Hellenic Petroleum Holdings S.A.

Earnings Release • Feb 25, 2021

National Storage Mechanism | Additional information

RNS Number : 4121Q

Hellenic Petroleum S.A.

25 February 2021

25 February 2021

Fourth quarter / Full Year 2020 financial results

Positive FY20 results, despite COVID-19 crisis and worse refining environment in history. 

Significant progress in implementing an energy transition strategy.

HELLENIC PETROLEUM Group announced its 4Q/FY20 financial results, with Adjusted EBITDA coming in at €77m in 4Q20, with FY20 Adjusted EBITDA at €333m and Adjusted Net Income at €5m.

Overall results are considered satisfactory, as they were achieved amid the unprecedented drop in demand and benchmark refining margins, as well as successive lockdowns; impact on operating profitability over €350 million, while inventory losses, due to the drop of crude prices, exceeded €500m.

Since the beginning of the crisis, our key priorities have been the health and safety of staff and contractors, the uninterrupted supply of markets and our customers, as well as ensuring liquidity and taking advantage of market opportunities.

In this context, as early as February 2020, the Group implemented policies to protect staff, including testing with over 30,000 COVID-19 tests in total during the year and received the "CoVid-Shield" certification at Excellent level, for its facilities and offices, in all countries of operation. These measures  helped to detect and isolate COVID-19 cases amongst staff and allowed the uninterrupted operation of the refineries, tank depots and petrol stations, supporting a normal market supply. At the same time, our refineries maintained high production levels, with exports 11% higher in FY20, at a time when many refineries in the Med region and globally, were forced to either curtail or shut down production runs.

Liquidity was improved with refinancing of existing credit facilities as well as obtaining additional funding for risk management purposes and investments. Taking advantage of the international commodity markets in crude oil and products and the substantial tankage capacity, the Group entered and benefited from storage/contango trades to the order of $70m in 2H20.

IFRS Reported Results benefited from the recovery of crude oil price in 4Q20, with inventory gains of €32m, reversing a small part of the losses recorded during the previous quarters.  4Q20 Reported EBITDA was €68m, vs €110m in 4Q19.

Supporting the national effort and society to deal with the pandemic, was also a priority for the Group, with substantial contribution in infrastructure and advanced medical equipment for the National Health System, totaling €8m.

Furthermore, during 2H20 we completed successfully the full (5-year) maintenance turnaround and upgrade program of the Aspropyrgos refinery; the largest turnaround project in the history of the Group, amid significant challenges due to the pandemic. In addition to the financial performance uplift, the refinery will also benefit from improved environmental performance in energy efficiencies and emissions reduction (PM) by 50%, as more than €35m were invested in environmental projects.

Total capital expenditure during the year was approximately €295m, covering the entire range of activities with an emphasis on energy transition and digital transformation projects. During the year, the Group proceeded to the acquisition and development of a 204MW PV project in Kozani, a milestone for the implementation of Group's strategy in RES. It is noted that 20% of the total investments relate to sustainability and environmental improvement projects, with the corresponding share for 2021 exceeding 35%, marking the Group's gradual transition to cleaner forms of energy, while also improving the environmental footprint of its core business.

The BoD, considering the results, as well as the outlook for the Group, proposed to the AGM the distribution of a FY20 dividend of €0.10/share.

Strategy implementation - Key developments

During 4Q20, the construction works at Kozani PV plant commenced, according to schedule, despite the small delays due to COVID-19. Furthermore a Stakeholder Engagement Plan was introduced and implemented, in order to maximise the benefit for the local community.

Regarding the HRADF sale process of DEPA Infrastructure and DEPA Commercial (65% HRADF - 35% HELLENIC PETROLEUM), in which the Group participates as joint seller for DEPA Infrastructure and potential buyer for DEPA Commercial, due diligence is in progress by qualified parties, with binding bids scheduled for March 2021; however delays in the process are expected due to COVID-19.

During 4Q20 the upgrade program at ELPEDISON's Thessaloniki CCGT plant was successfully completed; following the €20m project, capacity increased to 420MW, while its efficiency and flexibility were also significantly improved.

Recovery of crude prices, weak refining environment, stronger euro

International crude oil prices recovered during 4Q20 from multi-year lows recorded in 2Q20 due to the demand collapse, following the lockdowns, reflecting mainly the result of OPEC++ agreement for the significant reduction of production and sales. As a result, Brent prices averaged at $44/bbl, substantially weaker vs 4Q19 ($63/bbl). Equally on a FY basis, prices moved higher from the lows recorded in April 2020, with Brent averaging at $42/bbl, vs $64/bbl in 2019.

The Euro recovered during 2H20, with its exchange rate vs the USD at 1.19, the highest since 1Q18; in FY20, the Euro averaged at 1.14 vs 1.12 in 2019. A weaker USD has a negative effect on European refiners.

The international refining environment deteriorated significantly during 2Q20, due to the sharp drop in demand, which recorded a small recovery in 2H20, remaining however materially lower vs 2019 levels. In 4Q20 main product cracks remained very weak, while the Brent-Urals spread improved slightly. Consequently, Med benchmark margins had a small recovery q-o-q, however close to historical lows, with FCC margins averaging at $1.0/bbl and Hydrocracking margins at $-0.1/bbl.

Significant demand drop in domestic fuels market

Domestic fuel demand in FY20 was down 8% at 6.3m MT, as auto-fuels were 13% lower on average during the year, due to the mobility restrictions, while heating gasoil consumption increased by 15%, reflecting weather conditions and the lockdowns imposed. Aviation and bunkering fuels demand was significantly lower, by 67% and 33% respectively, as tourism declined sharply and coastal marine and cruise sectors activity was also weaker.

Sufficient liquidity with successful refinancing of bank loans. Finance costs at historical lows

The Group improved its liquidity, despite the adverse environment, with additional funding from international capital markets, as well as the banking system, with improved terms, during the year. In 4Q20, the refinancing of €900m credit facilities maturing in 4Q20/1H21 was completed, improving the Group's maturity profile.

The above led to a further significant reduction of finance cost, which came in at €104m, 10% lower y-o-y, having recorded an almost 50% decline in the last four years. FY20 Net Debt stood at €1.7bn, with gearing ratio at 47%.

Andreas Shiamishis, Group CEO, commented on results:

"This year was marked by COVID-19 pandemic and its consequences globally for all of us, with a particularly negative impact on the refining industry. As was the case for all, we faced significant challenges in maintaining safe operations and protect our staff; however, on top of that we had to deal with a negative impact on operating profitability in excess of €350m, driven by demand drop and the lowest ever refining margins.

In this unprecedented environment, we focused on the protection our staff and contractors, we managed to reduce the impact of the pandemic on our operations and ensured interrupted market supply. In addition, we maintained production at high levels, at a time where many refineries were reducing or even ceasing operations and increased our exports.

The safe and successful completion of the maintenance and upgrade program at Aspropyrgos refinery was a particular challenge, due to its scope and COVID-19 challenges arising from having over 2,500 people in the refinery on a daily basis. However, the economic benefit and environmental improvement are expected to be substantial from 2021.

As one of the largest companies in Greece, we considered it our duty to support the national effort to deal with the effects of the pandemic, with substantial contributions to the National Health System in Greece and in other countries where we operate.

Looking forward, strategic priorities along the clean energy transition and digitalization agenda were also progressed. Key milestones were the completion of the acquisition of the PV plant in Kozani, its financing with favorable terms with EBRD being an anchor investor, and the start of the construction during a very difficult period in the area. Investments in energy transition projects will gradually increase in the coming years, supporting our objective to improve our carbon footprint by 50% during this decade.

Leaving a most difficult year for all behind us, we remain cautiously optimistic as we expect conditions to start improving in the coming quarters. In that context, despite an exceptionally challenging year, the BOD will propose to the AGM a dividend of 0.10 cents per share which reflects our commitment to the shareholders and the positive outlook for the medium term.

These achievements reflect strong team effort and commitment of all our employees in the Group, which successfully responded to those exceptional operating conditions and I would like to thank them for their substantial contribution".

Key highlights and contribution for each of the main business units in 4Q/FY20 were:

REFINING, SUPPLY & TRADING

-     Refining, Supply & Trading 4Q20 Adjusted EBITDA at €43m (-43%).

-  Net production amounted to 3m MT (-5%), with sales at 3.2m MT (-8%), with FY20 at 13.8m MT and 14.4m MT respectively.

-  Realised HELPE system margin came in at $6.6/bbl in 4Q20, maintaining significant over-performance vs benchmarks.

PETROCHEMICALS

-  4Q20 Adjusted EBITDA came in at €10m (-49%), as the reduced propylene output, due to the maintenance of the splitter unit at the Aspropyrgos refinery had a negative impact on profitability.

MARKETING

-     In Domestic Marketing, while the implementation of the second lockdown in Greece, combined with the continuing decline in the aviation & bunkering market, led to lower volumes, improved operational performance and cost management kept 4Q20 profitability at the same level y-o-y. 4Q20 Comparable EBITDA came in at €10m and FY20 at €38m (-49%).

-     In International Marketing, weaker demand in all markets was offset by improved operation that limited profitability drop, with 4Q20 Comparable EBITDA at €16m (-3%), leading FY20 at €59m (-8%).

ASSOCIATE COMPANIES

- DEPA companies' contribution to consolidated Net Income for FY20 was €21m.

- ELPEDISON EBITDA amounted to €44m in FY20, a significant increase vs last year, due to higher production and supply optimisation.

HELLENIC PETROLEUM GROUP OF COMPANIES

Key consolidated financial indicators (prepared in accordance with IFRS)

for 4Q/FY20 are shown below:

€ million	4Q19	4Q20	% Δ	FY19	FY20	% Δ
P&L figures
Refining Sales Volumes ('000 ΜΤ)	3,496	3,224	-8%	15,223	14,397	-5%
Sales	2,052	1,322	-36%	8,857	5,782	-35%
EBITDA	110	68	-38%	574	-253	-
Adjusted EBITDA 1	118	77	-35%	572	333	-42%
Net Income	-4	-17	-	164	-397	-
Adjusted Net Income 1	25	-8	-	185	5	-
Balance Sheet Items
Capital Employed				3,869	3,521	-
Net Debt				1,543	1,672	8%
Debt Gearing (Net Debt/Capital Employed)				40%	47%	-

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 December 2020	31 December 2019
ASSETS
Non-current assets
Property, plant and equipment	6	3.379.813	3.297.668
Right-of-use assets	2,7	235.541	242.934
Intangible assets	8	105.841	104.426
Investments in associates and joint ventures	9	416.542	384.747
Deferred income tax assets	19	72.161	59.358
Investment in equity instruments	3	959	1.356
Loans, advances and long term assets	10	71.676	55.438
		4.282.533	4.145.927
Current assets
Inventories	11	694.410	1.012.802
Trade and other receivables	12	544.795	748.153
Income tax receivable	29	37.699	91.391
Assets held for sale		2.466	2.520
Derivative financial instruments	23	9.945	3.474
Cash and cash equivalents	13	1.202.900	1.088.198
		2.492.215	2.946.538
Total assets		6.774.748	7.092.465
EQUITY
Share capital and share premium	14	1.020.081	1.020.081
Reserves	15	273.959	276.972
Retained Earnings		492.457	964.972
Equity attributable to the owners of the parent		1.786.497	2.262.025
Non-controlling interests		62.340	64.548
Total equity		1.848.837	2.326.573
LIABILITIES
Non- current liabilities
Interest bearing loans and borrowings	17	2.131.371	1.610.094
Lease liabilities	2,18	170.896	169.357
Deferred income tax liabilities	19	32.572	213.495
Retirement benefit obligations	20	194.887	180.398
Provisions	21	39.022	25.625
Other non-current liabilities	22	27.957	28.376
		2.596.705	2.227.345
Current liabilities
Trade and other payables	16	1.546.844	1.401.732
Derivative financial instruments	23	4.635	-
Income tax payable	29	1.673	7.147
Interest bearing loans and borrowings	17	744.561	1.022.270
Lease liabilities	2,18	30.240	30.537
Dividends payable		1.253	76.861
		2.329.206	2.538.547
Total liabilities		4.925.911	4.765.892
Total equity and liabilities		6.774.748	7.092.465

Group Consolidated statement of comprehensive income

		For the year ended
	Note	31 December 2020	31 December 2019
Revenue from contracts with customers	5	5.781.791	8.856.965
Cost of sales	24	(5.817.773)	(8.051.806)
Gross profit / (loss)		(35.982)	805.159
Selling and distribution expenses	24	(319.897)	(329.711)
Administrative expenses	24	(132.920)	(140.012)
Exploration and development expenses	25	(5.526)	(4.843)
Other operating income and other gains	26	53.387	34.146
Other operating expense and other losses	26	(60.466)	(23.795)
Operating profit / (loss)		(501.404)	340.944
Finance income	27	5.646	5.843
Finance expense	27	(109.820)	(146.303)
Lease finance cost	18,27	(10.914)	(10.081)
Currency exchange gains / (losses)	28	4.950	(1.255)
Share of profit / (loss) of investments in associates and joint ventures	9	29.826	17.862
Profit / (loss) before income tax		(581.716)	207.010
Income tax	29	185.101	(43.434)
Profit / (loss) for the year		(396.615)	163.576
Profit / (loss) attributable to:
Owners of the parent		(395.827)	160.798
Non-controlling interests		(788)	2.778
		(396.615)	163.576
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	20	(7.381)	(12.369)
Changes in the fair value of equity instruments	15	(309)	544
Share of other comprehensive income / (loss) of associates	15	1.440	(188)
		(6.250)	(12.013)
Other comprehensive income / (loss) that may be reclassified subsequently to profit or loss (net of tax):
Fair value gains / (losses) on cash flow hedges	15	(22.008)	12.890
Recycling of (gains) / losses on hedges through comprehensive income	15	25.077	1.501
Currency translation differences and other movements		145	272
		3.214	14.663
Other comprehensive income / (loss) for the year, net of tax		(3.036)	2.650
Total comprehensive income / (loss) for the year		(399.651)	166.226
Total comprehensive income / (loss) attributable to:
Owners of the parent		(398.840)	163.425
Non-controlling interests		(811)	2.801
		(399.651)	166.226
Εarnings / (losses) per share  (expressed in Euro per share)	30	(1,30)	0,53

Group Consolidated statement of cash flows

		For the year ended
	Note	31 December 2020	31 December 2019
Cash flows from operating activities
Cash generated from operations	32	426.400	634.718
Income tax received / (paid)	29	23.133	(148.655)
Net cash generated from operating activities		449.533	486.063
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets	6,8	(288.055)	(241.045)
Proceeds from disposal of property, plant and equipment & intangible assets		2.803	1.616
Participation in share capital increase of associates and joint ventures	9	-	(10.295)
Purchase of subsidiary, net of cash acquired	36	(6.475)	(5.341)
Share capital issue expenses		(51)	-
Grants received		337	439
Interest received	27	5.646	5.843
Prepayments for right-of-use assets		(1.035)	(717)
Dividends received	9	9.465	30.490
Proceeds from disposal of assets held for sale		-	1.334
Proceeds from disposal of investments in equity instruments		-	19
Net cash (used in) / generated from investing activities		(277.365)	(217.657)
Cash flows from financing activities
Interest paid on borrowings		(100.003)	(150.411)
Dividends paid to shareholders of the Company	31	(152.647)	(153.248)
Dividends paid to non-controlling interests		(1.401)	(2.246)
Participation of minority shareholders in share capital increase of subsidiary		34	34
Proceeds from borrowings		1.419.247	514.700
Repayments of borrowings		(1.167.609)	(625.581)
Payment of lease liabilities - principal	18	(33.563)	(30.712)
Payment of lease liabilities - interest	18	(10.914)	(10.081)
Net cash (used in) / generated from financing activities		(46.856)	(457.545)
Net increase/ (decrease) in cash and cash equivalents		125.312	(189.139)
Cash and cash equivalents at the beginning of the year	13	1.088.198	1.275.159
Exchange (losses) / gains on cash and cash equivalents		(10.608)	2.179
Net increase / (decrease) in cash and cash equivalents		125.312	(189.139)
Cash and cash equivalents at end of the year	13	1.202.901	1.088.198

Parent Company Statement of Financial Position

		As at
	Note	31 December 2020	31 December 2019
ASSETS
Non-current assets
Property, plant and equipment	6	2.766.635	2.693.794
Right-of-use assets	7	32.157	32.084
Intangible assets	8	8.094	8.704
Investments in subsidiaries, associates and joint ventures	9	1.064.566	1.045.138
Investment in equity instruments	3	587	965
Loans, advances and long-term assets	10	42.956	22.089
		3.914.995	3.802.774
Current assets
Inventories	11	599.613	899.760
Trade and other receivables	12	489.979	791.257
Income tax receivable	29	33.830	87.616
Derivative financial instruments	23	9.945	3.474
Cash and cash equivalents	13	992.748	888.564
		2.126.115	2.670.671
Total assets		6.041.110	6.473.445
EQUITY
Share capital and share premium	14	1.020.081	1.020.081
Reserves	15	279.576	283.106
Retained Earnings		520.475	935.648
Total equity		1.820.132	2.238.835
LIABILITIES
Non-current liabilities
Interest bearing loans and borrowings	17	2.064.808	1.607.838
Lease liabilities	18	21.279	21.264
Deferred income tax liabilities	19	2.773	182.065
Retirement benefit obligations	20	159.782	147.074
Provisions	21	22.287	22.797
Other non-current liabilities	20	12.685	13.620
		2.283.614	1.994.658
Current liabilities
Trade and other payables	16	1.427.067	1.271.809
Derivative financial instruments	23	4.635	-
Income tax payable	29	450	5.785
Interest bearing loans and borrowings	17	494.675	875.576
Lease liabilities	18	9.284	9.919
Dividends payable		1.253	76.863
		1.937.364	2.239.952
Total liabilities		4.220.978	4.234.610
Total equity and liabilities		6.041.110	6.473.445

Parent Company Statement of Comprehensive Income

		For the year ended
	Note	31 December 2020	31 December 2019
Revenue from contracts with customers	5	5.114.813	8.023.563
Cost of sales	24	(5.417.177)	(7.563.197)
Gross profit/(loss)		(302.364)	460.366
Selling and distribution expenses	24	(95.983)	(104.209)
Administrative expenses	24	(78.536)	(85.966)
Exploration and development expenses	25	(1.123)	(2.289)
Other operating income and other gains		38.444	15.592
Other operating expense and other losses		(37.715)	(21.650)
Operating profit/(loss)		(477.277)	261.844
Finance income	27	9.727	10.510
Finance expense	27	(102.724)	(115.800)
Lease finance cost	18,27	(1.388)	(967)
Dividend income	9	51.533	195.416
Currency exchange gains/(losses)	28	4.988	(910)
Profit/(Loss) before income tax		(515.141)	350.093
Income tax	29	176.377	(33.734)
Profit/(Loss) for the year		(338.764)	316.359
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	15	(6.311)	(9.835)
Changes in the fair value of equity instruments	15	(288)	469
		(6.599)	(9.366)
Other comprehensive income/(loss), that may be reclassified subsequently to profit or loss (net of tax):
Fair value gains/(losses) on cash flow hedges	15	(22.008)	12.890
Recycling of (gains)/losses on hedges through comprehensive income	15	25.077	1.501
Other Comprehensive income/(loss) for the year, net of tax		(3.530)	5.025
Total comprehensive income/(loss) for the year		(342.294)	321.384
Earnings/(Losses) per share (expressed in Euro per share)	30	(1,11)	1,04

Parent Company Statement of Cash flows

		For the year ended
	Note	31 December 2020	31 December 2019
Cash flows from operating activities
Cash generated from operations	32	312.109	459.810
Income tax received / (paid)		33.170	(143.204)
Net cash generated from operating activities		345.279	316.606
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets	6,8	(208.118)	(160.831)
Proceeds from disposal of property, plant and equipment & intangible assets		4.846	1.074
Dividends received		161.533	45.416
Interest received	27	9.727	10.510
Participation in share capital increase of subsidiaries and joint ventures	9	(12.043)	(22.680)
Net cash used in investing activities		(44.055)	(126.511)
Cash flows from financing activities
Interest paid		(98.323)	(117.527)
Dividends paid	31	(152.647)	(150.085)
Proceeds from borrowings		1.412.971	231.420
Repayments of borrowings		(1.342.771)	(329.168)
Payment of lease liabilities - principal	18	(10.393)	(7.694)
Payment of lease liabilities - interest	18	(1.388)	(967)
Net cash generated used in financing activities		(192.551)	(374.021)
Net increase / (decrease) in cash and cash equivalents		108.673	(183.926)
Cash and cash equivalents at the beginning of the year	13	888.564	1.070.377
Exchange (losses)/gains on cash and cash equivalents		(4.489)	2.113
Net increase / (decrease) in cash and cash equivalents		108.673	(183.926)
Cash and cash equivalents at the end of the year	13	992.748	888.564

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

FR UVONRABUUUAR