Hellenic Petroleum Holdings S.A.

Earnings Release • May 12, 2022

National Storage Mechanism | Additional information

RNS Number : 3378L

Hellenic Petroleum Holdings S.A.

12 May 2022

12 May 2022

First quarter 2022 financial results
Improved operating results on stronger benchmark margins, despite negative impact from energy crisis and the Elefsina T/A

HELLENIC PETROLEUM Holdings S.A. announced its 1Q22 consolidated financial results, with Adjusted EBITDA at €99m (+54%) and Adjusted Net Income at €4m.

The positive results reflect mainly the improved performance of Refining, Supply & Trading, on the back of stronger benchmark refining margins and increased domestic market fuel demand, which offset the negative impact of the energy crisis on operating costs. Refining production amounted to 3.1m MT (-16% vs 1Q21), as Elefsina refinery underwent a full Turnaround, which was safely and successfully completed in the beginning of 2Q22. Sales volumes amounted to 3.3m MT (-4%), on increased trading, which partially offset reduced production. Demand recovery across all our markets, which was affected by mobility restriction measures during 1Q21, led to an increase in volumes and contribution for both Domestic and International Marketing.

Reported EBITDA amounted to €501m, with Reported Net Income at €347m, benefiting from inventory valuation gains on the back of the rise in international oil prices, as well as the IFRS accounting treatment of EUAs, which is expected to reverse in the coming quarters.

Developments in Ukraine and market implications

Russia's invasion of Ukraine has exacerbated the energy crisis in Europe, with a further increase in natural gas and electricity prices, negatively impacting consumers and industry. In addition, it affected the supply of crude oil and oil products, mainly diesel, in the region, as Russia accounted for about 25% of European imports of crude oil and 50% of the area's diesel shortage. Russian crude oil share of Greece's imports was around 10-15%. The gradual imposition of sanctions by the EU and the potential oil embargo, have led most European refineries to reduce or even suspend imports of Russian crude oil and oil products, resulting in a demand-supply imbalance. Those developments contributed to the significant rise in crude oil prices, exceeding $100/barrel since March, with increased volatility, while product cracks, mainly diesel, were positively affected, leading to an increase in benchmark refining margins.

Strategy Implementation - Vision 2025

During 1Q22, the construction of the 204 MW photovoltaic park in Kozani, N. Greece, the largest bi-facial PV park in Europe, was completed, with the commercial operation starting in 2Q22. The Group upgraded the medium-term target for an operating capacity of 1 GW by the end of 2026 and over 2 GW by 2030.

The sale of DEPA Infrastructure (65% HRADF - 35% HELLENIC PETROLEUM Holdings) to Italgas for €733m, corresponding to €256m for the participation of HELLENIC PETROLEUM Holdings, is expected to be completed in the second quarter of 2022, following the relevant regulatory approvals.

Regarding Exploration & Production, the Group completed on March 3, 2022 the execution of 1,600 km of 2D seismic survey in the offshore block "Ionian", where it holds rights (100%) for an area of 6,700 sq. km.

Recovery of crude oil prices to the highest levels since 2014, strengthening of international refining margins

International crude oil prices increased in 1Q22 compared with the respective quarter in 2021, due to the recovery of economic activity, easing of mobility restrictions and reduced crude supply, following Russia's invasion in Ukraine. As a result, Brent prices in 1Q22 averaged $102/bbl, an 8-year high, compared to $61/bbl in 1Q21.

The dollar strengthened against the euro, on the back of the central banks' monetary policy, averaging 1.12 in 1Q22 vs 1.21 in the respective period last year.

In 1Q22 diesel cracks recovered significantly, leading to improved Hydrocracking and FCC benchmark margins, at $6.7/bbl and $3.6/bbl respectively.

Increased demand in the domestic fuel market

Total ground fuels demand in the domestic market was 16% higher, reaching 1.7m MT, while the consumption of auto-fuels increased by 17% y-o-y in 1Q22, as a result of the lifting of mobility restrictions due to the COVID-19 pandemic and increased economic activity. Heating gasoil demand was also higher (+15% y-o-y), due to weather conditions. Aviation fuels consumption increased significantly by 160%, on increased air traffic and bunkering fuels demand was 4% higher.

Balance sheet and capital expenditure

Net financial costs recorded a decrease of 1% in the first quarter of 2022, compared to the same period last year, at €24m. Net Debt amounted to €2.3bn, higher compared to the previous quarter, as the escalation of international oil prices due to the Ukrainian crisis led to an increase in working capital requirements. The Group has a strong balance sheet and sufficient credit lines to finance the additional needs.

Capital expenditure amounted to €84m, higher compared to the first quarter of 2021, due to the full turnaround of the Elefsina refinery, as well as the new acquisition of 16 MW PV projects in Viotia.

Andreas Shiamishis, Group CEO, commented on the results:

"In 1Q22, the energy crisis deteriorated, with further price increases of natural gas and electricity for consumers and industry. In the fuels market, Russia's invasion of Ukraine resulted in significant changes, especially in our region, where Russian crude and oil products account for a significant part of the supply. Our Group immediately secured alternative raw material sources, without affecting the operation of our units and the continuous market supply, while taking advantage of the refineries' flexibility to process various types of crude oil and good co-operation with other producing countries.

In terms of financial results, stronger benchmark refining margins, combined with the recovery of the domestic market demand, resulted in satisfactory operating profitability across all our business activities, especially those export-oriented, as well as our international markets.

Regarding RES, the 204MW PV park in Kozani, the largest producing RES project in Greece, was completed on time and started commercial operation. We are in the process of expanding our portfolio, developing an important additional activity for the Group."

Key highlights and contribution for each of the main business units in 1Q22 were:

REFINING, SUPPLY & TRADING

-  Refining, Supply & Trading 1Q22 Adjusted EBITDA came in at €44m (vs €9m in 1Q21).

-  Realized HELPE System margin amounted to $9.0/bbl, with significant overperformance vs benchmarks, vs $6.8/bbl in 1Q21.

PETROCHEMICALS

-  1Q22 Adjusted EBITDA came in at €28m, as normalization of global PP balances vs market deficit in 1Q21 led to lower international benchmark PP margins.

MARKETING

-  Domestic Marketing exhibited improved performance on higher sales volume (+20% y-o-y), as demand recovered. Adjusted EBITDA came in at €18m.

-  In International Marketing, demand recovery across our markets and the higher number of petrol stations resulted in increased sales volume (+32% vs 1Q21) and improved profitability, with Adjusted EBITDA at €13m.

RENEWABLES

-  Higher RES operational capacity, due to the contribution of the wind farms in South Evia, led to increased electricity generation (43 GWh vs 10 GWh in 1Q21), with Adjusted EBITDA increasing to €3m vs €1m in 1Q21.

-  Following the completion of the 204 MW Kozani PV project in the beginning of 2Q22, the total operating capacity reached 285 MW.

ASSOCIATE COMPANIES

-  DEPA companies' contribution to 1Q22 consolidated Net Income was €5m.

-  Elpedison 1Q22 EBITDA came in at €46mn, with improved electricity demand and higher production of Elpedison plants.

HELLENIC PETROLEUM GROUP OF COMPANIES

Key consolidated financial indicators (prepared in accordance with IFRS)

for 1Q22 are shown below:

€ million			1Q21	1Q22	% Δ
P&L figures
Refining Sales Volumes ('000 MT)			3,403	3,292	-3%
Sales			1,722	2,803	63%
EBITDA			258	501	94%
Adjusted EBITDA 1			64	99	54%
Net Income			153	347	-
Adjusted Net Income 1			5	4	-28%
Balance Sheet Items
Capital Employed			4,183	4,791	15%
Net Debt			2,244	2,331	4%
Debt Gearing			54%	49%	-9%

Note 1: Calculated as Reported adjusted for inventory effects and other non-operating items, as well as the IFRS accounting treatment of the EUAs deficit.

Further information:

N. Katsenos, Head of IR

Tel.: +30 210-6302305

Email: nkatsenos@helpe.gr

Group Consolidated statement of financial position

		As at
	Note	31 March 2022	31 December 2021
ASSETS
Non-current assets
Property, plant and equipment	10	3.479.368	3.484.805
Right-of-use assets	11	223.497	228.375
Intangible assets	12	263.203	228.659
Investments in associates and joint ventures	7	339.931	313.723
Deferred income tax assets		91.602	75.702
Investment in equity instruments	3	489	504
Loans, advances and long term assets		67.277	73.910
		4.465.367	4.405.678
Current assets
Inventories	13	1.643.889	1.379.135
Trade and other receivables	14	754.156	694.606
Income tax receivables		16.354	16.479
Derivative financial instruments	3	7.724	92.143
Cash and cash equivalents	15	869.165	1.052.618
		3.291.288	3.234.981
Assets held for sale		193.993	191.577
Total assets		7.950.648	7.832.236
EQUITY
Share capital and share premium	16	1.020.081	1.020.081
Reserves	17	236.472	249.104
Retained Earnings		1.138.223	795.468
Equity attributable to equity holders of  the parent		2.394.776	2.064.653
Non-controlling  interests		65.816	64.402
Total equity		2.460.592	2.129.055
LIABILITIES
Non-current liabilities
Interest bearing loans & borrowings	18	1.667.853	1.516.531
Lease liabilities		168.727	172.296
Deferred income tax liabilities		167.678	89.478
Retirement benefit obligations		211.302	210.736
Derivative financial instruments		283	860
Provisions		27.559	26.959
Other non-current liabilities		27.450	27.801
		2.270.852	2.044.661
Current liabilities
Trade and other payables	19	1.605.566	2.146.559
Derivative financial instruments		21.110	2.214
Income tax payable		30.701	4.488
Interest bearing loans & borrowings	18	1.532.361	1.474.493
Lease liabilities		28.199	29.499
Dividends payable		1.267	1.267
		3.219.204	3.658.520
Total liabilities		5.490.056	5.703.181
Total equity and liabilities		7.950.648	7.832.236

Group Consolidated statement of comprehensive income

		For the three month period ended
	Note	31 March 2022	31 March 2021
Revenue from contracts with customers	4	2.802.935	1.722.327
Cost of sales		(2.258.207)	(1.425.522)
Gross profit / (loss)		544.728	296.805
Selling and distribution expenses		(82.388)	(70.690)
Administrative expenses		(36.650)	(31.459)
Exploration and development expenses		(6.375)	(861)
Other operating income and other gains	5	5.191	6.058
Other operating expense and other losses	5	(4.678)	(4.041)
Operating profit /(loss)		419.828	195.812
Finance income		539	723
Finance expense		(24.554)	(24.904)
Finance expense - lease finance cost		(2.362)	(2.550)
Currency exchange gain / (loss)	6	(4.270)	5.162
Share of profit / (loss) of investments in associates and joint ventures	7	46.352	19.687
Profit / (loss)  before income tax		435.533	193.930
Income tax credit / (expense)	8	(88.902)	(41.156)
Profit / (loss) for the year		346.631	152.774
Profit / (loss) attributable to:
Equity holders of the parent		345.205	152.464
Non-controlling interests		1.426	310
		346.631	152.774
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	(17.727)	24
Changes in the fair value of equity instruments	17	(16)	(41)
Net other comprehensive income / (loss) that will not be reclassified to profit or loss (net of tax):		(17.743)	(17)
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	-	(23.988)
Fair value gains / (losses) on cash flow hedges	17	5.266	24.637
Currency translation differences and other movements	17	(167)	75
Net other comprehensive income / (loss) that may be reclassified subsequently to profit or loss (net of tax):		5.099	724
Other comprehensive income / (loss)  for the period, net of tax		(12.644)	707
Total comprehensive income / (loss) for the period		333.987	153.481
Total comprehensive income / (loss) attributable to:
Equity holders of the parent		332.573	153.173
Non-controlling interests		1.414	325
		333.987	153.498
Basic and diluted earnings / (losses) per share (expressed in Euro per share)	9	1,13	0,50

Group Consolidated statement of cash flows

		For the three month period ended
	Note	31 March 2022	31 March 2021
Cash flows from operating activities
Cash generated from / (used in) operations	20	(278.333)	(518.426)
Income tax received / (paid)		(2.148)	390
Net cash generated from / (used in) operating activities		(280.480)	(518.037)
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets	10,12	(84.009)	(39.830)
Proceeds from disposal of property, plant and equipment & intangible assets		22	133
Share capital issue expenses		-	(4)
Purchase of subsidiary, net of cash acquired	25	404	-
Grants received		-	21
Interest received		539	723
Prepayments for right-of-use assets		(387)	(234)
Net cash generated from / (used in) investing activities		(83.431)	(39.193)
Cash flows from financing activities
Interest paid		(10.042)	(8.765)
Dividends paid to shareholders of the Company		-	(5)
Proceeds from borrowings		211.400	55.148
Repayments of borrowings		(4.300)	(1.089)
Payment of lease liabilities - principal, net		(9.829)	(10.134)
Payment of lease liabilities - interest		(2.362)	(2.550)
Net cash generated from / (used in) financing activities		184.867	32.605
Net increase / (decrease) in cash and cash equivalents		(179.044)	(524.625)
Cash and cash equivalents at the beginning of the period	15	1.052.618	1.202.900
Exchange gain / (loss) on cash and cash equivalents		(4.409)	5.056
Net increase / (decrease) in cash and cash equivalents		(179.044)	(524.625)
Cash and cash equivalents at end of the period	15	869.165	683.332

Parent Company Statement of Financial Position

		As at
	Note	31 March 2022	31 December 2021
ASSETS
Non-current assets
Property, plant and equipment		1.438	2.707.520
Right-of-use assets	11	10.090	26.547
Intangible assets		170	1.111
Investments in subsidiaries,associates and joint ventures	7	1.617.370	933.596
Deferred income tax assets		11.019	-
Investment in equity instruments		38	37
Loans, advances and long term assets		202.832	143.172
		1.842.957	3.811.983
Current assets
Inventories		-	1.240.774
Trade and other receivables		40.467	569.077
Income tax receivables		-	13.898
Derivative financial instruments		-	92.143
Cash and cash equivalents		28.876	843.493
		69.343	2.759.385
Assets held for sale		122.301	122.301
Total assets		2.034.601	6.693.669
EQUITY
Share capital and share premium	16	1.020.081	1.020.081
Reserves	17	260.642	260.642
Retained Earnings		714.957	714.744
Total equity		1.995.680	1.995.467
LIABILITIES
Non-current liabilities
Interest bearing loans & borrowings		-	1.149.696
Lease liabilities		8.287	16.532
Deferred income tax liabilities		-	60.807
Retirement benefit obligations		8.976	174.211
Provisions		-	22.248
Other non-current liabilities		5.219	11.956
		22.482	1.435.450
Current liabilities
Trade and other payables		13.080	1.901.339
Derivative financial instruments		-	2.214
Income tax payable	8	54	416
Interest bearing loans & borrowings		-	1.349.300
Lease liabilities		2.038	8.216
Dividends payable		1.267	1.267
		16.439	3.262.752
Total liabilities		38.921	4.698.202
Total equity and liabilities		2.034.601	6.693.669

Parent Company Statement of Comprehensive Income

		For the three month period ended
	Note	31 March 2022	31 March 2021
Revenue from contracts with customers		6.040	-
Cost of sales		(5.491)	-
Gross profit / (loss)		549	-
Selling and distribution expenses		-	-
Administrative expenses		(1.414)	(904)
Exploration and development expenses		-	-
Other operating income and other gains	5	3.686	424
Other operating expense and other losses	5	(3.351)	-
Operating profit /(loss)		(530)	(480)
Finance income		1.416	1.025
Finance expense		(504)	-
Finance expense - lease finance cost		(135)	(166)
Currency exchange gain / (loss)		-	-
Profit / (loss)  before income tax from continuing operations		246	378
Income tax credit / (expense)	8	(31)	(83)
Profit / (loss) for the year from continuing operations		215	295
Discontinued operations
Profit / (loss) after tax for the year from discontinued operations	1	-	136.716
Profit / (loss) for the period		215	137.011
Total comprehensive income / (loss) for the period		215	137.011

Parent Company Statement of Cash flows

			For the three month period ended
	Note		31 March 2022	31 March 2021
Net cash outflow due to demerger	7		(713.493)	-
Cash flows from operating activities
Cash generated from / (used in) operations	20		6.361	(501.338)
Income tax received / (paid)			-	-
Net cash generated from / (used in) operating activities			6.361	(501.338)
Cash flows from investing activities
Participation in share capital increase of subsidiaries, associates and joint ventures			(6.450)	(1.799)
Loans and advances to Group Companies			(100.800)	-
Interest received			650	1.025
Net cash generated from / (used in) investing activities from discontinued operations	1		-	(24.217)
Net cash generated from / (used in) investing activities			(106.600)	(24.991)
Cash flows from financing activities
Payment of lease liabilities - principal, net			(750)	(653)
Payment of lease liabilities - interest			(135)	(166)
Net cash generated from / (used in) financing activities from discontinued operations	1		-	23.095
Net cash generated from / (used in) financing activities			(885)	22.276
Net increase / (decrease) in cash and cash equivalents			(814.617)	(504.053)
Cash and cash equivalents at the beginning of the period			843.493	992.748
Exchange gain / (loss) on cash and cash equivalents			-	5.098
Net increase / (decrease) in cash and cash equivalents			(814.617)	(504.053)
Cash and cash equivalents at end of the period			28.876	493.793

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