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Hellenic Petroleum (HLPD)

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Thursday 31 May, 2018

Hellenic Petroleum

1st Quarter Results

RNS Number : 9151P
Hellenic Petroleum S.A.
31 May 2018
 

PRESS RELEASE

31 May 2018

First quarter 2018 financial results

 

 

Strong 1Q18 profitability, with increased production and sales, despite weaker refining environment; record high exports.   

 

HELLENIC PETROLEUM Group announced financial results, according to IFRS, with 1Q18 Adjusted EBITDA at €149m and Adjusted Net Income at €62m, recording a decrease vs 1Q17. 

Weaker benchmark margins and USD vs the Euro were the key drivers for the results. In this environment, the Group's refineries achieved record high utilisation, resulting in increased production and sales to 3.9m MT (+2%) and 4.1m (+3%) respectively, as well as record high exports at 2.5m MT, exceeding 60% of total sales. The strong operating performance of the refineries and crude mix optimisation kept performance vs benchmarks and the overall HELPE realised margin at high levels.

1Q18 Reported Net Income amounted to €74m, vs €124m in 1Q17, as increased oil prices y-o-y had a positive impact on inventory valuation of €19m.

 

Increasing crude oil prices at the highest level since 2014, stronger EUR

Geopolitical developments and the implementation of OPEC's decision to reduce crude oil production led oil prices at the highest level since 4Q14, with Brent averaging $67/bbl in 1Q18, increased significantly (+22%) vs 1Q17 ($55/bbl).  

Macro developments and monetary policy in Eurozone and the US resulted in the further strengthening of the EUR, with EUR/USD averaging at 1.23, +16% yoy.

The significant increase in crude oil prices negatively affected Med benchmark margins, with the exception of high middle distillates yield refineries, such as Elefsina. Med FCC benchmark margins averaged at $4.8/bbl (-19%), with Hydrocracking at $5.3/bbl (+5%).

 

Increased auto-fuels demand

Auto-fuels demand recorded an overall increase of 4%, while the reduction in HGO consumption due to mild weather conditions led to a decline in total domestic fuels demand of 6% for the first quarter of 2018, with total consumption at 1.7m MT. The Bunkering and Aviation demand also fell by 5%.

 

 

Reduced gross debt and finance expenses, completion of refinancing

The refinancing of the Group's loans, totaling circa €900m, will be completed in 1H18. More precisely, the refinancing of a €400m syndicated loan facility, maturing in 2023, has been agreed with the participation of both Greek and foreign banks, while a revolving credit facility of €300m, maturing in 2021, was signed. The interest rates have been reduced significantly, with upsizing on loan amounts committed on both facilities. In addition, a three-year $250m revolving credit facility has been signed, improving balance sheet FX risk management, while an existing syndicated loan facility of €240m, which was arranged in 2016 for Eurobond refinancing, has been fully repaid. As a result, the Group notably improved its debt profile and sourcing, with a significant part of its funding covered by committed medium-term loans. This, combined with a reduction in total borrowing, which as at 31 March 2018 came in at €2.7bln, led finance expenses in 1Q18 to €39m, 17% lower yoy.

Net debt at €2bln, with debt gearing at 45%, on similar levels vs last year.

                      

Key strategic developments

In E&P, HELLENIC PETROLEUM continues its efforts to create a diversified portfolio through alternative partnership structures in Greece. In this context, as part of a JV, it submitted an offer for exploration and production in two offshore areas West and SW of Crete (Total 40% - operator, ExxonMobil 40%, ELPE 20%) and one in Ionian sea (Repsol 50% - operator, ELPE 50%)  

Regarding the sales process for 66% of DESFA, which accounts for 35% of the Group's participation and 31% of the Greek State, the sellers accepted an offer of €535m from a JV of European companies Snam SpA, Enagas and Fluxys, while an EGM of HELLENIC PETROLEUM, held on 7 May 2018, approved the transaction, which is currently subject to TAIPED, as well as competent regulatory authorities' approval processes in Greece and the EU.  

DEPA, as part of its restructuring plan, announced on 16 May 2017, the sale of 51% of the retail gas company EPA Thessaloniki to ENI for a cash consideration of €57m.  

Key highlights and contribution for each of the main business units in 1Q18 were:

 

REFINING, SUPPLY & TRADING

Refining, Supply & Trading 1Q18 Adjusted EBITDA at €112m (-40%).

The Group's refinery production was 3.9m MT, with sales exceeding 4m MT, and exports recording a 15% increase vs last year, to a historical high of 2.5m MT, accounting for 62% of total sales.

Crude mix optimization and availability of all refining units sustained realised margin at high levels, offsetting part of the reduction in trading contribution due to the higher exports.

 

 

 

PETROCHEMICALS

1Q18 Adjusted EBITDA at €26m, with sales volumes and operating profitability at similar with 1Q17 levels.

 

MARKETING

1Q18 Marketing Adjusted EBITDA at €14m (+3%).

Domestic Marketing 1Q18 Adjusted EBITDA at €3m, similar to 1Q17 results, on better commercial management, despite weaker domestic demand.

International Marketing sustained its profitability, with Adjusted EBITDA at €11m (+6%), on improved profitability in the Serbian and Bulgarian markets despite the decline in wholesale sales volumes.

 

ASSOCIATED COMPANIES

DEPA Group contribution to consolidated Net Income came in at €17m, due to a drop in gas demand from power generators as well as domestic and commercial customers due to milder weather conditions than last year.

Similarly, Elpedison's EBITDA at €5m in 1Q18, due to the reduced demand, while the final approval and activation of the flexible compensation mechanism for independent power generators is still pending.

 

 

  

Key consolidated financial indicators (prepared in accordance with IFRS) for 1Q18 are shown below:

€ million




1Q17

1Q18

% Δ

P&L figures







Refining Sales Volumes ('000 ΜΤ)




3,977

4,102

+3%

Sales




2,066

2,168

+5%

EBITDA




226

166

-26%

Adjusted EBITDA 1




229

149

-35%

Net Income




124

74

-40%

Adjusted Net Income 1




126

62

-51%

Balance Sheet Items







Capital Employed




4,039

4,419

+9%

Net Debt




1,783

1,973

+11%

Debt Gearing (ND/ND+E)




44%

45%

-

 

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:   [email protected]

 

 

 

 

 

 

 

 

 

 

 

 

 

Group Consolidated statement of financial position

 



As at


Note

31 March 2018

31 December 2017

ASSETS




Non-current assets




Property, plant and equipment

10

3.289.964

3.311.893

Intangible assets

11

107.515

105.684

Investments in associates and joint ventures


715.530

701.635

Deferred income tax assets


73.191

71.355

Investment in equity instruments

2

1.403

1.857

Loans, advances and long term assets


91.199

89.626



4.278.802

4.282.050

Current assets




Inventories

12

1.041.517

1.056.393

Trade and other receivables

2,13

849.445

791.205

Derivative financial instruments

3

15.847

11.514

Cash, cash equivalents and restricted cash

14

682.795

1.018.913



2.589.604

2.878.025

Total assets


6.868.406

7.160.075





EQUITY




Share capital

15

1.020.081

1.020.081

Reserves

16

360.030

358.056

Retained Earnings

2

1.002.765

930.522

Capital and reserves attributable to owners of  the parent


2.382.876

2.308.659

Non-controlling  interests


62.860

62.915

Total equity


2.445.736

2.371.574





LIABILITIES




Non-current liabilities




17

1.117.488

920.234

Deferred income tax liabilities


156.578

131.611

Retirement benefit obligations


133.856

131.256

Provisions for other liabilities and charges


6.733

8.371

Trade and other payables


28.090

28.700



1.442.745

1.220.172

Current liabilities




Trade and other payables

18

1.433.982

1.661.457

Current income tax liabilities


5.398

5.883

Borrowings

17

1.539.828

1.900.269

Dividends payable


717

720



2.979.925

3.568.329

Total liabilities


4.422.670

4.788.501

Total equity and liabilities


6.868.406

7.160.075

 

 

 

 

 

 

 

Group Consolidated statement of comprehensive income

 



For the three month period ended


Note

31 March 2018

31 March 2017









Sales

4

2.168.386

2.065.753

Cost of sales


(1.944.687)

(1.781.089)





Gross profit


223.699

284.664

Selling and distribution expenses


(74.475)

(66.234)

Administrative expenses


(32.129)

(29.894)

Exploration and development expenses


(126)

(129)

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

5

2.023

(7.332)

Operating profit


118.992

181.075

Finance income


975

1.264

Finance expense


(39.508)

(47.651)

Currency exchange losses

6

(2.118)

(854)





Share of profit of investments in associates and joint ventures

7

13.895

30.617

Profit  before income tax


92.236

164.451

Income tax expense

8

(18.015)

(40.627)

Profit for the period


74.221

123.824

Other comprehensive income/ (loss) :




Items that will not be reclassified to profit or loss:




Changes in the fair value of equity instruments

2, 16

(147)

14

Items that may be reclassified subsequently to profit or loss:








Fair value gains /(losses) on cash flow hedges

16

1.884

(9.421)

Currency translation differences and other movements

16

(124)

(60)

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


1.613

(9.467)

Total comprehensive income for the period


75.834

114.357

Profit attributable to:




     Owners of the parent


74.272

123.821

     Non-controlling interests


(51)

3



74.221

123.824

Total comprehensive income attributable to:




     Owners of the parent


75.889

115.146

     Non-controlling interests


(55)

(789)



75.834

114.357

Basic and diluted earnings per share
(expressed in Euro per share)

9

0,24

0,41

 

 

 

Group Consolidated statement of cash flows

 



For the three month period ended


Note

31 March 2018

31 March 2017

Cash flows from operating activities




Cash generated (used in)/ from operations

19

(98.029)

40.600

Income tax received/(paid)


4.492

(1.559)

Net cash generated from / (used in) operating activities


(93.537)

39.041





Cash flows from investing activities




Purchase of property, plant and equipment & intangible assets

10,1

(25.452)

(18.022)

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


20

255

Acquisition of further equity interest in subsidiary


(16.000)

-

Purchase of subsidiary, net of cash acquired


(1.298)

-

Grants received


80

-

Interest received


975

1.264

Proceeds from disposal of investments in equity instruments


257

-

Net cash used in investing activities


(41.418)

(16.503)





Cash flows from financing activities




Interest paid


(32.663)

(41.477)

Dividends paid to shareholders of the Company


(3)

(187)

Movement in restricted cash

14 

144.445

11.873

Acquisition of treasury shares

16 

(249)

-

Proceeds from borrowings


-

45.502

Repayments of borrowings


(165.734)

(25.943)

Net cash used in financing activities


(54.204)

(10.232)





Net decrease in cash and cash equivalents


(189.159)

12.306





Cash and cash equivalents at the beginning of the period

14 

873.261

924.055

Exchange losses on cash and cash equivalents


(2.514)

(917)

Net decrease in cash and cash equivalents


(189.159)

12.306

Cash and cash equivalents at end of the period

14 

681.588

935.444

 

 

 

 

 

 

 

Parent Company Statement of Financial Position

 

 



As at


Note

31 March 2018

31 December 2017

ASSETS




Non-current assets




Property, plant and equipment

9

2.701.763

2.719.172

Intangible assets

10

8.725

7.042

Investments in subsidiaries, associates and joint ventures


672.472

671.622

Investment in equity instruments

3

1.079

1.252

Loans, advances and long-term assets


20.170

19.686



3.404.209

3.418.774





Current assets




Inventories

11

948.317

963.746

Trade and other receivables

12

1.039.840

989.901

Derivative financial instruments

3

15.847

11.514

Cash, cash equivalents and restricted cash

13

519.476

813.251



2.523.480

2.778.412

Total assets


5.927.689

6.197.186





EQUITY




Share capital

14

1.020.081

1.020.081

Reserves

15

362.732

360.694

Retained Earnings


486.830

428.448

Total equity


1.869.643

1.809.223





LIABILITIES




Non-current liabilities




Borrowings

16

1.113.878

909.579

Deferred income tax liabilities


114.659

89.959

Retirement benefit obligations


106.487

104.331

Provisions for other liabilities and charges


3.814

6.058

Trade and other payables


14.919

15.569



1.353.757

1.125.496

Current liabilities




Trade and other payables

17

1.355.203

1.554.027

Current income tax liabilities


1.584

2.769

Borrowings

16

1.346.785

1.704.951

Dividends payable


717

720



2.704.289

3.262.467

Total liabilities


4.058.046

4.387.963

Total equity and liabilities


5.927.689

6.197.186

 

 

 

 

 

 

 

 

 

 

 

Parent Company Statement of Comprehensive Income

 

 



For the three-month period ended


Note

31 March 2018

31 March 2017





Sales


2.010.635

1.904.474

Cost of sales


(1.855.792)

(1.684.076)

Gross profit


154.843

220.398

Selling and distribution expenses


(22.238)

(15.568)

Administrative expenses


(19.557)

(17.817)

Exploration and development expenses


(21)

(38)

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

5

619

(9.167)

Operating profit


113.646

177.808

Finance income


2.487

3.108

Finance expense


(36.419)

(42.814)

Currency exchange (losses) / gains

6

(2.501)

(721)

Profit before income tax


77.213

137.381

Income tax expense

7

(17.398)

(41.414)

Profit for the period


59.815

95.967

Other comprehensive income / (loss):




Items that will not be reclassified to profit or loss:




Changes in the fair value of equity instruments

15

(123)

-

Items that may be reclassified subsequently to profit or loss:




Fair value gains / (losses) on cash flow hedges

15

1.884

(9.421)



1.884

(9.421)

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


1.761

(9.421)

Total comprehensive income for the period


61.576

86.546

Basic and diluted earnings per share
(expressed in Euro per share)

8

0,20

0,31

 

 

 

 

 

Parent Company Statement of Cash flows

 

 



For the three-month period ended


Note

31 March 2018

31 March 2017

Cash flows from operating activities




Cash (used in) / generated from operations

18

(81.202)

95.323

Income tax paid


5.768

-

Net cash (used in) / generated from operations


(75.434)

95.323





Cash flows from investing activities




Purchase of property, plant and equipment & intangible assets

9,10

(17.401)

(14.663)

Interest received


2.487

3.108

Acquisition of minority interest in subsidiary


(16.000)

-

Participation in share capital increase of affiliated companies


(850)

-

Net cash used in investing activities


(31.764)

(11.555)





Cash flows from financing activities




Interest paid


(29.957)

(31.450)

Dividends paid


(3)

(187)

Movement in restricted cash

13

144.445

11.873

Acquisition of treasury stock

15

(249)

-

Proceeds from borrowings


7.700

34.000

Repayments of borrowings


(161.567)

(43.494)

Net cash used in financing activities


(39.631)

(29.258)





Net (decrease) / increase in cash and cash equivalents


(146.829)

54.510





Cash and cash equivalents at the beginning of the period

13

667.599

731.258

Exchange losses on cash and cash equivalents


(2.501)

(721)

Net (decrease) / increase in cash and cash equivalents


(146.829)

54.510

Cash and cash equivalents at end of the period

13

518.269

785.047

 


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