Company update. June 2016

Transcription

1 Company update June 2016

2 Contents Hellenic Petroleum Overview Industry Update & Market Developments 1Q16 Results Appendix 1

3 Assets overview Core business around downstream assets with activities across the energy value chain Exploration & Production Refining, Supply & Trading Petrochemicals DESCRIPTION Exploration assets in Greece Complex (recently upgraded) refining system: Aspropyrgos (FCC, 148kbpd) Elefsina (HDC, 100kbpd) Thessaloniki (HS, 93kbpd) Pipeline fed refinery/terminal in FYROM Basel technology PP production (integrated with refining) and trading > 60% exports in the Med basin METRICS 50% (operator) in W. Patraikos Exploration rights in 2 more areas Capacity: 16MT NCI: 9.6 Market share: 65% Tankage: 7m M 3 Capacity (PP): 220 kt Domestic Marketing Leading position in all market channels (Retail, Commercial, Aviation, Bunkering) through EKO and HF (BP branded network) c.1,700 petrol stations 30% market share Sales volumes: 3.5MT International Marketing Power & Gas Strong position in Cyprus, Montenegro, Serbia, Bulgaria, FYROM Advantage on supply chain/vertical integration ELPEDISON: Second largest IPP in Greece (JV with Edison/EdF) DEPA/DESFA GROUP: 35% in Greece s incumbent NatGas supply company (DESFA in sale process) c.290 petrol stations Sales volumes: 1.2MT Capacity: 810 MW (CCGT) Volumes (2015): 3.0bcm 2

4 Key financials million, IFRS Q16 Income Statement Sales Volume (MT 000) - Refining 14,502 12,528 12,796 12,696 13,538 14,258 3,443 Net Sales 8,477 9,308 10,469 9,674 9,478 7, Segmental EBITDA - Refining, Supply & Trading Petrochemicals Marketing Other (incl. E&P) Adjusted EBITDA * Adjusted associates share of profit Adjusted Net Income * Balance Sheet / Cash Flow Capital Employed 4,191 4,217 4,350 3,905 2,870 2,913 4,321 Net Debt 1,659 1,687 1,855 1,689 1,140 1,122 2,504 Capital Expenditure (incl. refinery upgrades) (*) Calculated as Reported less the Inventory effects and other non-operating items 3

5 Current Position post Strategic Investment & Transformation Plan Delivery of strategic targets despite prolonged crisis; new refinery amongst most competitive in the Med 1 Upgrade Refining Assets Completed refinery upgrades successfully Among the most complex refining systems in the Med 2 Enhance vertical integration Doubled domestic market share - BP network Regional integration 3 Manage Portfolio for value Re-focus E&P Power generation portfolio JV Refining improvements (DIAS) 4 Improve competitiveness Marketing competitiveness Procurement (BEST 80) 5 Fit-for-purpose organisation Reduced headcount by 21% Group culture Shared services 4

6 Current Position Leading domestic market position; major middle distillates and naphtha/gasoline exporter in the East Med market; Group operational footprint and Sales Aviation & Bunkering Domestic MONTENEGRO SERBIA FYROM BULGARIA GREECE CYPRUS Exports Power & Gas 5

7 Regional market Diesel shortage in the Med ELPE yields match increasing shortage in the region Key DIESEL/GASOIL balances in the Med region, kb/d (2020) Diesel/Gasoil surplus (2020) Diesel/Gasoil deficit (2020) PORTUGAL MED FRANCE -178 SLOVENIA CROATIA ITALY BOSNIA MONTENEGRO SERBIA FYROM SPAIN ALBANIA GIBRALTAR MOROCCO -103 ALGERIA -65 TUNISIA -28 MALTA -13 GREECE +8 TURKEY -195 CYPRUS -16 SYRIA LIBYA +4 EGYPT LEBANON ISRAEL Source: Wood Mackenzie 6

8 Strategy Update Utilise strong refining and logistics asset base to consolidate position; risk management remains key priority STRATEGY TARGETS 1 Integrate and realise benefit of investments Capture positive refining cycles EBITDA m 2 Rebalance market position and de-risk business model Vertical integration Increased exports (50%) 3 Continue competitiveness improvement Operating KPIs Solomon benchmarks 4 Manage business portfolio for value Gas & Power Exploration assets in Greece 5 Strengthen financial position Deleverage balance-sheet Business model de-risking Cost of funding 7

9 Business model Operations & Markets Elefsina upgrade transformed business model; increased production and improved yields drive higher exports Increased utilisation Improved yields Market focus differentiation Gross Production by refinery (MT 000) 14,359 5,031 Refining product yields (%) 11% 22% 14% 15 21% Refining Sales by market (m MT) IG int sales Elefsina Thessaloniki 8, ,282 2,914 8% 41% 54% 10 21% 50% Exports 5 Aspropyrgos 7,061 6,414 Domestic 29% 21% Utilisation Rate* (%) % % Mogas Middle distillates Others Fuel oil (*) Total feed over crude capacity; H12 Elefsina Refinery was not operating due to its upgrade project

10 Refining, Supply & Trading economics Integrated supply chain management yields improved results Refining Trading Marketing (Med benchmark & $2/bbl) (sales premia >$3/bbl) (Cost +) Domestic market 7.5 MT Domestic 3.5MT 89% ELPE Refining System 8% 25% 55% Exports, 3 rd parties (Platts Med FOB based) 7.5 MT International 2MT 11% High sulphur Low sulphur 16 MT NCI: % Other Gasoline Middle Distillates Fuel Oil Petchems (Benchmark Pricing plus premia) Domestic and international Markets (PP + BOPP 225kt) 9

11 Refining, Supply & Trading Performance Consistent over-performance vs benchmark margin at normal operations ELPE realised vs benchmark* margin ($/bbl) Adj. EBITDA ( m) Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 ELPE system benchmark (on feed) ELPE realised margin** (*) System benchmark calculated using actual crude feed weights (**) Includes PP contribution which is reported under Petchems 10

12 Cash Flow Profile Post upgrade cashflows support deleverage and increased returns with reduced risk profile Free cash flow pro forma at mid-cycle economics excl. working capital movements ( m) ( ) ( ) (75-125) GM % by driver / market 10% 7% 9% 40% Benchmark margins & EUR/USD driven 9% 25% Refining International EBITDA (proforma run rate) Capex Interest Tax Free cash flow for deleverage and distribution Domestic market Exports Aviation & Bunkering PetChems 11

13 Credit Facilities - Liquidity Full repayment of $400m Eurobond on 16 May out of existing cash reserves; covenants harmonisation successfully completed Gross Debt overview (%) 1Q16 Credit Lines Maturity Profile - 1Q16 Total: 3.3bn EIB 10% Banks (committed) 25% Debt Capital Markets 37% 28% Banks (uncommitted) Repaid in May EIB Banks Debt Capital Markets L12M Operating cashflow at 549m (Adj. EBITDA Capex). Stand-by facility of 240m established with Greek banks, providing additional headroom to support and refinancing process Considering alternatives in 2H16 to refinance other maturities, subject to market conditions DESFA proceeds earmarked to accelerate deleverage 12

14 Contents Hellenic Petroleum Overview Industry Update & Market developments 1Q16 Results Appendix 13

15 Med regional crude supply Excess supply of sour crude grades (Iraq production growth) leads to favourable crude spreads for Med refiners; Iran return to the market affecting 2016 balances Crude exports / supply to Med* (kbpd) 3,000 2,500 2,000 1,500 1, Kirkuk CPC Siberian Light Urals (Novo) BTC Basrah (RHS) 4,000 3,500 3,000 2,500 2,000 1,500 1, B-U spread ($/bbl) (*) Total exports for Bashra; Med loadings for other grades 14

16 European demand growth for refined products Strong demand growth in especially for light-ends; Consumption in Europe also positive after several years of contraction European demand growth per product (%) Europe fuels (mbpd) 6% Growth -3% -2% -1% +2% 1% 4% 2% 0% % 10-4% 8-6% 6-8% 4 Gasoline Distillate Others Source: KBC estimates as of 18/05/

17 Recent Industry developments Improvement in European refining environment on positive fundamentals Med complex margins - $/bbl FCC Hydrocracking 0 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 QTD* Developments in global refining capacity (Middle East, Russia) and inter-regional competitive position (USGC) key drivers Weak crude prices and stronger USD positive for refiners, despite one-off inventory impact (*) Data updated as of 01/06/2016 Med FCC margins: $/bbl 16

18 Domestic market environment Positive 1H15 trend reversed in 2H, following bank holiday and capital controls; auto-fuels flat y-oy, with heating gasoil driving overall market demand growth Domestic Market demand* (MT 000) 1, % 1,923 +6% 1,497 1,583-7% 1,611 1,501 +6% 2,097 1,980-11% 1Q 2Q 3Q 4Q LPG & Others 11,413 1,159 10,125-8% ,267-17% HGO ADO 3,353 2,837 2,932 2, ,883 2,224 7, ,983 2,066-15% 6, ,248 +1% +7% 6, ,358 7, ,389 2,427 +3% +43% +3% MOGAS 4,064 3,722 3,355 2,913 2,670 2,527 2,458-3% (*) Does not include PPC and armed forces Source: Ministry of Environment & Energy 17

19 Contents Hellenic Petroleum Overview Industry Update & Market developments 1Q16 Results Appendix 18

20 1Q16 GROUP KEY FINANCIALS Adj. EBITDA ( m) -17% FY million, IFRS 1Q Δ% Income Statement 14,258 Sales Volume (MT'000) - Refining 3,615 3,443-5% 4,672 Sales Volume (MT'000) - Marketing 1, % 7,303 Net Sales 1,879 1,247-34% Segmental EBITDA 1Q15 1Q16 Adj. EBIT ( m) -22% Q15 1Q16 IFRS Net Income ( m) Refining, Supply & Trading % 93 - Petrochemicals % Marketing % -2 - Other Adjusted EBITDA * % 22 Share of operating profit of associates ** % 581 Adjusted EBIT * (including Associates) % -201 Finance costs - net % 268 Adjusted Net Income * % 444 IFRS Reported EBITDA % +84% IFRS Reported Net Income % Balance Sheet / Cash Flow 2,913 Capital Employed 3,836 4,321 13% 17 1,122 Net Debt 2,085 2,504 20% 165 Capital Expenditure % (*) Calculated as Reported less the Inventory effects and other non-operating items 1Q15 1Q16 (**) Includes 35% share of operating profit of DEPA Group adjusted for one-off items 19

21 1Q16 KEY HIGHLIGHTS 1Q16 Adj. EBITDA at 169m ( 205m LY) and Adj. Net Income at 70m ( 54m LY): Strong results on improved refining performance, despite weaker margins and Elefsina maintenance Lower international crude and product prices environment, stable EUR/USD Record 1Q profitability in Petchems, on higher volumes and margins Reduced financing costs IFRS Net results of 32m (+84%), affected by inventory losses ( 40m in 1Q16) and DEPA arbitration one-off charge Operating cashflow (Adj. EBITDA Capex) for the quarter at 144m. Net Debt at 2.5bn (1Q15 2.1bn) reflects temporary working capital increase, mainly on account of crude prepayments and higher stocks due to shut-down. $400m Eurobond maturing in 16 May 2016, to be repaid from Group s existing reserves; Refinancing plans for remaining bonds to be implemented later in the year depending on market conditions 20

22 CAUSAL TRACK & SEGMENTAL RESULTS OVERVIEW 1Q 2016 Improved operations partly offset weaker margins and planned maintenance at Elefsina refinery Adjusted EBITDA causal track 1Q16 vs 1Q15 ( m) 205 Environment Performance 169 MK Chems MK Chems Refining, S&T Refining, S&T Other (incl. E&P) Q15 Benchmark Refining Margins FX Elefsina Refinery (Hydrocracker catalyst change) Refining Ops Others 1Q16 Other (incl. E&P) 21

23 Contents Hellenic Petroleum post upgrade Industry Update & Market developments 1Q16 Results Appendix 22

24 Shareholding & Governance Controlling shareholders supported successful implementation of long-term strategy Corporate Governance Shareholding structure Board of Directors: Consists of 13 members appointed as per Articles of Association Board Committees (Finance / Audit / HR) Int l institutionals 6% GR institutionals 8% Retail 7% 43% POIH Executive Committee: Key management executives with responsibility 36% for strategy and operations Greek State 23

25 Greek petroleum market overview and route to market Leading domestic market position through vertical integration and competitive logistics assets 16MT Greek Refining capacity: 25MT ELPE exports: 6-8MT 60-65% 30-35% Domestic market: 11.5MT 3 rd party Imports 3 rd party exports: 5MT ELPE Group subsidiaries: 1-2MT ELPE Group subsidiaries: 3.5MT (30%) Independent marketing companies: 4.5MT (35%) Specialty markets (PPC, public sector): 1.5MT (15%) MOH Group subsidiaries: 2MT (20%) 0-10% Greek market product breakdown Other Fuel Oil 9% 6% 21% Gasoline Bunkers 20% 8% Jet 12% Gasoil 24% Diesel Retail C&I (Construction, wholesale) Aviation & Bunkering 24

26 Petrochemicals Operations centred on vertical integration for higher value product; trading geared to exports markets Competitive advantage in polypropylene - vertical integration at 85-90% of total production Exports account for >60% of total sales; strong export markets in Turkey, Italy and East Med Domestic market share in petchems exceeds 50% in all products, produced or traded PP value chain contribution ($/T) Polypropylene value chain Imports 10% Propylene (refinery grade) Propylene (polymer grade) 90% Propylene splitter Thessaloniki PP plant (220 kt) Aspropyrgos splitter contribution 300 1Q15 2Q15 3Q15 4Q15 1Q16 Integrated PP Margin 90% PP 10% Domestic and international market BOPP film plant (26kt) Propane, FOB Propylene NWE, CIF Polypropylene NWE 25

27 Domestic Marketing Leading position in the Greek market with EKO and BP brands; extensive restructuring during restores profitability Auto-fuels domestic market share evolution (%) Adj. EBITDA profitability ( m) > (EKO only) 2015 (EKO & BP) Domestic Retail network evolution (# PS) Sales volumes per segment ( 000MT) EKO Bunkers & Aviation C&I HF Retail

28 International Marketing Subsidiaries in neighboring markets increase downstream integration; selective expansion to improve network control and increase presence in markets of focus International Marketing: Regional footprint Sales volumes (MT 000) 1,051 1,041 1,072 1,072 1,079 1,178 JPK MONTENEGRO SERBIA BULGARIA SER BU CY GREECE TURKEY rd party % CYPRUS Adj. EBITDA profitability ( m) % Group refineries

29 Exploration & Production Exploration activity focused on Greece Patraikos Gulf (offshore) Hellenic Petroleum W. Patraikos 50% (operator) Edison International S.p.A 50%. Major 3D double azimuth/2d seismic data acquisition completed in February; processing ongoing Sea of Thrace Concession (offshore) Hellenic Petroleum 25%, Calfrac Well Services 75%. Prospective area surrounding the Prinos oilfield and Kavala gas field NW Peloponnese and Arta-Preveza Blocks (onshore) Declared by the Ministry of Environment and Energy as Preferred Bidder ; Lease Agreement to be finalised Block 2 offshore W. Greece Total 50% (operator), Hellenic Petroleum 25% and Edison International 25% expecting evaluation od submitted offer. Block 1 and Block 10 offshore W. Greece Hellenic Petroleum has submitted bids for Block 1 and Block 10 28

30 Power: second largest IPP in Greece; development of a renewable energy portfolio Elpedison BV, is a 50/50 JV between Hellenic Petroleum and Edison, Italy s 2 nd largest electricity producer and gas distributor (EdF Group) Owns 75% of 810MW of installed CCGT capacity: a 390MW plant in Thessaloniki and a 420MW in Thisvi Increasing power trading & marketing, considering credit exposure; 2 nd largest independent supplier Thisvi 420MW CCGT power plant Energy market in Greece under restructuring; delays in capacity certificates regulatory framework; developments expected on current transitional regime Renewables portfolio target > 100MW (wind, PV, biomass) subject to fiscal environment and market developments Consolidated as Associate 29

31 Gas: 35% participation in DEPA, Greece s incumbent gas company DEPA Natural gas transmission network Long-term contracts on pipe gas (Russian & Azeri) and capacity rights on two in-bound interconnecting pipelines Long-term contracts with power generators, eligible industrial customers and existing EPAs Owns 51% of the local supply companies (EPAs), with rights until 2036 International pipelines: Participation in Greece-Bulgaria Interconnector DESFA (RAB) in sale process Greece s gas grid and LNG import terminal owner and operator SPA for sale of 66% of DESFA to SOCAR for 400m signed on 21 Dec 2013; regulatory approvals in process for completion of transaction DEPA Volumes (bcm) DEPA snapshot financials ( m) * EBITDA Net Income * Adjusted for settlement with PPC Consolidated as Associate 30

32 Glossary of Key Terms Adjusted EBITDA ADO CCGT COMO DCM FCC HDC HGO HS HSFO IPP MOGAS LNG NatGas Nelson Complexity Index (NCI) POIH PP Solomon Complexity Index ULSD Reported EBITDA adjusted by inventory effect (impact of the fluctuation of crude prices on BS inventories and on the value of products sold during the related period) and other one-off non recurring items Auto Diesel Oil Combined Cycle Gas Turbine Company Owned Manager Operated Debt Capital Markets Fluid Catalytic Cracking Hydrocracking Heating Gasoil Hydroskimming High Sulfur Fuel Oil Independent Power Producer Motor Gasoline Liquefied Natural Gas Natural Gas Index assessing the refinery conversion capacity by relating each processing unit capacity against the crude distillation capacity and applying a weighting factor. Paneuropean Oil and Industrial Holdings Polypropylene Compares the relative refining configuration apart from throughput capacity. It is the total of EDC (Equivalent Distillation Capacity) divided by the sum of the crude unit stream-day capacities. Ultra-low-sulphur Diesel 31

33 Disclaimer Forward looking statements Hellenic Petroleum do not in general publish forecasts regarding their future financial results. The financial forecasts contained in this document are based on a series of assumptions, which are subject to the occurrence of events that can neither be reasonably foreseen by Hellenic Petroleum, nor are within Hellenic Petroleum's control. The said forecasts represent management's estimates, and should be treated as mere estimates. There is no certainty that the actual financial results of Hellenic Petroleum will be in line with the forecasted ones. In particular, the actual results may differ (even materially) from the forecasted ones due to, among other reasons, changes in the financial conditions within Greece, fluctuations in the prices of crude oil and oil products in general, as well as fluctuations in foreign currencies rates, international petrochemicals prices, changes in supply and demand and changes of weather conditions. Consequently, it should be stressed that Hellenic Petroleum do not, and could not reasonably be expected to, provide any representation or guarantee, with respect to the creditworthiness of the forecasts. This presentation also contains certain financial information and key performance indicators which are primarily focused at providing a business perspective and as a consequence may not be presented in accordance with International Financial Reporting Standards (IFRS). 32