Key figures for the 1Q period to
31 March 2014
are:
All numbers in €m
|
1Q13
|
1Q14
|
% Δ
|
Adjusted EBITDA
|
38
|
51
|
+35
%
|
EBITDA
|
-12
|
25
|
-
|
Adjusted Net Income
|
-
21
|
-19
|
-
|
Net Income
|
-7
8
|
-
38
|
-
|
Net Debt
|
2,188
|
2,333
|
7%
|
Total Assets
|
7,123
|
6,567
|
-8%
|
Weak European refining environment
European
refining background remained challenging, with Urals exports at low levels and
other regional suppliers (
Iraq
,
Libya
) having
difficulties to maintain a consistent supply flow. In this environment, US
refiners were able to continue exporting increased diesel volumes to
Europe
, supported
by their competitive advantage of lower cost of crude oil and energy. As a
result, benchmark Med refining margins remained weak, with FCC margins
averaging $1.7/bbl (1Q13: $4.1/bbl), close to 10-year lows and Hydrocracking
margins at $4.1/bbl (1Q13: $4.7/bbl).
Greek fuels market shows stabilization signs
1Q14
transport fuel demand remained unchanged vs 1Q13, sustaining the stabilization trend
reported during the last 2 quarters. Gasoline demand is gradually substituted
by
diesel,
as new diesel car registrations have increased following the end of the ban on
private diesel cars in
Athens
and
Thessaloniki
two years ago. In this environment, the Group launched new products (BP
Ultimate Diesel, Diesel Ekonomy), improving customer value proposition and its
competitive
position
in this new market. Mild weather
conditions during 1Q14 and the continuation of high excise duties led to a
lower heating gasoil consumption (-15% vs 1Q13), resulting to weaker demand in
the domestic fuels market (-4%).
Improved financial results
Adjusted
EBITDA amounted to €51m (+35%
vs 1Q13
); Elefsina
refinery operations, the restructuring of our domestic marketing companies EKO
and Hellenic Fuels and cost control in all our business units, had a positive
impact on results. Refined product sales were marginally up to 2.8 million
tons, with exports reaching 50% of total sales. On the other hand, the continuation
of a challenging European refining environment, with weaker benchmarks and US
dollar, negatively affected 1Q results by over €20m.
The
contribution from Elefsina refinery was positive, even though it was shut-down for
necessary maintenance and improvement works in March. Following the successful
and safe completion of the start-up process, the refinery has resumed normal operations
at high utilization rates and improved performance.
Competitiveness
improvement projects and cost controls positively affected results; 1Q14 reports
an additional €18m benefit, bringing total contribution from these initiatives since
2008 to €290m cumulatively. As a result,
1Q14 fixed costs are down 13% vs 1Q13. Furthermore, a number of projects
completed in 2013, or currently under implementation, are expected to add to profitability
and cashflow in the next two years.
As a result
of improved operating performance, Reported EBITDA came at €25m (1Q13: -€12m),
despite inventory valuation losses
;
Reported Net
Results were also improved at -€38m (1Q13: -€78m).
Stronger
balance sheet
On
16 May 2014
, Hellenic Petroleum successfully issued the first ever unrated USD
Euro-bond from a Greek company. The size of the two-year issue came at $400m,
higher vs original plan and the coupon at 4.625%, following strong investor
demand. The new bond issue improves the Group’s liquidity position, allows
diversification of funding sources and leads to a reduction of funding costs.
Following the successful completion of our investment
program, capex relates to maintenance and minor improvement projects and in
1Q14 amounted to €25m. Working capital needs have been affected by the lower
utilization of our refineries during the end of 1Q14; as a result, Net Debt
came at €2.3bn.
Signing of
West Patraikos
lease agreement
On 14 May the lease agreement for exploration &
production in W. Patraikos area was signed by a Consortium formed by HELLENIC
PETROLEUM (operator), Edison International S.p.a. and Petroceltic Resources
Plc. Exploration activities in the area will begin following ratification by
the Greek Parliament.
DESFA sale
process
Following
the
signing of the
Share Purchase
Agreement (
SPA) for the sale of the 66%
of DESFA share capital from HELLENIC PETROLEUM and HRADF to SOCAR, for €400m,
regulatory approvals are in process from authorities in
Greece
and the EU. Completion of the transaction is expected
in 2014. HELLENIC PETROLEUM’s share of
the consideration for its 35% indirect share in DESFA amounts to €212m and the proceeds
from the sale are earmarked for the reduction of gearing and funding costs.
John
Costopoulos, Group CEO, commented on 1Q13 performance:
“Despite the prevailing challenges in the
international refining environment, during1Q14, our financial results improved compared
to last year.
It is worth mentioning the contribution of Elefsina
refinery, which despite the shut-down in March, enabled realization of better
margins during this quarter. The completion
of works
and safe start-up of the refinery took place in April with improved utilization
and operational performance.
Furthermore, 1Q14 results have benefited from the
continuous competitiveness improvement programs and the restructuring of our
marketing units in
Greece
.
The recent issuance of the USD Eurobond further
diversifies our funding mix and provides a low-cost hedging strategy against
currency fluctuations. The issue, with a 4.625% coupon, is the first step
towards de-escalating our financing costs, which driven by the Greek crisis had
a negative effect on our results and competitiveness in the international
markets.
Following the signing of the lease agreement for
exploration and production in W. Patraikos, the Group re-engages in the Greek
upstream industry, aiming to utilise our local expertise and our partners’
international experience and capabilities.
In 2014, despite the challenging environment, the
enhanced performance of our refineries as well as benefits from competitiveness
improvement programs are expected to have a positive impact on results and
cashflow.”
Key highlights and contribution for each of the main
business units were:
REFINING, SUPPLY & TRADING
Domestic
Refining Adjusted EBITDA at €25m (
+7
%), as Elefsina contribution and
improved Aspropyrgos performance offset weak
European
refining
environment.
Production
at 2.5m MT, with increased yield of high value products.
Exports at
1.4m MT (+7% vs 1Q13), offset domestic market decline
,
driving sales to 2.8m MT (+1%).
DOMESTIC MARKETING
Improved
operational performance in Retail and C&I and successful restructuring
programs, led Adjusted EBITDA at
€2m (1Q13:
-€3m), despite weaker heating gasoil demand.
Fixed cost
base reduced by 10% vs 1Q13.
INTERNATIONAL MARKETING
Adjusted
EBITDA at €9m (+31%), on margin improvement, cost control and supply chain
benefits.
PETROCHEMICALS
Despite
flat PP margins vs 1Q13, cost control and high level of vertical integration
between Aspropyrgos and Thessaloniki plants, led to increased profitability, with
EBITDA at €17m, (+19% vs 1Q1
3
).
ASSOCIATED COMPANIES
DEPA
contribution to Group results at €13m (vs €31m in 1Q13), due to weak demand as
warmer weather affected local supply companies’ (EPAs) sales and gas-fired
electricity generation was lower.
ELPEDISON
EBITDA at €14m (+7% vs 1Q13).
Key
consolidated financial indicators (prepared in accordance with IFRS) for the
three-month period to
31 March
201
4
are shown below:
€ million
|
1Q13
|
1Q14
|
% Δ
|
|
P&L figures
|
|
|
|
|
Net Sales
|
2,241
|
2,077
|
-7%
|
|
EBITDA
|
-12
|
25
|
-
|
|
Adjusted EBITDA 1
|
38
|
51
|
+
35%
|
|
Net Income
|
-78
|
-38
|
-
|
|
Adjusted Net Income 1
|
-21
|
-19
|
-
|
|
EPS (€)
|
-0.25
|
-0.12
|
-
|
|
Adjusted EPS (€) 1
|
-0.07
|
-0.06
|
-
|
|
Balance Sheet
Items
|
|
|
|
|
Capital Employed
|
4,623
|
4,505
|
-3%
|
|
Net Debt
|
2,188
|
2,333
|
7%
|
|
Debt Gearing (D/D+E)
|
47%
|
52%
|
-
|
|