Company Announcements

1st Quarter Results

Source: RNS
RNS Number : 8203M
Hellenic Petroleum S.A.
13 May 2020
 

13 May 2020

First quarter 2020 financial results

 

 

Improved results on higher production and exports, amid negative oil price environment and covid-19 crisis

 

HELLENIC PETROLEUM Group announced its 1Q20 financial results, with Adjusted EBITDA 4% higher, at €128m and Adjusted Net Income amounting to €44m (+18%).

Refining environment was driven by increased volatility and the covid-19 pandemic, especially at quarter end; improved Refining and Fuels Marketing performance outweighed the negative impact of crude oil and feedstocks' pricing, as well as the weaker domestic market sales due to covid-19. Increased refining availability led exports higher by 27% and total sales at 3.9m MT (+9%). Aspropyrgos refinery successfuly completed the first full quarter of IMO operation model, supplying the market with the full range of products, with a substantial change in the crude mix and required adjustments on operation and working capital.

The significant drop in crude and oil product prices by approximately 50% between December and March, to the lowest levels of the last few years, affected IFRS Reported Results, resulting in inventory losses of €540m, leading Reported Net Results to €-341m. It is noted that losses would have been higher, had the Group not proceeded with an inventory management program, already from 4Q19.

 

Covid-19 impact and response - Key developments

The outbreak of the pandemic and the measures implemented globally are having a significant impact on the economy, affecting the international energy sector. It is estimated that world demand decline, during restrictions on mobility and economic activity will reach or even exceed 20% in 2Q20, leading to a significant drop and volatility in crude oil and product prices; combined with the inability of existing storage capacity to absorb the supply surplus, resulted in an agreement from oil producing countries for a c.10mbpd output reduction from May, while many refineries internationally are reducing runs or shutting down in 2Q20. The Greek market is also affected, with the decline in auto-fuels demand during April estimated at approximately 40%.

The Group proceeded with a series of measures to manage the crisis, already from end of February, with key priorities the health and safety of all staff and contractors, the smooth operation of facilities for uninterrupted market supply, ensuring sufficient liquidity and managing risks, as well as capturing opportunities in the contago pricing structure of crude and products. A policy for the prevention and response to the impact of the pandemic was established, with continuous information updating for employees, regular disinfection at facilities and offices and provision of personal protection equipment. Furthermore, refinery shifts were adjusted and a new tele-working model (WFH) was adopted for the vast majority of head-office staff, utilizing digital technologies.

The Group has a strong balance sheet, with sufficient liquidity at the start of the crisis. Since the beginning of March, in the context of risk management for the pandemic, the Group's access to credit, from Greek and international banks, grew by €300m, which combined with the utilization of existing facilities headroom, resulted in a total liquidity increase since the beginning of the year of €550m, to help manage the crisis. Furthermore, finance expenses are at historic lows, recording a further significant reduction of 21%, to €26m in 1Q20.

In terms of its strategy, the Group is assessing the impact of the crisis and will adjust its business planning accordingly. Growing in the energy sector and improving carbon footprint by 50% in the next 10 years, remain key priorities, despite any delays due to the crisis. Design and implementation works for the 204MW Kozani project, as well as the sale process of DEPA subsidiaries (Commercial and Infrastructure) in which the Group is involved are in process. It is noted that during 2Q20, the corporate restructuring of DEPA SA, with the spin off of international projects and the demerger of DEPA Infrastructure was completed.

 

Andreas Shiamishis, Group CEO, commented on results:

"In 1Q20 we managed to improve our operational performance and financial results in almost all our activities, while continuing the fast implementation of our strategy. Despite the notable recent developments in the oil industry, there is no doubt that the event that will define 2020 is the covid-19 pandemic and its impact on the world economy. Already from the first weeks of the crisis, we witnessed unprecedented changes in international supply and demand levels, with respective impact on prices. The crisis will continue to negatively affect most economic activity sectors, especially tourism that is more relevant to our markets.

The Group was among the first to take necessary measures, achieving uninterrupted operations, in the safest possible conditions for our personnel, which successfully responded to the challenge of transitioning to a different operating model. Furthermore, with full awareness of our responsibility to the Greek society, we designed and implement actions totaling €8m, aimed at supporting the national health system and vulnerable groups, that are most affected during this period."

 

Deterioration of refining environment

International crude oil prices moved lower throughout 1Q20, recording a significant decline in March, as the impact from covid-19 and OPEC+ not agreeing to extend its production cuts escalated, with Brent prices averaging at $50/bbl in 1Q20, while in March Brent came in at $32/bbl, the lowest since 1Q16.

The US dollar strengthened further vs the euro, reflecting international macro developments; euro averaged at 1.10 in 1Q20.

White product cracks were lower vs 4Q19, due to weak demand, while HSFO cracks recovered strongly from the historic lows of 4Q19. Brent-Urals widened significantly to the highest levels in the last 9 years, with a positive impact on benchmark refining margins. As a result, FCC margins averaged at $3.8/bbl, with Hydrocracking margins at $5.2/bbl.

 

Weaker domestic fuel demand

Domestic fuel demand in 1Q20 was 4% lower at 1.7m MT, with auto-fuels consumption recording a respective decline, due to the negative impact of covid-19 on demand in March. Heating gasoil, despite strong demand in March, due to mobility restrictions, was also lower in 1Q20, on mild weather in January-February. Aviation and bunkering fuels was 18% lower, to 681k MT. The negative trend of 1Q20 is expected to intensify in 2Q.

 

Strong balance sheet, liquidity management

The Group took advantage of favorable international capital markets conditions for the strengthening of its balance sheet, with the €500m Eurobond issue in 4Q19, achieving a material increase of its liquidity. Furthermore, at the initial signs of the crisis, proceeded to the additional improvement of its debt headroom, with new credit facilities of €200m and an increase of its LC issuance capacity for crude supply. Net Debt came in at €1.9bn, with gearing ratio at 49%, mainly due to the commodity price drop and the working capital increase.

 

Key highlights and contribution for each of the main business units in 1Q20 were:

REFINING, SUPPLY & TRADING

-     Refining, Supply & Trading 1Q20 Adjusted EBITDA at €86m (+8%).

Net production 8% higher to 3.9m MT, with a respective increase in sales which came in at 3.9m MT (+9%).

High value product output increased, as IMO FO production was higher at Aspropyrgos refinery, minimizing HSFO production respectively.

 

PETROCHEMICALS

1Q20 Adjusted EBITDA came in at €20m (-22%), on account of weaker benchmark PP margins.

 

MARKETING

In Domestic Marketing, improved Retail performance resulted in higher Adjusted EBITDA of €12m, mitigating the impact of weaker demand at the end of the quarter.

Higher sales and improved operational performance in International Marketing led Adjusted EBITDA to €15m (+29%).

 

ASSOCIATE COMPANIES

- DEPA Group contribution to 1Q20 consolidated Net Income (excluding the positive impact of BOTAS case arbitration) came in at €15m.

- ELPEDISON 1Q20 EBITDA was 58% higher, at €17m, due to higher production and supply optimisation. 

 

Key consolidated financial indicators (prepared in accordance with IFRS) for 1Q20 are shown below:

 

 

€ million

 

 

 

1Q19

1Q20

% Δ

P&L figures

 

 

 

 

 

 

Refining Sales Volumes ('000 ΜΤ)

 

 

 

3,551

3,883

9%

Sales

 

 

 

1,991

1,919

-4%

EBITDA

 

 

 

135

-416

-

Adjusted EBITDA 1

 

 

 

123

128

4%

Net Income

 

 

 

47

-341

-

Adjusted Net Income 1

 

 

 

37

44

18%

Balance Sheet Items

 

 

 

 

 

 

Capital Employed

 

 

 

3,971

3,858

-3%

Net Debt

 

 

 

1,522

1,906

25%

Debt Gearing (ND/ND+E)

 

 

 

38%

49%

-

 

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 2020

31 December 2019

ASSETS

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

10

3.280.073

3.297.668

Right of use assets

11

242.172

242.934

Intangible assets

12

104.805

104.426

Investments in associates and joint ventures

 

429.932

384.747

Deferred income tax assets

 

60.850

59.358

Investment in equity instruments

3

812

1.356

Loans, advances and long term assets

 

46.094

55.438

 

 

4.164.738

4.145.927

Current assets

 

 

 

Inventories

13

679.890

1.012.802

Trade and other receivables

14

647.157

748.153

Income tax receivable

 

92.128

91.391

Assets held for sale

 

2.018

2.520

Derivative financial instruments

3

-

3.474

Cash and cash equivalents

15

970.652

1.088.198

 

 

2.391.845

2.946.538

Total assets

 

6.556.583

7.092.465

 

 

 

 

EQUITY

 

 

 

Share capital and share premium

16

1.020.081

1.020.081

Reserves

17

250.682

276.972

Retained Earnings

 

625.162

964.972

Equity attributable to equity holders of  the parent

 

1.895.925

2.262.025

Non-controlling  interests

 

63.599

64.548

Total equity

 

1.959.524

2.326.573

 

 

 

 

LIABILITIES

 

 

 

Non-current liabilities

 

 

 

Interest bearing loans & borrowings

18

1.380.534

1.610.094

Lease liabilities

 

169.923

169.357

Deferred income tax liabilities

 

86.349

213.495

Retirement benefit obligations

 

182.038

180.398

Provisions

 

25.596

25.625

Trade and other payables

 

28.391

28.376

 

 

1.872.831

2.227.345

Current liabilities

 

 

 

Trade and other payables

19

1.159.572

1.401.732

Derivative financial instruments

 

30.044

-

Income tax payable

 

6.442

7.147

Interest bearing loans & borrowings

18

1.497.419

1.022.270

Lease liabilities

 

29.475

30.537

Dividends payable

 

1.276

76.861

 

 

2.724.228

2.538.547

Total liabilities

 

4.597.059

4.765.892

Total equity and liabilities

 

6.556.583

7.092.465

Group Consolidated statement of comprehensive income

 

For the three month period ended

 

Note

31 March 2020

31 March 2019

Revenue from contracts with customers

4

1.918.964

1.991.216

Cost of sales

 

(2.287.093)

(1.804.901)

Gross profit / (loss)

 

(368.129)

186.315

Selling and distribution expenses

 

(80.846)

(75.548)

Administrative expenses

 

(34.437)

(33.963)

Exploration and development expenses

 

(1.305)

(450)

Other operating expense

5

(2.960)

(2.764)

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

5

5.669

2.916

Operating profit / (loss)

 

(479.048)

79.270

Finance income

1.062

1.000

Finance expense

 

(26.707)

(33.296)

Lease finance cost

 

(2.748)

(2.273)

Currency exchange gains / (losses)

6

2.262

1.255

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

7

45.407

18.091

Profit / (loss) before income tax

(459.772)

64.047

Income tax credit / (expense)

8

119.074

(17.433)

Profit / (loss) for the period

 

(340.698)

46.614

Profit / (loss) attributable to:

 

 

 

     Owners of the parent

 

(339.809)

47.115

     Non-controlling interests

 

(889)

(501)

 

 

(340.698)

46.614

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

(224)

-

Changes in the fair value of equity instruments

17

(436)

(4)

 

 

(660)

(4)

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

(25.474)

7.889

Currency translation differences and other movements

17

(216)

30

 

 

(25.690)

7.919

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

 

(26.350)

7.915

Total comprehensive income / (loss) for the period

 

(367.048)

54.529

Total comprehensive income / (loss) attributable to:

 

 

 

     Owners of the parent

 

(366.098)

55.043

     Non-controlling interests

 

(949)

(514)

 

 

(367.048)

54.529

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

9

(1,11)

0,15

Group Consolidated statement of cash flows

 

 

 

For the three month period ended

 

Note

31 March 2020

31 March 2019

Cash flows from operating activities

 

 

 

Cash generated (used in)/ from operations

20 

(221.655)

4.514

Income tax received/(paid)

 

(3.590)

(2.660)

Net cash generated from / (used in) operating activities

 

(225.245)

1.854

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment & intangible assets

10,12

(35.532)

(31.360)

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

 

665

245

Participation in share capital (increase)/ decrease of associates

 

-

200

Grants received

 

43

-

Interest received

 

1.062

1.000

Prepayments for right-of-use assets

 

(215)

(259)

Net cash used in investing activities

 

(33.977)

(30.174)

Cash flows from financing activities

 

 

 

Interest paid

 

(15.659)

(26.215)

Dividends paid to shareholders of the Company

 

(76.215)

-

Proceeds from borrowings

 

239.681

7.722

Repayments of borrowings

 

68

148

Payment of lease liabilities - principal

 

(10.015)

(8.581)

Payment of lease liabilities - interest

 

(2.748)

(2.273)

Net cash used in financing activities

 

135.112

(29.199)

Net decrease in cash and cash equivalents

 

(124.110)

(57.519)

 

 

 

 

Cash and cash equivalents at the beginning of the period

15

1.088.198

1.275.159

Exchange gain/(loss) on cash and cash equivalents

 

6.564

4.602

Net decrease in cash and cash equivalents

 

(124.110)

(57.519)

Cash and cash equivalents at end of the period

15

970.652

1.222.242

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Parent Company Statement of Financial Position

 

 

 

As at

 

Note

31 March 2020

31 December 2019

ASSETS

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

9

2.677.554

2.693.794

Right-of-use assets

10

30.876

32.084

Intangible assets

11

8.862

8.704

Investments in subsidiaries, associates and joint ventures

 

1.055.138

1.045.138

Investment in equity instruments

3

519

965

Loans, advances and long-term assets

 

10.616

22.089

 

 

3.783.565

3.802.774

 

 

 

 

Current assets

 

 

 

Inventories

12

588.244

899.760

Trade and other receivables

13

550.786

791.257

Income tax receivable

 

88.445

87.616

Derivative financial instruments

3

-

3.474

Cash and cash equivalents

14

738.388

888.564

 

 

1.965.863

2.670.671

Total assets

 

5.749.428

6.473.445

 

 

 

 

EQUITY

 

 

 

Share capital and share premium

15

1.020.081

1.020.081

Reserves

16

257.294

283.106

Retained Earnings

 

555.005

935.648

Total equity

 

1.832.380

2.238.835

 

 

 

 

LIABILITIES

 

 

 

Non-current liabilities

 

 

 

Interest bearing loans and borrowings

17

1.225.765

1.607.838

Lease liabilities

 

20.639

21.264

Deferred income tax liabilities

 

55.272

182.065

Retirement benefit obligations

 

148.463

147.074

Provisions

 

22.797

22.797

Other non-current liabilities

 

13.455

13.620

 

 

1.486.391

1.994.658

Current liabilities

 

 

 

Trade and other payables

18

1.056.016

1.271.809

Derivative financial instruments

3

30.044

-

Income tax payable

 

5.192

5.785

Interest bearing loans and borrowings

17

1.329.283

875.576

Lease liabilities

 

8.846

9.919

Dividends payable

 

1.276

76.863

 

 

2.430.657

2.239.952

Total liabilities

 

3.917.048

4.234.610

Total equity and liabilities

 

5.749.428

6.473.445

 

 

 

Parent Company Statement of Comprehensive Income

 

 

 

For the three-month period ended

 

Note

31 March 2020

31 March 2019

Revenue from contracts with customers

4

1.740.600

1.824.373

Cost of sales

 

(2.173.932)

(1.703.824)

Gross profit / (loss)

 

(433.332)

120.549

Selling and distribution expenses

 

(27.553)

(24.294)

Administrative expenses

 

(20.612)

(21.043)

Exploration and development expenses

 

(1.017)

(29)

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

5

4.464

2.851

Operating profit / (loss)

 

(478.050)

78.034

Finance income

 

2.220

2.388

Finance expense

 

(25.392)

(30.567)

Lease finance cost

 

(358)

(219)

Currency exchange gains/(losses)

6

2.295

1.563

Profit / (Loss) before income tax

 

(499.285)

51.199

Income tax credit / (expense)

7

118.642

(15.144)

Profit / (Loss) for the period

 

(380.643)

36.055

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

(338)

(17)

 

 

(338)

(17)

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

(25.474)

7.889

 

 

(25.474)

7.889

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

 

(25.812)

7.872

Total comprehensive income / (loss) for the period

 

(406.455)

43.927

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

8

(1,25)

0,12

 

 

 

 

 

 

 

 

 

 

 

 

 

Parent Company Statement of Cash flows

 

 

 

For the three-month period ended

 

Note

31 March 2020

31 March 2019

Cash flows from operating activities

 

 

 

Cash generated from / (used in) operations

19

(246.288)

9.176

Income tax received / (paid)

 

(795)

(1.768)

Net cash generated from / (used in) operations

 

(247.083)

7.408

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment & intangible assets

9,11

(24.360)

(25.851)

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

 

-

4

Dividends received

 

150.000

-

Interest received

 

2.220

2.388

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

 

(10.000)

-

Net cash generated from / (used in) investing activities

 

117.860

(23.459)

Cash flows from financing activities

 

 

 

Interest paid

 

(14.237)

(23.295)

Dividends paid

 

(76.215)

(7)

Proceeds from borrowings

 

218.120

4.442

Repayments of borrowings

 

(152.002)

-

Payment of lease liabilities - principal

 

(2.759)

(1.635)

Payment of lease liabilities - interest

 

(358)

(219)

Net cash generated from /(used in) financing activities

 

(27.451)

(20.714)

Net increase / (decrease) in cash and cash equivalents

 

(156.674)

(36.765)

Cash and cash equivalents at the beginning of the period

14

888.564

1.071.585

Exchange gains / (losses) on cash and cash equivalents

 

6.498

4.559

Net increase / (decrease) in cash and cash equivalents

 

(156.674)

(36.765)

Cash and cash equivalents at end of the period

14

738.388

1.039.379

 


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