Last checked at 28 Feb 2019 16:10
PRESS RELEASE
28 February 2019
Fourth Quarter / Full Year 2018 financial results |
Strong profitability on record production and higher exports sales, despite weaker benchmark refining margins. Positive results and improved balance sheet led to a BoD proposal for a FY 18 dividend of €0.75/share (€229m) |
HELLENIC PETROLEUM Group announced its 4Q and FY18 financial results. FY Adjusted EBITDA came in at €730m (-12%), with Adjusted Net Income at €296m (-20%). The Group delivered a strong set of results, as improved refineries mechanical availability and production during 2018 vs last year, partly offset the expected profitability drop due to refining environment deterioration, as evidenced by weaker Med benchmark margins and a stronger euro.
During a year which ranks as one of its best ever in terms of refining performance, the Group recorded historical highs in production and sales at 15.5m MT (+3%) and 16.5m MT (+4%) respectively, while exports grew even further at a record high of 9.4m MT, making the Group as one of the largest exporters in the country.
In terms of Reported IFRS results, Net Income amounted to €215m (-44%), reflecting the losses suffered on inventory valuation in 4Q18 due to the oil price drop, as well as a number of one-off non-operating accounting provisions. These include the impairment on the sale of DESFA, provision for deferred tax liability on the sale of DEPA, mark to market of provisions for CO2 emission rights prices, as well as other non-operating provisions.
On the back of strong results, prudent financing strategy and the completion of the sale of its stake in DESFA to "SENFLUGA Energy Infrastructure Holdings S.A.", for a cash consideration of €284m, the Group reports an improved balance sheet and a lower cost of financing.
In addition to positive operating results, during 2018 senior management focused on strategic priorities, setting the pillars for a new competitiveness improvement program. In that respect, the Group launched initiatives that will form part of its strategy for the coming years in the areas of digital transformation, energy efficiency and CO2 emissions reduction, procurement optimization (BEST) and growth in renewables.
Considering FY18 results, the stronger balance sheet, as well as the positive 2019 outlook, the BoD has approved a proposal to the AGM for a final FY18 dividend of €0.5 / share, taking the total 2018 dividend to €0.75 / share (€229m); out of the total dividend, €0.25 / share corresponds to a special distribution from DESFA sale proceeds, while the balance of the proceeds will be used for debt and finance cost reduction.
Significant crude oil price drop in 4Q18
Crude oil price recorded a considerable decline in 4Q18, averaging $68/bbl, with increased volatility, ranging between $50-85/bbl, on increased production, mainly in US, as well as a slow-down in global demand growth. In FY18, Brent oil prices increased materially, averaging $72/bbl.
The notable decline in gasoline cracks has negatively affected Med benchmark FCC margins, that recorded a 13% drop, averaging $4/bbl, while stronger diesel cracks led Med hydrocracking benchmarks at $5.3/bbl, flat y-o-y. Equally, in FY18, FCC benchmarks averaged $5.0/bbl (-16%), with Hydrocracking margins at $5.5/bbl (+5%).
USD strengthened further in 4Q18, with euro averaging $1.14, while for FY18 the euro was stronger vs 2017, at $1.18.
Auto fuels marginally higher. Aviation and marine fuels growth continued
Domestic fuels demand was 6.7 m tones, -3% vs 2017, as heating gasoil consumption declined. Contrary, auto-fuels demand recorded a small growth. Aviation fuels consumption amounted to 1.3m MT (+11%), registering an increase for the 6th consecutive year, with marine fuels also up by 4% at 2.9m MT.
Finance strategy objectives achieved, stronger balance
Financing costs in 2018 at €146m, recorded a cumulative drop of 32% in the last 4 years, as a result of positive performance and the successful implementation of the Group's financial strategy, with refinancing of bank loans and eurobonds at improved cost and terms. During 2018 the refinancing of bank loans totaling €900m was completed with significant benefits in cost, maturity and flexibility.
Operating cash flows (Adjusted EBITDA - Capex) were maintained at high levels in 2018, at €572m and combined with DESFA sale proceeds, led Net Debt at €1.5bn and gearing at 38%, the lowest in the last 9 years, within the target range of Group strategy.
Important developments
In E&P, the planned environmental studies and exploration activities at Patraikos Gulf continued in 4Q18, while respective works have commenced at offshore "Block 2", as well as onshore "Arta-Preveza" and "NW Peloponnisos".
Regarding the restructuring of DEPA activities, the acquisition of remaining 49% of EPA and EDA Attikis from Attiki Gas (subsidiary of Shell Gas BV) was completed, following regulatory approvals; together with the sale of EPA Thessaloniki and DESFA, the position of DEPA Group in Distribution and Retail is clarified.
Key highlights and contribution for each of the main business units in 4Q/FY18 were:
REFINING, SUPPLY & TRADING
- Refining, Supply & Trading 4Q18 Adjusted EBITDA at €125m (-4%), with FY18 at €548 m (-14%).
- 4Q18 sales volumes were 6% higher at 4.1m MT, despite a small decline in production.
- The Group continues its preparation ahead of new marine fuel specs change in 2020, in order to respond to market conditions. In that respect, new types of US crude oil were successfully tested at Aspropyrgos refinery, further differentiating crude slate.
PETROCHEMICALS
- Higher vertical integration between Aspropyrgos refinery splitter unit and Thessaloniki petchems plant, as well as increased sales, led to improved operating profitability for Petchems, with 4Q18 Adj. EBITDA at €22m (+9%).
MARKETING
- FY18 Marketing Adjusted EBITDA at €93m (-13%).
- In Domestic Marketing weaker heating gasoil demand, as well as inventory losses due to the considerable oil price drop, negatively affected contribution to Group results, with 4Q18 Adjusted EBITDA at €2m (-79%).
- In International Marketing a 4% increase in sales partly offset weak margins in Balkan markets, that led 4Q18 Adjusted EBITDA to €10m (-19%).
ASSOCIATED COMPANIES
- DEPA Group participation to 4Q18 consolidated Net Income, adjusting for the impact of DESFA sale, came in at €7m.
- The reinstatement of a flexibility remuneration mechanism for gas fired generators had a positive impact, with Elpedison 4Q18 EBITDA at €15m (+11%), despite higher cost for nat-gas and CO2 emission rights.
Key consolidated financial indicators (prepared in accordance with IFRS) for 4Q/FY18 are shown below:
€ million | 4Q17 | 4Q18 | % Δ | FY17 | FY18 | % Δ |
P&L figures |
|
|
|
|
|
|
Refining Sales Volumes ('000 ΜΤ) | 3,905 | 4,137 | 6% | 15,896 | 16,490 | 4% |
Sales | 2,106 | 2,428 | 15% | 7,995 | 9,769 | 22% |
EBITDA | 243 | -19 | - | 851 | 711 | -16% |
Adjusted EBITDA 1 | 170 | 156 | -8% | 834 | 730 | -12% |
Net Income | 111 | -145 | - | 384 | 215 | -44% |
Adjusted Net Income 1 | 59 | 57 | -4% | 372 | 296 | -20% |
Balance Sheet Items |
|
|
|
|
|
|
Capital Employed |
|
|
| 4,173 | 3,854 | -8% |
Net Debt |
|
|
| 1,800 | 1,459 | -19% |
Debt Gearing (ND/ND+E) |
|
|
| 43% | 38% |
|
Notes:1. Calculated as Reported adjusted for inventory effects for Refining, Supply & Trading 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 December 2018 | 31 December 2017 |
ASSETS |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment | 6 | 3.268.928 | 3.311.893 |
Intangible assets | 7 | 105.617 | 105.684 |
Investments in associates and joint ventures | 8 | 390.091 | 701.635 |
Deferred income tax assets | 17 | 64.109 | 71.355 |
Investment in equity instruments | 3 | 634 | 1.857 |
Loans, advances and long term assets | 9 | 73.922 | 89.626 |
|
| 3.903.301 | 4.282.050 |
Current assets |
|
|
|
Inventories | 10 | 993.031 | 1.056.393 |
Trade and other receivables | 11 | 821.598 | 791.205 |
Assets held for sale |
| 3.133 | - |
Derivative financial instruments | 21 | - | 11.514 |
Cash, cash equivalents and restricted cash | 12 | 1.276.366 | 1.018.913 |
|
| 3.094.128 | 2.878.025 |
Total assets |
| 6.997.429 | 7.160.075 |
|
|
|
|
EQUITY |
|
|
|
Share capital and share premium | 13 | 1.020.081 | 1.020.081 |
Reserves | 14 | 258.527 | 358.056 |
Retained Earnings |
| 1.052.164 | 930.522 |
Equity attributable to equity holders of the parent |
| 2.330.772 | 2.308.659 |
|
|
|
|
Non-controlling interests |
| 63.959 | 62.915 |
|
|
|
|
Total equity |
| 2.394.731 | 2.371.574 |
|
|
|
|
LIABILITIES |
|
|
|
Non- current liabilities |
|
|
|
Interest bearing loans and borrowings | 16 | 1.627.171 | 920.234 |
Deferred income tax liabilities | 17 | 185.744 | 131.611 |
Retirement benefit obligations | 18 | 163.514 | 133.256 |
Provisions | 19 | 42.038 | 6.371 |
Trade and other payables | 20 | 28.852 | 28.700 |
|
| 2.047.319 | 1.220.172 |
Current liabilities |
|
|
|
Trade and other payables | 15 | 1.349.153 | 1.661.457 |
Derivative financial instruments | 21 | 16.387 | - |
Income tax payable |
| 80.171 | 5.883 |
Interest bearing loans and borrowings | 16 | 1.108.785 | 1.900.269 |
Dividends payable |
| 883 | 720 |
|
| 2.555.379 | 3.568.329 |
Total liabilities |
| 4.602.698 | 4.788.501 |
Total equity and liabilities |
| 6.997.429 | 7.160.075 |
Group Consolidated statement of comprehensive income
|
| For the year ended | |
| Note | 31 December 2018 | 31 December 2017 |
Reveue from contracts with customers | 5 | 9.769.155 | 7.994.690 |
Cost of sales | 22 | (8.769.769) | (6.907.198) |
Gross profit |
| 999.386 | 1.087.492 |
|
|
|
|
Selling and distribution expenses | 22 | (324.430) | (276.182) |
Administrative expenses | 22 | (150.518) | (133.427) |
Exploration and development expenses | 23 | (1.403) | (212) |
Other operating (expenses) / income and other gains/( losses) - net | 24 | (8.823) | (15.888) |
Operating profit |
| 514.212 | 661.783 |
Finance income | 25 | 3.827 | 4.600 |
Finance expense | 25 | (149.532) | (169.653) |
Currency exchange (losses) / gains | 26 | 2.194 | (8.173) |
Share of profit/ (loss) of investments in associates and joint ventures | 8 | (1.771) | 31.228 |
Profit before income tax |
| 368.930 | 519.785 |
Income tax expense | 27 | (154.218) | (135.862) |
Profit for the year |
| 214.712 | 383.923 |
Profit attributable to: |
|
|
|
Owners of the parent |
| 211.614 | 381.372 |
Non-controlling interests |
| 3.098 | 2.551 |
|
| 214.712 | 383.923 |
Other comprehensive income/ (loss): |
|
|
|
Other comprehensive income that will not be reclassified to profit or loss (net of tax): |
|
|
|
Actuarial losses on defined benefit pension plans |
| (11.012) | (9.589) |
Changes in the fair value of equity instruments | 14 | (695) | 6 |
Reduction in value of land | 14 | - | (1.669) |
Share of other comprehensive income/ (loss) of associates | 14 | (288) | - |
|
| (11.995) | (11.252) |
Other comprehensive income that may be reclassified subsequently to profit or loss (net of tax): |
|
|
|
Fair value losses on cash flow hedges | 14 | (5.006) | (4.590) |
Derecognition of gains/losses on hedges through comprehensive income | 14 | (14.920) | 1.979 |
Currency translation differences and other movements |
| (745) | 752 |
|
| (20.671) | (1.859) |
Other comprehensive (loss)/income for the year, net of tax |
| (32.666) | (13.111) |
Total comprehensive income for the year |
| 182.046 | 370.812 |
Total comprehensive income/(loss) attributable to: |
|
|
|
Owners of the parent |
| 178.958 | 368.989 |
Non-controlling interests |
| 3.088 | 1.823 |
|
| 182.046 | 370.812 |
Basic and diluted earnings per share(expressed in Euro per share) | 28 | 0,69 | 1,25 |
Group Consolidated statement of cash flows
|
| For the year ended | |
| Note | 31 December 2018 | 31 December 2017 |
Cash flows from operating activities |
|
|
|
Cash generated from operations | 30 | 507.847 | 453.311 |
Income tax paid |
| (4.918) | (10.375) |
Net cash generated from operating activities |
| 502.929 | 442.936 |
|
|
|
|
Cash flows from investing activities |
|
|
|
Purchase of property, plant and equipment & intangible assets | 6,7 | (156.713) | (208.732) |
Proceeds from disposal of property, plant and equipment & intangible assets |
| 277 | 30 |
Settlement of consideration of acquisition of further equity interest in subsidiary |
| (1.298) | - |
Purchase of subsidiary, net of cash acquired | 34 | (16.000) | - |
Grants received |
| 299 | 110 |
Interest received | 25 | 3.827 | 4.600 |
Dividends received | 8 | 307.735 | 19.346 |
Investment in associates - net | 8 | - | (147) |
Proceeds from disposal of investments in equity instruments |
| 265 | 8 |
Net cash generated from/ (used in) investing activities |
| 138.392 | (184.785) |
|
|
|
|
Cash flows from financing activities |
|
|
|
Interest paid |
| (140.755) | (160.830) |
Dividends paid to shareholders of the Company |
| (148.767) | (104.115) |
Dividends paid to non-controlling interests |
| (2.061) | (2.561) |
Movement in restricted cash | 12 | 144.445 | 11.873 |
Acquisition of treasury shares |
| (683) | (10.245) |
Participation of minority shareholders in share capital increase of subsidiary |
| 17 | 76 |
Proceeds from borrowings |
| 409.694 | 288.000 |
Repayments of borrowings |
| (506.358) | (322.622) |
Net cash used in financing activities |
| (244.468) | (300.424) |
|
|
|
|
Net increase/ (decrease) in cash and cash equivalents |
| 396.853 | (42.273) |
|
|
|
|
Cash and cash equivalents at the beginning of the year | 12 | 873.261 | 924.055 |
Exchange gains / (losses) on cash and cash equivalents |
| 5.046 | (8.521) |
Net increase/(decrease) in cash and cash equivalents |
| 396.853 | (42.273) |
Cash and cash equivalents at end of the year | 12 | 1.275.160 | 873.261 |
Parent Company Statement of Financial Position
|
| As at | |
| Note | 31 December 2018 | 31 December 2017 |
ASSETS |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment | 6 | 2.684.237 | 2.719.172 |
Intangible assets | 7 | 4.799 | 7.042 |
Investments in subsidiaries, associates and joint ventures | 8 | 1.032.372 | 671.622 |
Investment in equity instruments | 3 | 318 | 1.252 |
Loans, advances and long-term assets | 9 | 8.887 | 19.686 |
|
| 3.730.613 | 3.418.774 |
|
|
|
|
Current assets |
|
|
|
Inventories | 10 | 893.859 | 963.746 |
Trade and other receivables | 11 | 680.347 | 989.901 |
Derivative financial instruments | 21 | - | 11.514 |
Cash, cash equivalents and restricted cash | 12 | 1.071.585 | 813.251 |
|
| 2.645.791 | 2.778.412 |
Total assets |
| 6.376.404 | 6.197.186 |
|
|
|
|
EQUITY |
|
|
|
Share capital and share premium | 13 | 1.020.081 | 1.020.081 |
Reserves | 14 | 262.263 | 360.694 |
Retained Earnings |
| 864.333 | 428.448 |
Total equity |
| 2.146.677 | 1.809.223 |
|
|
|
|
LIABILITIES |
|
|
|
Non-current liabilities |
|
|
|
Interest bearing loans and borrowings | 16 | 1.657.598 | 909.579 |
Deferred income tax liabilities | 17 | 151.873 | 89.959 |
Retirement benefit obligations | 18 | 132.539 | 104.331 |
Provisions | 19 | 37.858 | 6.058 |
Trade and other payables | 20 | 14.810 | 15.569 |
|
| 1.994.678 | 1.125.496 |
Current liabilities |
|
|
|
Trade and other payables | 15 | 1.226.107 | 1.554.027 |
Derivative financial instruments | 21 | 16.387 | - |
Income tax payable |
| 76.322 | 2.769 |
Interest bearing loans and borrowings | 16 | 915.350 | 1.704.951 |
Dividends payable |
| 883 | 720 |
|
| 2.235.049 | 3.262.467 |
Total liabilities |
| 4.229.727 | 4.387.963 |
Total equity and liabilities |
| 6.376.404 | 6.197.186 |
Parent Company Statement of Comprehensive Income
|
| For the year ended | |
| Note | 31 December 2018 | 31 December 2017 |
|
|
|
|
Revenue from contracts with customers | 5 | 8.967.702 | 7.233.600 |
Cost of sales |
| (8.287.696) | (6.475.455) |
Gross profit |
| 680.006 | 758.145 |
|
|
|
|
Selling and distribution expenses | 22 | (99.248) | (59.045) |
Administrative expenses | 22 | (95.795) | (81.825) |
Exploration and development expenses | 23 | (875) | (119) |
Other operating (expenses) / income and other gains / (losses) - net | 24 | (8.356) | (19.735) |
Operating profit |
| 475.732 | 597.421 |
Finance income | 25 | 9.442 | 12.834 |
Finance expense | 25 | (136.636) | (153.105) |
Finance (expenses)/income - net | 25 | (127.194) | (140.271) |
Dividend income | 29 | 318.795 | 33.724 |
Currency exchange gains/(losses) | 26 | 2.244 | (8.483) |
Profit before income tax |
| 669.577 | 482.391 |
Income tax expense | 27 | (146.187) | (136.400) |
Profit for the year |
| 523.390 | 345.991 |
Other comprehensive income/(loss): |
|
|
|
Other comprehensive income/(loss), that will not be reclassified to profit or loss (net of tax): |
|
|
|
Actuarial losses on defined benefit pension plans | 14 | (10.878) | (7.100) |
Changes in the fair value of equity instruments | 14 | (675) | - |
|
| (11.553) | (7.100) |
Other comprehensive income/(loss), that may be reclassified subsequently to profit or loss (net of tax): |
|
|
|
Fair value gains / (losses) on cash flow hedges | 14 | (5.006) | (4.590) |
Derecognition of gains/(losses) on hedges through comprehensive income | 14 | (14.920) | 1.979 |
Other Comprehensive (loss)/income for the year, net of tax |
| (31.479) | (9.711) |
Total comprehensive income for the year |
| 491.911 | 336.280 |
Basic and diluted earnings per share(expressed in Euro per share) | 28 | 1,71 | 1,13 |
Parent Company Statement of Cash flows
|
| For the year ended | |
| Note | 31 December 2018 | 31 December 2017 |
Cash flows from operating activities |
|
|
|
Cash generated from operations | 30 | 412.752 | 307.783 |
Income tax received / (paid) |
| 2.224 | (20) |
Net cash generated from operating activities |
| 414.976 | 307.763 |
|
|
|
|
Cash flows from investing activities |
|
|
|
Purchase of property, plant and equipment & intangible assets | 6,7 | (101.318) | (149.930) |
Dividends received |
| 318.795 | 33.724 |
Interest received | 25 | 9.442 | 12.834 |
Participation in share capital increase of subsidiaries |
| (21.054) | 1.584 |
Settlement of consideration of acquisition of further equity interest in subsidiary | 8 | (39.000) | - |
Sale of investment in subsidiaries to related parties |
| 7.000 | - |
Net cash generated from / (used in) investing activities |
| 173.865 | (101.788) |
|
|
|
|
Cash flows from financing activities |
|
|
|
Interest paid |
| (131.965) | (162.494) |
Dividends paid |
| (148.767) | (104.116) |
Loans to affiliated companies |
| (3.600) | - |
Movement in restricted cash | 12 | 144.445 | 11.873 |
Acquisition of treasury stock | 13 | (683) | (10.245) |
Repayments of borrowings |
| (491.303) | (279.775) |
Proceeds from borrowings |
| 440.748 | 283.606 |
Net cash used in financing activities |
| (191.125) | (261.151) |
|
|
|
|
Net increase / (decrease) in cash and cash equivalents |
| 397.716 | (55.176) |
|
|
|
|
Cash and cash equivalents at the beginning of the year | 12 | 667.599 | 731.258 |
Exchange gains / (losses) on cash and cash equivalents |
| 5.063 | (8.483) |
Net increase / (decrease) in cash and cash equivalents |
| 397.716 | (55.176) |
Cash and cash equivalents at the end of the year | 12 | 1.070.378 | 667.599 |