio, (c) improve carbon footprint in our core activities and (d) embed and further improve ESG and sustainability criteria in our business.

In this framework, we are currently evaluating and maturing an investment for carbon capture and storage (CCS) facility at the Elefsina refinery, for the production of "blue" hydrogen. For this, an application for funding support has recently been submitted to the EU Innovation Fund. Although CCS technology is relatively well-known, prevailing conditions (institutional framework, funding priorities at European level, availability of storage) are not conducive for an immediate investment decision. However, we believe that such projects need to be pursued and matured if we are to achieve environmental targets within a realistic timeline. On the contrary, the pilot investment in "green" hydrogen at the Elefsina refinery edges closer to the final investment decision, while projects for the production of biofuels (HVO, SAF) at the Group's refineries are in the implementation phase. 

An important part of new technologies for carbon footprint improvement depends on the availability of low-cost accessible green energy. In this context, the development of a RES portfolio makes sense for us not only as a stand-alone new business proposition but also a major synergistic benefit for our core businesses.

In terms of operational excellence and competitiveness improvement, the digital transformation program is being accelerated, with investments of more than €40m and significant benefits, which are estimated to reach €50m on an annualized basis at the end of the program.

In the RES business, following the addition of approximately 300 MW of installed capacity during the last year, the total operating RES capacity amounts to 341 MW, with additional projects in production and storage, under evaluation in Greece and internationally. The development of storage and energy management solutions is of particular importance, given, also significant synergy opportunities with the rest of the Group's portfolio.

As far as the E&P is concerned, our objective is to complete as soon as possible the data processing and interpretation of the 2D seismic surveys that were completed in the 2 offshore areas of West of Crete and Southwest of Crete in collaboration with ExxonMobil, as well the 3D seismic surveys that were conducted at 3 other offshore areas (Block 2, Block Ionio and Block 10). Despite satisfactory progress, decisions on any drilling campaign are not expected within 2023.

Normalization of crude oil prices and strong international refining margins

International crude oil and product prices continued to normalize during 1Q23, with Brent prices averaging $81/bbl. Concerns remain, however, about global demand dynamics and normalization of supply compared to the corresponding period in 2022, during which prices had increased following Russia's invasion of Ukraine.

Benchmark refining margins strengthened significantly in 1Q23 vs last year, mainly due to an inventory build ahead of the implementation of sanctions on product exports from Russia on 5 February 2023 and reduced refining capacity due to strikes in France. In particular, FCC and Hydrocracking benchmark margins averaged $10.7/bbl and $14.1/bbl respectively in 1Q23 vs $3.6/bbl and $6.7/bbl respectively in 1Q22.

Improved auto fuels demand

Auto fuels consumption recorded a significant increase of 5% in 1Q23, as a result of a growing economy and the extension of the tourism season. Supporting this is an even stronger growth of aviation fuels demand (+25%) on increased flight activity, while bunkering fuels offtake fell by 2%. Despite the aforementioned performance, mild weather conditions led to reduced heating gasoil needs and an overall lower total oil products demand in Greece compared to 1Q22.

Balance sheet and capital expenditure

The Group's balance sheet strengthened in 1Q23 on the back of profitability and normalized working capital needs. Net debt decreased by €0.5bn vs FY22 and by €0.9bn y-o-y, with gearing (Net Debt over Capital Employed) declining to 34%.

Capital expenditure amounted to €40m, lower vs the corresponding period of last year which included the extensive maintenance program at the Elefsina refinery.

Andreas Shiamishis, Group CEO, commented on the results:

"A year after the invasion in Ukraine, we find the international energy market partly recovered from a sudden shock but with a changed perspective with respect to the industry's strategy and priorities.

Targeting a more environmentally-neutral energy market remains a priority and determines our current and future investments in RES, energy storage, as well as in the reduction of the carbon footprint of our energy products. However, at the same time, events of recent past and the increase of RES in the energy mix present additional challenges with respect to accessibility and energy security.

Our strategy, as described by Vision 2025, considers all the above and having successfully completed the first phase of the transformation, we are proceeding with developing a value-enhancing New Energy portfolio in Greece and internationally, as well as evaluating and implementing investments which support the energy transition of our refineries and the substantial improvement of our environmental footprint.

Having said all that, at the same time we remain focused on improving our operations and deliver the required results across all of our businesses. In this context, 1Q23 financial results are positive, as they continue to report increased production, exports and profitability, especially compared to a weak first quarter last year. With a lower price environment, positive results depend to a great extent on strong refining margins in the Mediterranean region and the operational flexibility of our refineries. Likewise, the areas we can control in our other businesses (retail petrol stations, international subsidiaries, RES) demonstrate improved performance, even if they contribute to a lesser extent to the overall performance.

Projecting forward, international refining environment looks weaker in the coming months, but we would expect a strong domestic market, driven by increased demand due to tourism and investment growth."


 

Key highlights and contribution for each of the main business units in 1Q23 were:

 

REFINING, SUPPLY & TRADING

Refining, Supply & Trading 1Q23 Adjusted EBITDA came in at €366m, supported by international refining margins, overperformance at our refineries and higher sales volume, with increased exports contribution.

- Production reached 3.6m MT, significantly higher (+29%) vs the corresponding period of 2022, during which a full turnaround was implemented at the Elefsina refinery.

 

PETROCHEMICALS

1Q23 Adjusted EBITDA came in at €15m, lower y-o-y on weak PP margins, partly offset by the 9% sales volume increase.

 

MARKETING

In 1Q23, Domestic Marketing recorded lower sales volume (-7% y-o-y), while, excluding heating gasoil, it delivered an increase of 2%. Regulatory gross margin caps, lower inventory valuation due to falling prices and higher transportation costs negatively impacted profitability.

International Marketing recorded higher sales volume (+9% y-o-y) in 1Q23, with Adjusted EBITDA rising by 33% to €17m, on higher margins and improved contribution from Bulgaria and the Republic of North Macedonia.

 

RENEWABLES

Higher RES operating capacity (341 ΜW) led to increased electricity output, with Adjusted EBITDA coming in at €10m in 1Q23.

 

ASSOCIATE COMPANIES

DEPA companies' contribution to 1Q23 consolidated Net Income was €9m.

Elpedison 1Q23 EBITDA came in at €60m, driven by high availability at the electricity generation plants, operational flexibility and trading opportunities in the natural gas markets.

 

 

HELLENiQ ENERGY Holdings S.A.

 

Key consolidated financial indicators for 1Q23

(prepared in accordance with IFRS)

 

€m

1Q22

1Q23

% Δ

P&L figures




Refining Sales Volume ('000 ΜΤ)

3,292

3,688

12%

Sales

2,803

3,113

11%

EBITDA

501

279

-44%

Adjusted EBITDA 1

99

404

-

Adjusted Net Income 1

4

252

-

Operating Profit

420

202

-52%

Net Income

346

155

-55%

Balance Sheet Items

 

 

 

Capital Employed

4,791

4,331

-10%

Net Debt

2,331

1,454

-38%

Gearing (ND/ND+E)

49%

34%

-15 pps 2 π,μ,pps2 2

 

Note 1: Adjusted for inventory effects and other non-operating/one-off items, as well as the IFRS accounting treatment of the EUAs deficit,

Note 2: pps stands for percentage points

 

Further information:

Nikos Katsenos, Head of IR

Tel.: +30 210-6302305

Email: nkatsenos@helleniq,gr

 

 

 

 

Group Consolidated statement of financial position

 


 

As at

 

Note

31 March 2023

31 December 2022

Αssets

 



Non-current assets

 



Property, plant and equipment

10

3.619.378

3.639.004

Right-of-use assets

11

233.868

233.141

Intangible assets

12

539.667

518.073

Investments in associates and joint ventures

7

432.273

402.101

Deferred income tax assets

 

95.991

91.204

Investment in equity instruments

3

489

490

Derivative financial instruments

 

906

958

Loans, advances and long term assets

13

63.180

64.596


 

4.985.752

4.949.567

Current assets

 

 

 

Inventories

14

1.541.125

1.826.242

Trade and other receivables

15

807.845

866.109

Income tax receivable

 

14.310

14.792

Derivative financial instruments

 

-

5.114

Cash and cash equivalents

16

966.007

900.176

 

 

3.329.287

3.612.433

Total assets

 

8.315.039

8.562.000


 

 


Equity

 



Share capital and share premium

17

1.020.081

1.020.081

Reserves

18

295.009

297.713

Retained Earnings

 

1.493.619

1.341.908

Equity attributable to the owners of the parent

 

2.808.709

2.659.702


 



 

 



Total equity

 

2.876.782

2.727.401


 



Liabilities

 



Non- current liabilities

 



Interest bearing loans and borrowings

19

1.486.788

1.433.029

Lease liabilities

 

178.989

177.745

Deferred income tax liabilities

 

197.723

202.523

Retirement benefit obligations

 

176.318

175.500

Derivative financial instruments

 

-

-

Provisions

 

36.285

36.117

Other non-current liabilities

 

22.560

22.662


 

2.098.663

2.047.576

Current liabilities

 

 

 

Trade and other payables

20

1.888.112

1.835.957

Derivative financial instruments

 

2.741

1.761

Income tax payable

8

483.358

432.385

Interest bearing loans and borrowings

19

934.173

1.409.324

Lease liabilities

 

29.765

30.372

Dividends payable

 

1.445

77.224


 

3.339.594

3.787.023

Total liabilities

 

5.438.257

5.834.599

Total equity and liabilities

 

8.315.039

8.562.000

 

 

Group Consolidated statement of comprehensive income

 

 


For the period ended

 

Note

31 March 2023

31 March 2022





Revenue from contracts with customers

4

3.113.343

2.802.927

Cost of sales

 

(2.778.127)

(2.258.207)

Gross profit / (loss)


335.216

544.720





Selling and distribution expenses

 

(93.808)

(82.740)

Administrative expenses

 

(40.483)

(36.650)

Exploration and development expenses

 

(4.244)

(6.375)

Other operating income and other gains

5

7.403

5.191

Other operating expense and other losses

5

(2.551)

(4.678)


 

 


Operating profit / (loss)

 

201.533

419.468


 

 


Finance income

 

1.326

538

Finance expense

 

(32.124)

(24.192)

Lease finance cost

 

(2.325)

(2.362)

Currency exchange gains / (losses)

6

558

(4.270)

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

7

31.289

46.352


 

 


Profit / (loss) before income tax

 

200.257

435.534


 

 


Income tax

8

(44.491)

(88.902)


 



Profit / (loss) for the period

 

155.766

346.632

 

 

 


Profit / (loss) attributable to:

 

 


     Owners of the parent

 

155.276

345.206

     Non-controlling interests

 

490

1.426


 

155.766

346.632


 

 


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)


 

-

(16)

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

 

 


Share of other comprehensive income / (loss) of associates

 

(1.117)

(17.727)

Fair value gains / (losses) on cash flow hedges

 

(921)

5.266

Currency translation differences and other movements

 

(782)

(167)

 

 

(2.820)

(12.628)

 

 

 


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

 

(2.820)

(12.644)

 

 

 


Total comprehensive income / (loss) for the period

 

152.946

333.988

 

 

 


Total comprehensive income / (loss) attributable to:

 

 


     Owners of the parent

 

152.572

332.574

     Non-controlling interests

 

374

1.414


 

152.946

333.988


 



Εarnings / (losses) per share (expressed in Euro per share)

9

0,51

1,13

 

 

Group Consolidated statement of cash flows

 

 

 

For the period ended

 

Note

31 March 2023

31 March 2022

Cash flows from operating activities

 

 

 

Cash generated from operations

21

615.161

(278.332)

Income tax received / (paid)

8

(2.365)

(2.148)

Net cash generated from/ (used in) operating activities

 

612.796

(280.479)

 

 



Cash flows from investing activities

 



Purchase of property, plant and equipment & intangible assets

10, 11

(45.617)

(84.009)

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


97

22

Acquisition of share of associates and joint ventures


(1)

-

Purchase of subsidiary, net of cash acquired


-

404

Grants received


1

-

Interest received


1.326

539

Prepayments for right-of-use assets


(27)

(387)

Dividends received

7

31.715

-

Net cash generated from/ (used in) investing activities

 

(12.507)

(83.431)

 

 


 

Cash flows from financing activities

 


 

Interest paid on borrowings


(26.484)

(10.042)

Dividends paid to shareholders of the Company

26

(75.779)

-

Proceeds from borrowings

19

435.211

211.400

Repayments of borrowings

19

(855.611)

(4.300)

Payment of lease liabilities - principal


(9.192)

(9.829)

Payment of lease liabilities - interest


(2.325)

(2.362)

Net cash generated from/ (used in) financing activities

 

(534.180)

184.867

 

 


 

Net increase/ (decrease) in cash and cash equivalents

 

66.109

(179.043)

 

 


 

Cash and cash equivalents at the beginning of the year

16

900.176

1.052.618

Exchange (losses) / gains on cash and cash equivalents


(278)

(4.409)

Net increase / (decrease) in cash and cash equivalents


66.109

(179.043)

Cash and cash equivalents at end of the period

16

966.007

869.166

 


Parent Company Statement of Financial Position

 

 

 

As at

 

Note

 

31 March 2023

31 December 2022

Assets

 




Non-current assets

 

 

 

 

Property, plant and equipment



683

671

Right-of-use assets

11

 

10.442

10.817

Intangible assets



110

138

Investments in subsidiaries, associates and joint ventures

7


1.674.167

1.654.517

Deferred income tax assets



10.918

11.020

Investment in equity instruments



38

38

Loans, advances and long term assets

13


356.843

230.243



 

2.053.201

1.907.444

Current assets

 




Inventories



-

-

Trade and other receivables



173.896

86.159

Income tax receivables



-

-

Derivative financial instruments



-

-

Cash and cash equivalents



15.919

209.054



 

189.815

295.213

Total assets

 

 

2.243.016

2.202.657






Equity

 




Share capital and share premium

17


1.020.081

1.020.081

Reserves

18


281.104

281.104

Retained Earnings



892.758

765.156

Total equity

 

 

2.193.943

2.066.341






Liabilities

 




Non-current liabilities

 




Interest bearing loans & borrowings



-

-

Lease liabilities



8.773

9.611

Deferred income tax liabilities



-

-

Retirement benefit obligations



8.120

7.977

Provisions



-

-

Other non-current liabilities



174

174



 

17.067

17.762

Current liabilities

 




Trade and other payables



24.081

36.491

Derivative financial instruments



-

-

Income tax payable

8


4.716

3.582

Interest bearing loans & borrowings



-

-

Lease liabilities



1.764

1.257

Dividends payable

25


1.445

77.224



 

32.006

118.554

Total liabilities

 

 

49.073

136.316

Total equity and liabilities

 

 

2.243.016

2.202.657

 

 

Parent Company Statement of Comprehensive Income

 

 

 

For the period ended

 

Note

 

31 March 2023

31 March 2022

 

 

 

 

 






Revenue from contracts with customers

 

 

7.457

6.040

 

 

 

 

 

Cost of sales



(6.779)

(5.491)

Gross profit / (loss)

 

 

678

549






Administrative expenses



(3.275)

(1.414)

Other operating income and other gains

5


3.686

3.686

Other operating expense and other losses

5


(2.820)

(3.351)

Operating profit /(loss)

 

 

(1.731)

(530)






Finance income



4.584

1.416

Finance expense



(3)

(504)

Lease finance cost



(93)

(135)

Dividend income

25


126.081

-

Profit / (loss)  before income tax

 

 

128.838

246






Income tax credit / (expense)



(1.236)

(31)






Profit / (loss) for the period

 


127.602

215

 


Parent Company Statement of Cash flows

 

 

For the period ended

 

Note

31 March 2023

31 March 2022

 

 

 

 

Cash flows from operating activities

 



Cash generated from / (used in) continuing operations

21 

(10.880)

6.361

Income tax received / (paid)

 

-

-

Net cash generated from / (used in) operating activities

 

(10.880)

6.361

 

 

 


Cash flows from investing activities

 

 


Purchase of property, plant and equipment & intangible assets

 

(18)

-

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


(18.650)

(6.450)

Loans and advances to Group Companies


(126.600)

(100.800)

Interest received

 

6.852

650

Dividends received

 

32.979

-

Proceeds from disposal of assets held for sale

 

-

-

Net cash generated from / (used in) investing activities from discontinued operations


-

-

Net cash generated from / (used in) investing activities

 

(105.437)

(106.600)

 

 

 


Cash flows from financing activities

 

 


Interest paid

 

-

-

Dividends paid to shareholders of the Company


(75.779)

-

Payment of lease liabilities - principal, net


(578)

(750)

Payment of lease liabilities - interest


(461)

(135)

Net cash generated from / (used in) financing activities from discontinued operations


-

-

Net cash generated from / (used in) financing activities

 

(76.818)

(885)

 

 

 


Net increase / (decrease) in cash and cash equivalents

 

(193.135)

(101.124)

 

 

 


Cash and cash equivalents at the beginning of the period

 

209.054

843.493

Exchange gain / (loss) on cash and cash equivalents

 

-

-

Net cash outflow due to demerger

 

-

(713.493)

Net increase / (decrease) in cash and cash equivalents

 

(193.135)

(101.124)

Cash and cash equivalents at end of the period

 

15.919

28.876

 

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