Hellenic Petroleum Holdings S.A.

Earnings Release • Aug 25, 2022

National Storage Mechanism | Additional information

RNS Number : 2765X

Hellenic Petroleum Holdings S.A.

25 August 2022

25 August 2022

Second Quarter / First Half 2022 financial results
Improved operating results on strong benchmark margins, significant contribution from exports and increased tourism activity

HELLENIC PETROLEUM Holdings S.A. announced its 2Q22 consolidated financial results, with Adjusted EBITDA at €535m compared with €79m in 2Q21 and Adjusted Net Income at €367m.

The positive results reflect increased benchmark refining margins, the improved profitability in exports and our international subsidiaries, but also the demand recovery in the Greek market due to tourism, especially in aviation and bunkering sales. Those outweigh the negative impact on our operating cost from electricity and natural gas pricing, as well as the planned refining maintenance.

Refining production amounted to 3.2m MT in 2Q22 (-13% vs 2Q21), as the scheduled full turnaround at the Elefsina refinery and the maintenance at the Aspropyrgos FCC unit were safely and successfully completed. As a result of reduced output due to maintenance, sales volumes amounted to 3.4m MT (-16%), with materially increased contribution from aviation and bunkering due to strong tourism.

Reported EBITDA amounted to €738m, with Reported Net Income at €526m, benefiting from the increase in international oil prices and the EUR/USD exchange rate on the valuation of our inventory.

Strategy Implementation - Vision 2025

The Group's transformation strategy with investments in cleaner forms of energy and reduction of its CO2 footprint is successfully implemented, as in 2Q22, the new, 204 MW photovoltaic park in Kozani, the largest operating park in Greece, commenced operations. The impact of this investment is particularly positive both for the Company's results and Greece's energy balance, as it replaces very expensive natural gas imports. It is noted that in July 2022, the Group's installed RES capacity increased further to 340 MW, following the acquisition of 55 MW of operating wind farms in Mani, S. Greece. Our objective is to gradually grow the operating RES portfolio in the medium term to 1 GW and exceed 2 GW by 2030.

In this context, on 4 July 2022, the Group, through HELPE Renewables S.A., signed Heads of Terms (50-50 partnership) with RWE Renewables GmbH, a subsidiary of RWE, for the development, operation and management of offshore wind parks in Greece. At the same time, studies are progressing to further reduce the carbon footprint of the Group's refineries and petrol stations network, through investments in carbon capture and green hydrogen production technologies.

Record high crude oil prices in Euro/bbl terms, as well as of benchmark refining margins in 2Q22

International crude oil prices increased in 2Q22 to record highs. Specifically, Brent prices in 2Q22 averaged $114/bbl, compared to $69/bbl in 2Q21, driven by the market disruption and energy security concerns, following Russia's invasion in Ukraine, but also the strong demand due to improved economic activity.

The US dollar continued to strengthen, with the EUR/USD averaging 1.07 vs 1.20 in 2Q21, driven by the diverse monetary policies of the central banks and concerns over Eurozone's higher reliance on imports relative to the US.

The combination of the highest oil prices in recent years and the strengthening of the dollar, led to a historical high of crude oil and oil product prices in Euro terms, with Brent averaging €107/bbl vs €57/bbl in the corresponding period of last year; adding the impact of taxes, international and domestic pump prices reached the highest levels on record. Furthermore, this crisis led to a significant increase in the funding requirements to ensure the smooth market supply.

Benchmark refining margins increased significantly in 2Q22, reaching record high levels, mainly due to the strong demand, especially in diesel and gasoline. Specifically, Hydrocracking and FCC benchmark margins averaged $18.2/bbl and $21.4/bbl respectively in 2Q22.

Increased demand in the domestic fuel market

Domestic market's ground fuels demand was 2% higher, reaching 1.5m MT, while auto fuels consumption grew by 7% y-o-y in 2Q22, as a result of the increased economic activity and tourism. Aviation fuels consumption almost tripled, on increased air traffic, mainly due to tourism, while bunkering fuels demand grew by 13% y-o-y.

Balance sheet and capital expenditure

Net financial costs were flat y-o-y in 2Q22 at €25m, despite Net Debt increasing to €1.97bn, as oil prices escalated in the wake of the Ukraine crisis, resulting in higher working capital needs. However, Net Debt was lower vs 1Q22, as a result of robust free cash flow generation, further strengthening the Group's balance sheet.

Capital expenditure amounted to €136m, higher y-o-y, mainly due to the maintenance works at the Elefsina and the Aspropyrgos refineries and the acquisition of the Group's HQ office building.

Andreas Shiamishis, Group CEO, commented on the results:

"The 2Q22 set of financial results, with Adjusted Net Income of €367m, is particularly positive with substantial improvements across all our business units, mainly due to the prevailing conditions in international markets, increased demand in Greece, as well as the ongoing focus towards the Group's operational improvement. The efforts for extroversion and change of business model are yielding results, as, in addition to the incremental profitability from our investments, the contribution from exports, aviation sales and our international subsidiaries, for the first time, significantly exceeded that of domestic market.

During the quarter we further accelerated our strategy implementation, with new investments in RES, where we have now created a new business pillar, as one of the fastest growing companies in the market. Developments in the rest of our portfolio are also evolving, with the partnership with ExxonMobil in the Crete offshore blocks, offering a new perspective to hydrocarbons exploration. As far as DEPA is concerned, we estimate that the sale of DEPA Infrastructure will soon be completed, with proceeds of over €250m directed towards new Energy, while allowing for an additional distribution to our shareholders.

The benefits of our new business strategy, the upgraded corporate governance, as well as the new organizational structure have become visible within a short period of time and allow a more dynamic development of the Group. With today's decision to convene an Extraordinary General Meeting of our shareholders to approve our new corporate identity, we are completing the first phase of our strategic plan Vision 2025".

Key highlights and contribution for each of the main business units in 2Q22 were:

REFINING, SUPPLY & TRADING

-  Refining, Supply & Trading 2Q22 Adjusted EBITDA came in at €467m (vs €9m in 2Q21).

-  Realized HELPE System margin amounted to $26.5/bbl, with notable overperformance vs benchmarks.

-  During 2Q22, scheduled maintenance works at the Elefsina and Aspropyrgos refineries were successfully completed. It is noted that in September an extensive maintenance program will commence at the Thessaloniki refinery.

PETROCHEMICALS

-  2Q22 Adjusted EBITDA came in at €22m, as normalization of global PP balances vs market deficit in 2Q21 led to lower international benchmark PP margins.

MARKETING

-  Domestic Marketing recorded improved performance on higher sales volume (+31% y-o-y), benefiting from increased tourism. Adjusted EBITDA came in at €24m.

-  In International Marketing, demand recovery across our markets resulted in increased sales volume (+24% vs 2Q21) and improved profitability, with Adjusted EBITDA at €19m.

RENEWABLES

-  Higher RES operating capacity, due to the contribution of the wind farms in South Evia and the PV in Kozani, led to higher electricity output (114 GWh vs 13 GWh in 2Q21), with Adjusted EBITDA increasing to €6m vs €1m in 2Q21.

ASSOCIATE COMPANIES

-  DEPA companies' contribution to 2Q22 consolidated Net Income was €10m.

-  Elpedison 2Q22 EBITDA came in at €35mn, driven by an increase of operational flexibility and natural gas supply optimization. Increased prices resulted in higher working capital and funding needs.

HELLENIC PETROLEUM Holdings

Key consolidated financial indicators for 2Q/1H22

(prepared in accordance with IFRS)

€ million	2Q21	2Q22	% Δ	1H21	1H22	% Δ
P&L figures
Refining Sales Volumes ('000 ΜΤ)	4,054	3,418	-16%	7,458	6,710	-10%
Sales	2,235	3,974	78%	3,957	6,777	71%
EBITDA	133	738	-	391	1,239	-
Adjusted EBITDA 1	79	535	-	139	633	-
Net Income	54	526	-	206	872	-
Adjusted Net Income 1	7	367	-	12	371	-
Balance Sheet Items
Capital Employed				3,769	4,835	28%
Net Debt				1,751	1,967	12%
Gearing (ND/ND+E)				46%	41%	-

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	30 June 2022	31 December 2021
ASSETS
Non-current assets
Property, plant and equipment	10	3.543.661	3.484.805
Right-of-use assets	11	209.036	228.375
Intangible assets	12	226.172	228.659
Investments in associates and joint ventures	7	369.831	313.723
Deferred income tax assets		98.074	75.702
Investment in equity instruments	3	483	504
Loans, advances and long term assets		65.485	73.910
		4.512.742	4.405.678
Current assets
Inventories	14	2.006.956	1.379.135
Trade and other receivables	15	938.037	694.606
Income tax receivables		16.444	16.479
Derivative financial instruments	3	17.008	92.143
Cash and cash equivalents	16	1.394.831	1.052.618
		4.373.276	3.234.981
Assets held for sale		193.993	191.577
Total assets		9.080.011	7.832.236
EQUITY
Share capital and share premium	17	1.020.081	1.020.081
Reserves	18	240.434	249.104
Retained Earnings		1.542.290	795.468
Equity attributable to equity holders of  the parent		2.802.805	2.064.653
Non-controlling  interests		65.342	64.402
Total equity		2.868.147	2.129.055
LIABILITIES
Non-current liabilities
Interest bearing loans & borrowings	19	1.269.420	1.516.531
Lease liabilities		159.906	172.296
Deferred income tax liabilities		197.579	89.478
Retirement benefit obligations		211.908	210.736
Derivative financial instruments		245	860
Provisions		32.711	26.959
Other non-current liabilities		27.317	27.801
		1.899.086	2.044.661
Current liabilities
Trade and other payables	20	2.016.160	2.146.559
Derivative financial instruments		374	2.214
Income tax payable		146.461	4.488
Interest bearing loans & borrowings	19	2.092.876	1.474.493
Lease liabilities		25.313	29.499
Dividends payable	25	31.594	1.267
		4.312.778	3.658.520
Total liabilities		6.211.864	5.703.181
Total equity and liabilities		9.080.011	7.832.236

Group Consolidated statement of comprehensive income

		For the six month period ended		For the three month period ended
	Note	30 June 2022	30 June 2021	30 June 2022	30 June 2021
Revenue from contracts with customers	4	6.777.314	3.957.067	3.974.379	2.234.740
Cost of sales		(5.422.183)	(3.482.556)	(3.163.977)	(2.057.034)
Gross profit / (loss)		1.355.131	474.511	810.402	177.706
Selling and distribution expenses		(169.684)	(150.058)	(87.296)	(79.368)
Administrative expenses		(85.592)	(64.272)	(48.942)	(32.813)
Exploration and development expenses		(7.332)	(1.662)	(957)	(801)
Other operating income and other gains	5	14.332	17.170	9.141	11.112
Other operating expense and other losses	5	(18.720)	(11.029)	(14.042)	(6.988)
Operating profit /(loss)		1.088.135	264.660	668.306	68.848
Finance income		1.105	1.415	567	692
Finance expense		(51.052)	(50.095)	(26.498)	(25.191)
Finance expense - lease finance cost		(4.704)	(5.130)	(2.342)	(2.580)
Currency exchange gain / (loss)	6	1.239	8.217	5.509	3.055
Share of profit / (loss) of investments in associates and joint ventures	7	68.161	32.481	21.809	12.794
Profit / (loss)  before income tax		1.102.884	251.548	667.351	57.618
Income tax credit / (expense)	8	(230.571)	(45.103)	(141.668)	(3.947)
Profit / (loss) for the period		872.313	206.445	525.683	53.671
Profit / (loss) attributable to:
Equity holders of the parent		869.117	204.928	523.912	52.464
Non-controlling interests		3.196	1.517	1.771	1.207
		872.313	206.445	525.683	53.671
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	18	-	(1.280)	-	(1.280)
Share of other comprehensive income / (loss) of associates	18	-	146	-	122
Changes in the fair value of equity instruments	18	(13)	(335)	3	(294)
Net other comprehensive income / (loss) that will not be reclassified to profit or loss (net of tax):		(13)	(1.469)	3	(1.452)
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	18	(4.941)	(31.794)	-	(7.806)
Share of other comprehensive income / (loss) of associates	18	(9.636)	-	8.091	-
Fair value gains / (losses) on cash flow hedges	18	5.844	28.115	(4.363)	3.478
Currency translation differences and other movements	18	66	(20)	233	(95)
Net other comprehensive income / (loss) that may be reclassified subsequently to profit or loss (net of tax):		(8.667)	(3.699)	3.961	(4.423)
Other comprehensive income / (loss)  for the period, net of tax		(8.680)	(5.168)	3.964	(5.875)
Total comprehensive income / (loss) for the period		863.633	201.277	529.647	47.796
Total comprehensive income / (loss) attributable to:
Equity holders of the parent		860.447	199.761	527.875	46.588
Non-controlling interests		3.186	1.516	1.772	1.208
		863.633	201.277	529.647	47.796
Basic and diluted earnings / (losses) per share (expressed in Euro per share)	9	2,84	0,67	1,71	0,17

Group Consolidated statement of cash flows

		For the six month period ended
	Note	30 June 2022	30 June 2021
Cash flows from operating activities
Cash generated from / (used in) operations	21	362.945	72.381
Income tax received / (paid)		(3.202)	16.755
Net cash generated from / (used in) operating activities		359.743	89.135
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets	10, 12	(219.598)	(110.548)
Proceeds from disposal of property, plant and equipment & intangible assets		172	541
Share capital issue expenses		-	(4)
Purchase of subsidiary, net of cash acquired	26	404	-
Grants received		-	56
Interest received		1.105	1.415
Prepayments for right-of-use assets		(468)	(220)
Proceeds from disposal of assets held for sale		-	2.649
Proceeds from disposal of investments in equity instruments		-	360
Net cash generated from / (used in) investing activities		(218.385)	(105.751)
Cash flows from financing activities
Interest paid		(45.278)	(43.456)
Dividends paid to shareholders of the Company		(91.951)	(6)
Dividends paid to non-controlling interests		(2.061)	(580)
Proceeds from borrowings		376.400	136.816
Repayments of borrowings		(13.991)	(44.979)
Payment of lease liabilities - principal, net		(19.055)	(16.904)
Payment of lease liabilities - interest		(4.704)	(5.130)
Net cash generated from / (used in) financing activities		199.360	25.761
Net increase / (decrease) in cash and cash equivalents		340.719	9.145
Cash and cash equivalents at the beginning of the period	17	1.052.618	1.202.900
Exchange gain / (loss) on cash and cash equivalents		1.494	8.371
Net increase / (decrease) in cash and cash equivalents		340.719	9.145
Cash and cash equivalents at end of the period	17	1.394.831	1.220.416

Parent Company Statement of Financial Position

			As at
	Note		30 June 2022	31 December 2021
ASSETS
Non-current assets
Property, plant and equipment			1.388	2.707.520
Right-of-use assets	11		7.770	26.547
Intangible assets			207	1.111
Investments in subsidiaries,associates and joint ventures	7		1.627.528	933.596
Deferred income tax assets			10.940	-
Investment in equity instruments			38	37
Loans, advances and long term assets	13		120.348	143.172
			1.768.219	3.811.983
Current assets
Inventories			-	1.240.774
Trade and other receivables			9.072	569.077
Income tax receivables			-	13.898
Derivative financial instruments			-	92.143
Cash and cash equivalents			47.389	843.493
			56.461	2.759.385
Assets held for sale			122.301	122.301
Total assets			1.946.981	6.693.669
EQUITY
Share capital and share premium	17		1.020.081	1.020.081
Reserves	18		260.642	260.642
Retained Earnings			593.770	714.744
Total equity			1.874.493	1.995.467
LIABILITIES
Non-current liabilities
Interest bearing loans & borrowings			-	1.149.696
Lease liabilities			5.471	16.532
Deferred income tax liabilities			-	60.807
Retirement benefit obligations			8.868	174.211
Provisions			-	22.248
Other non-current liabilities			5.219	11.956
			19.558	1.435.450
Current liabilities
Trade and other payables			18.704	1.901.339
Derivative financial instruments			-	2.214
Income tax payable	8		377	416
Interest bearing loans & borrowings			-	1.349.300
Lease liabilities			2.293	8.216
Dividends payable	25		31.556	1.267
			52.930	3.262.752
Total liabilities			72.488	4.698.202
Total equity and liabilities			1.946.981	6.693.669

Parent Company Statement of Comprehensive Income

			For the six month period ended		For the three month period ended
	Note		30 June 2022	30 June 2021	30 June 2022	30 June 2021
Continuing Operations
Revenue from contracts with customers			15.162	-	9.122	-
Cost of sales			(13.785)	-	(8.294)	-
Gross profit / (loss)			1.377	-	828	-
Selling and distribution expenses			-	-	-	-
Administrative expenses			(3.407)	(1.058)	(1.992)	(529)
Exploration and development expenses			-	-	-	-
Other operating income and other gains	5		11.044	851	7.359	427
Other operating expense and other losses	5		(9.245)	(753)	(5.894)	(753)
Operating profit /(loss)			(231)	(959)	301	(854)
Finance income			2.738	2.046	1.323	1.022
Finance expense			(509)	-	(4)	(166)
Finance expense - lease finance cost			(264)	(325)	(129)	-
Currency exchange gain / (loss)			-	-	-	-
Share of profit / (loss) of investments in associates and joint ventures	7		-	-	-	-
Profit / (loss)  before income tax from continuing operations			1.734	762	1.491	1
Income tax credit / (expense)	8		(432)	(168)	(401)	(83)
Profit / (loss) for the period from continuing operations			1.302	595	1.090	(82)
Discontinued operations
Total comprehensive income after tax for the period from discontinued operations	7		-	147.195	-	10.861
Total comprehensive income / (loss) for the period			1.302	147.790	1.090	10.779

Parent Company Statement of Cash flows

		For the six month period ended
	Note	30 June 2022	30 June 2021
Cash flows from operating activities
Cash generated from / (used in) continuing operations	21	44.890	644
Cash generated from / (used in) discontinued operations	21	-	(1.089)
Income tax received / (paid)		-	18.135
Net cash generated from / (used in) operating activities		44.890	17.690
Cash flows from investing activities
Participation in share capital increase of subsidiaries, associates and joint ventures		(16.609)	(1.482)
Loans and advances to Group Companies		(18.302)	-
Interest received		1.118	2.046
Net cash generated from / (used in) investing activities from discontinued operations		-	(50.046)
Net cash generated from / (used in) investing activities		(33.793)	(49.481)
Cash flows from financing activities
Dividends paid to shareholders of the Company		(91.951)	-
Payment of lease liabilities - principal, net		(1.494)	(1.313)
Payment of lease liabilities - interest		(264)	(325)
Net cash generated from / (used in) financing activities from discontinued operations		-	22.221
Net cash generated from / (used in) financing activities		(93.709)	20.583
Net increase / (decrease) in cash and cash equivalents		(82.612)	(11.208)
Cash and cash equivalents at the beginning of the period		843.493	992.748
Exchange gain / (loss) on cash and cash equivalents		-	8.041
Net cash outflow due to demerger	7	(713.493)	-
Net increase / (decrease) in cash and cash equivalents		(82.612)	(11.208)
Cash and cash equivalents at end of the period		47.388	989.581

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