Company Announcements

3rd Quarter Results

Source: RNS
RNS Number : 4309E
Hellenic Petroleum S.A.
05 November 2020
 

PRESS RELEASE

5 November 2020

 

 

Maintaining positive operating results maintained, despite most adverse refining environment on record and COVID-19 impact; successful completion of Aspropyrgos refinery turnaround

 

HELLENIC PETROLEUM announced its 3Q20 consolidated financial results, with Adjusted EBITDA coming in at €66m in 3Q20 and €256m in 9M20.

In terms of 3Q20 business environment, the significant decline in refining margins to negative levels on average, combined with the lower domestic market demand and the stronger euro, led to the worse international refining backdrop historically. Furthermore, the requirement for additional health & safety measures in facilities due to the pandemic was a key challenge. Increased product inventory levels, as well as reduced output and availability of crude oil combined with slow demand recovery, drove benchmark refining margins to negative levels, the lowest ever on record. The protracted low margin environment leads to adverse economics for a number of refineries globally, as well as the Med region, with some of them ceasing operations temporarily or permanently, or converting to other activities. In terms of the domestic market, auto-fuel demand recovered from 2Q20 lows, however remains materially below last year's levels, especially in aviation and bunkering.

In these exceptionally challenging conditions and despite the 5-year full turnaround of Aspropyrgos, our refineries maintained high utilization levels. Total sales amounted to 3.7m MT (-9%), due to the domestic market drop, being sharper in aviation and marine fuels, while exports were up, as inventory management and realization of contango trades contributed to smooth market supply, with significant economic benefits.

With regards to the financial results in accordance with IFRS, the drop in crude oil and product prices towards the end of the quarter resulted to inventory valuation losses of €42m, with Reported EBITDA at €19m.

 

Strategy and main developments

Benchmark refining margins recorded small recovery in 4Q20, as high product inventory levels gradually clear, mainly due to lower refining production. In any case, international margins remain significantly lower vs the average of previous years, while demand recovery is expected to be negatively affected by the new lockdown measures in Europe.

Aspropyrgos Refinery has successfully and safely completed a shut-down for its 5-year full turnaround, with a total cost of more than €130m, focused on environmental and safety upgrade projects.

On 12 October 2020, HPF plc, a fully owned subsidiary of HELLENIC PETROLEUM, completed a €99.9m retap on its existing Oct '24 notes, through private placement, with a 2.4% yield. EBRD contributed 75% of the issue proceeds that will be used for the development and construction of the 204MW PV project at Kozani, North Greece. It is noted that the acquisition was completed on 1 October and construction is scheduled to start in November.

Furthermore, regarding the sale procedures of DEPA Commercial and Infrastructure, in which HELLENIC PETROLEUM participates, due diligence procedures are in process, with binding bids scheduled for March 2021.

 

Benchmark refining margins at the lowest ever

Crude oil prices averaged $43/bbl, significantly lower than last year, having recovered from the multi-year lows recorded in 2Q20, following the OPEC++ countries agreement for the control of crude oil production and exports. This resolution had a negative impact on the availability and pricing of high sulphur grades, affecting European refineries.

Main product cracks remained at particularly low levels, with diesel dropping further to all-time lows, as the collapse in aviation fuel demand led to an adjustment of yields, increasing diesel output and resulting in surplus inventories. Furthermore, Urals pricing higher than Brent, combined with the above, led benchmark refining margins to historically low levels. FCC margins averaged at $0/bbl, with Hydrocracking margins at $-0.9/bbl.

The euro strengthened vs the US dollar to the highest levels of the last two years, with €/$ exchange rate averaging at 1.17 for the 3Q20.

 

Domestic fuel market demand decline

Domestic demand was affected mainly by the reduced economic activity in sectors like tourism, where the pandemic and measures to control it had a negative impact. More specifically, domestic ground fuels demand was 8% lower y-o-y, at 1.5m MT. The decline was larger in the aviation and shipping fuels market (-49%), with aviation fuel demand recovering q-o-q, however remaining materially lower vs 3Q19 (-63%).

 

Strong balance sheet, reduced financing cost

The Group continued to improve its capital structure, despite the particularly adverse environment, drawing additional liquidity, from both international capital markets as well as the Greek banking system, with very favorable terms. During 4Q20, the Group expects to conclude negotiations for the refinancing of €900m of credit facilities maturing in the next 6 months, further improving its debt maturity profile.

Financing cost is 14% lower y-o-y in 9M20, at €78m, the lowest of the last few years.

 

 

Andreas Shiamishis, Group CEO, commented on results:

"During 3Q20, we faced the most adverse industry environment in history. Already many refineries in the region have reduced utilization, while some are curtailing or terminating activities. Despite the partial recovery of the world economy vs 2Q20, the fuels market remains at significantly lower levels, as the pandemic affects tourism and travel in general. Operating environment remains challenging, with the health and safety of our employees, as well as the uninterrupted operation of the supply chain, being top priorities.

In this environment, we managed to sustain our production at high levels, increasing our exports, while taking advantage of the international market opportunities, in order to mitigate, to the extent possible, the negative impact.

The safe and successful completion of the turnaround program of our largest refinery in Aspropyrgos, which was a demanding project, due to the very large scale of works in a short time frame and the additional health and safety challenges due to COVID-19, was particularly important for us. On behalf of the Management, I would like to congratulate all the colleagues that were involved. The full restart of the refinery in the coming days will result in improved financials and environmental performance.

In terms of strategy implementation, we took important steps in relation to the large RES project in Kozani. We completed the acquisition and secured funding with especially favorable terms and the tangible support of international capital markets and the EBRD.

At the same time, we continued and increased our contribution towards facing the pandemic, especially in terms of supporting the National Health System, with notable increase of the testing capacity, as well as strengthening the ICU system.

The environment is expected to remain difficult in the coming months, with expectations for a substantial improvement after mid-2021. The fragile recovery in the oil market is not enough to return to previous levels and our objective remains to effectively manage the Covid-19 impact on our activities and performance in the best possible way. At the same time, despite the structural issues in the energy market, we intend to take advantage of this period to implement our growth plans to cleaner energy, as well as to accelerate the digital transformation in our activities, in order to improve the Group's position in the future."

 

Key highlights and contribution for each of the main business units in 3Q20 were:

 

REFINING, SUPPLY & TRADING

-     Refining, Supply & Trading 3Q20 Adjusted EBITDA at €17m.

 -    Production amounted to 3.3m MT (-14%), due to the Aspropyrgos shut-down. Sales amounted to 3.7m MT, with exports up 10%, at 2.2m MT, partly offsetting domestic market decline.

Crude mix was driven mainly by the new IMO operating model at Aspropyrgos, while white products yields exceeded 90%.

PETROCHEMICALS

Adjusted EBITDA amounted to €15m (-24%) in the 3Q20, due to reduced propylene output at Aspropyrgos during maintenance, as well as weak PP benchmark margins.

 

MARKETING

In Domestic Marketing, the significant drop in aviation and bunkering fuels and the demand decline due to lower tourism in the country, led sales volumes and profitability lower, with 3Q20 Adjusted EBITDA at €17m (-50%).

In International Marketing, good operating performance resulted in limiting the impact of the pandemic in terms of volumes and contribution, with 3Q20 Adjusted EBITDA at €17m (-16%).

 

ASSOCIATED COMPANIES

DEPA Group contribution to 3Q20 consolidated Net Income amounted to €4m.   

Elpedison's EBITDA for the 3Q20 came in at €15m, with 9M20 at €43m, a notable increase vs last year, due to supply mix optimisation.

 

 

HELLENIC PETROLEUM GROUP

Key consolidated financial indicators (prepared in accordance with IFRS) for 3Q/9M20 are shown below:

€ million

3Q19

3Q20

% Δ

9M19

9M20

% Δ

P&L figures

 

 

 

 

 

 

Refining Sales Volumes ('000 ΜΤ)

4,037

3,667

-9%

11,727

11,173

-5%

Sales

2,348

1,474

-37%

6,805

4,460

-34%

EBITDA

141

19

-86%

464

-321

-

Adjusted EBITDA 1

201

66

-67%

453

256

-44%

Net Income

46

-43

-

167

-379

-

Adjusted Net Income 1

90

-8

-

160

13

-92%

Balance Sheet Items

 

 

 

 

 

 

Capital Employed

 

 

 

3,916

3,989

2%

Net Debt

 

 

 

1,509

2,125

41%

Debt Gearing (ND/ND+E)

 

 

 

39%

53%

-

 

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

30 September 2020

31 December 2019

ASSETS

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

10

3.288.304

3.297.668

Right-of-use assets

11

229.732

242.934

Intangible assets

12

104.771

104.426

Investments in associates and joint ventures

7

400.389

384.747

Deferred income tax assets

 

66.038

59.358

Investment in equity instruments

3

820

1.356

Loans, advances and long term assets

 

41.694

55.438

 

 

4.131.748

4.145.927

Current assets

 

 

 

Inventories

13

740.090

1.012.802

Trade and other receivables

14

568.839

748.153

Income tax receivables

 

92.172

91.391

Assets held for sale

 

2.292

2.520

Derivative financial instruments

3

4.936

3.474

Cash and cash equivalents

15

828.333

1.088.198

 

 

2.236.662

2.946.538

Total assets

 

6.368.410

7.092.465

 

 

 

 

EQUITY

 

 

 

Share capital and share premium

16

1.020.081

1.020.081

Reserves

17

271.679

276.972

Retained Earnings

 

507.313

964.972

Equity attributable to equity holders of  the parent

 

1.799.073

2.262.025

Non-controlling  interests

 

64.950

64.548

Total equity

 

1.864.023

2.326.573

 

 

 

 

LIABILITIES

 

 

 

Non-current liabilities

 

 

 

Interest bearing loans & borrowings

18

1.232.937

1.610.094

Lease liabilities

 

167.143

169.357

Deferred income tax liabilities

 

30.340

213.495

Retirement benefit obligations

 

188.499

180.398

Provisions

 

25.413

25.625

Other non-current liabilities

 

28.106

28.376

 

 

1.672.438

2.227.345

Current liabilities

 

 

 

Trade and other payables

19

1.078.832

1.401.732

Derivative financial instruments

 

1.806

-

Income tax payable

 

2.133

7.147

Interest bearing loans & borrowings

18

1.721.163

1.022.270

Lease liabilities

 

26.738

30.537

Dividends payable

 

1.277

76.861

 

 

2.831.949

2.538.547

Total liabilities

 

4.504.387

4.765.892

Total equity and liabilities

 

6.368.410

7.092.465

 

 

Group Consolidated statement of comprehensive income

 

 

For the nine month period ended

 

For the three month period ended

 

Note

30 September 2020

30 September 2019

 

30 September 2020

30 September 2019

Revenue from contracts with customers

4

4.459.739

6.804.877

 

1.473.723

2.348.248

Cost of sales

 

(4.637.613)

(6.186.569)

 

(1.404.035)

(2.149.345)

Gross profit / (loss)

 

(177.874)

618.308

 

69.688

198.903

Selling and distribution expenses

 

(235.075)

(238.828)

 

(76.630)

(81.394)

Administrative expenses

 

(101.141)

(102.154)

 

(33.461)

(36.494)

Exploration and development expenses

 

(4.160)

(624)

 

(1.823)

1.087

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

5

9.378

14.545

 

(211)

1.465

Operating profit /(loss)

 

(508.872)

291.247

 

(42.437)

83.567

Finance income

 

3.904

4.427

 

1.179

1.471

Finance expense

 

(81.433)

(94.185)

 

(26.501)

(27.741)

Finance expense - lease finance cost

 

(8.108)

(7.320)

 

(2.672)

(2.615)

Currency exchange gain / (loss)

6

10.831

833

 

6.577

90

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

7

23.870

15.012

 

5.472

567

Profit / (loss)  before income tax

 

(559.808)

210.014

 

(58.382)

55.339

Income tax credit / (expense)

8

180.666

(42.577)

 

15.020

(9.264)

Profit / (loss) for the period

 

(379.142)

167.437

 

(43.362)

46.075

Profit / (loss) attributable to:

 

 

 

 

 

 

     Equity holders of the parent

 

(380.972)

165.690

 

(45.131)

44.367

     Non-controlling interests

 

1.830

1.747

 

1.769

1.708

 

 

(379.142)

167.437

 

(43.362)

46.075

Other comprehensive income / (loss):

 

 

 

 

 

 

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

 

 

 

 

 

 

Actuarial gains / (losses) on defined benefit pension plans

17

(2.953)

(6.494)

 

(2.953)

(6.438)

Share of other comprehensive income / (loss) of associates

17

288

(41)

 

71

-

Changes in the fair value of equity instruments

17

(411)

626

 

(62)

(74)

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

 

(3.076)

(5.909)

 

(2.944)

(6.512)

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

 

 

 

 

 

 

Recycling of (gains) / losses on hedges through comprehensive income

17

25.077

1.501

 

-

-

Fair value gains / (losses) on cash flow hedges

17

(27.398)

4.149

 

3.742

(1.037)

Currency translation differences and other movements

17

78

288

 

(66)

222

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

 

(2.243)

5.938

 

3.676

(815)

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

 

(5.319)

29

 

732

(7.327)

Total comprehensive income / (loss) for the period

 

(384.461)

167.466

 

(42.630)

Total comprehensive income / (loss) attributable to:

 

 

 

 

 

 

     Equity holders of the parent

 

(386.265)

165.699

 

(44.401)

37.021

     Non-controlling interests

 

1.804

1.767

 

1.771

1.727

 

 

(384.461)

167.466

 

(42.630)

38.748

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

9

(1,25)

0,54

 

(0,15)

0,15

 

Group Consolidated statement of cash flows

 

 

 

For the nine month period ended

 

Note

30 September 2020

30 September 2019

Cash flows from operating activities

 

 

 

Cash generated from / (used in) operations

20 

(176.897)

398.880

Income tax received / (paid)

 

(30.054)

(63.874)

Net cash generated from / (used in) operating activities

 

(206.952)

335.006

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment & intangible assets

10,12

(146.244)

(135.382)

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

 

1.827

1.048

Share capital issue expenses

 

(51)

(341)

Participation in share capital increase of associates

 

-

(9.950)

Purchase of subsidiary, net of cash acquired

25

-

(5.341)

Grants received

 

230

274

Interest received

 

3.904

4.427

Prepayments for right-of-use assets

 

0

-

Dividends received

 

8.519

30.490

Proceeds from disposal of assets held for sale

 

-

1.334

Proceeds from disposal of investments in equity instruments

 

-

18

Net cash generated from / (used in) investing activities

 

(131.816)

(113.423)

 

 

 

 

Cash flows from financing activities

 

 

 

Interest paid

 

(62.643)

(87.938)

Dividends paid to shareholders of the Company

 

(152.622)

(150.077)

Dividends paid to non-controlling interests

 

(1.060)

(2.246)

Participation of minority shareholders in share capital increase of subsidiary

 

34

34

Proceeds from borrowings

 

349.201

12.808

Repayments of borrowings

 

(22.047)

(346.543)

Payment of lease liabilities - principal, net

 

(24.123)

(22.244)

Payment of lease liabilities - interest

 

(8.108)

(7.320)

Net cash generated from / (used in) financing activities

 

78.633

(603.526)

 

 

 

 

Net increase / (decrease) in cash and cash equivalents

 

(260.134)

(381.944)

 

 

 

 

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

 

269

9.448

Net increase / (decrease) in cash and cash equivalents

 

(260.134)

(381.944)

Cash and cash equivalents at end of the period

15

828.333

902.663

 

 

 

Parent Company Statement of Financial Position

 

 

As at

 

Note

30 September 2020

31 December 2019

ASSETS

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

9

2.693.143

2.693.794

Right-of-use assets

10

27.173

32.084

Intangible assets

11

7.540

8.704

Investments in subsidiaries, associates and joint ventures

 

1.052.661

1.045.138

Investment in equity instruments

3

428

965

Loans, advances and long-term assets

 

9.971

22.089

 

 

3.790.916

3.802.774

 

 

 

 

Current assets

 

 

 

Inventories

12

644.103

899.760

Trade and other receivables

13

499.727

791.257

Income tax receivable

 

89.766

87.616

Derivative financial instruments

3

4.936

3.474

Cash and cash equivalents

14

543.400

888.564

 

 

1.781.932

2.670.671

Total assets

 

5.572.848

6.473.445

 

 

 

 

EQUITY

 

 

 

Share capital and share premium

15

1.020.081

1.020.081

Reserves

16

277.438

283.106

Retained Earnings

 

479.490

935.648

Total equity

 

1.777.009

2.238.835

 

 

 

 

LIABILITIES

 

 

 

Non-current liabilities

 

 

 

Interest bearing loans and borrowings

17

1.061.123

1.607.838

Lease liabilities

 

19.060

21.264

Deferred income tax liabilities

 

85

182.065

Retirement benefit obligations

 

154.795

147.074

Provisions

 

22.651

22.797

Other non-current liabilities

 

12.955

13.620

 

 

1.270.669

1.994.658

Current liabilities

 

 

 

Trade and other payables

18

950.754

1.271.809

Derivative financial instruments

3

1.806

-

Income tax payable

 

450

5.785

Interest bearing loans and borrowings

17

1.564.126

875.576

Lease liabilities

 

6.757

9.919

Dividends payable

 

1.277

76.863

 

 

2.525.170

2.239.952

Total liabilities

 

3.795.839

4.234.610

Total equity and liabilities

 

5.572.848

6.473.445

 

 

Parent Company Statement of Comprehensive Income

 

 

 

For the nine-month period ended

 

For the three-month period ended

 

Note

30 September 2020

30 September 2019

 

30 September 2020

30 September 2019

Revenue from contracts with customers

4

3.952.006

6.172.545

 

1.261.066

2.085.130

Cost of sales

 

(4.327.683)

(5.814.449)

 

(1.291.089)

(1.987.544)

Gross profit / (loss)

 

(375.677)

358.096

 

(30.023)

97.586

Selling and distribution expenses

 

(71.764)

(75.320)

 

(19.842)

(25.683)

Administrative expenses

 

(61.283)

(62.763)

 

(20.225)

(23.653)

Exploration and development expenses

 

(1.094)

(79)

 

(28)

(27)

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

5

35

1.215

 

(7.248)

1.700

Operating profit / (loss)

 

(509.783)

221.149

 

(77.366)

49.923

Finance income

 

7.150

8.141

 

2.240

2.632

Finance expense

 

(76.920)

(86.707)

 

(24.854)

(26.102)

Lease finance cost

 

(1.003)

(669)

 

(311)

(205)

Dividend income

 

11.533

38.416

 

11.533

30.499

Currency exchange gains/(losses)

6

10.885

1.175

 

6.569

143

Profit / (Loss) before income tax

 

(558.138)

181.505

 

(82.189)

56.890

Income tax credit / (expense)

7

178.389

(34.706)

 

20.275

(6.040)

Profit / (Loss) for the period

 

(379.749)

146.799

 

(61.914)

50.850

Other comprehensive income/(loss):

 

 

 

 

 

 

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

 

 

 

 

 

 

Acruarial losses on defined benefit pension plans

16

(2.938)

(6.188)

 

(2.938)

(6.188)

Changes in the fair value of equity instruments

16

(409)

540

 

(78)

(111)

 

 

(3.347)

(5.648)

 

(3.016)

(6.299)

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

(27.398)

4.149

 

3.742

(1.037)

Recycling of losses / (gains) on hedges through comprehensive income

16

25.077

1.501

 

-

-

 

 

(2.321)

5.650

 

3.742

(1.037)

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

 

(5.668)

2

 

726

(7.336)

 

 

 

 

 

 

 

Total comprehensive income / (loss) for the period

 

(385.417)

146.801

 

(61.188)

43.514

 

 

 

 

 

 

 

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

8

(1,24)

0,48

 

(0,20)

0,17

 

  

 

Parent Company Statement of Cash flows

 

 

 

For the nine-month period ended

 

Note

30 September 2020

30 September 2019

Cash flows from operating activities

 

 

 

Cash generated from / (used in) operations

19

(292.121)

296.793

Income tax received / (paid)

 

(22.768)

(59.292)

Net cash generated from / (used in) operations

 

(314.889)

237.501

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment & intangible assets

9,11

(116.474)

(92.176)

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

 

4.846

1.074

Dividends received

 

161.042

38.416

Interest received

 

7.150

8.141

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

 

(11.618)

(22.702)

Net cash generated from / (used in) investing activities

 

44.946

(67.247)

 

 

 

 

Cash flows from financing activities

 

 

 

Interest paid

 

(62.874)

(80.672)

Dividends paid

 

(152.622)

(150.078)

Proceeds from borrowings

 

338.521

11.577

Repayments of borrowings

 

(190.279)

(306.946)

Payment of lease liabilities - principal

 

(7.394)

(4.697)

Payment of lease liabilities - interest

 

(1.003)

(669)

Net cash generated from /(used in) financing activities

 

(75.651)

(531.485)

 

 

 

 

Net increase / (decrease) in cash and cash equivalents

 

(345.594)

(361.231)

 

 

 

 

Cash and cash equivalents at the beginning of the period

14

888.564

1.070.377

Exchange gains / (losses) on cash and cash equivalents

 

430

9.266

Net increase / (decrease) in cash and cash equivalents

 

(345.594)

(361.231)

Cash and cash equivalents at end of the period

14

543.400

718.412

 

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