4Q and 12M 2017 IFRS Financial Results

Transcription

1 Always moving forward 4Q and 12M 2017 IFRS Financial Results Record high EBITDA and core free cash flow March 23, 2018

2 Forward-Looking Statements Certain statements in this presentation are not historical facts and are forward-looking. Examples of such forwardlooking statements include, but are not limited to: projections or expectations of revenues, income (or loss), earnings (or loss) per share, dividends, capital structure or other financial items or ratios; statements of our plans, objectives or goals, including those related to products or services; statements of future economic performance; and statements of assumptions underlying such statements. Words such as believes, anticipates, expects, estimates, intends and plans and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. You should be aware that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. When relying on forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and events, especially in light of the political, economic, social and legal environment in which we operate. Such forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. We do not make any representation, warranty or prediction that the results anticipated by such forwardlooking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario. 1

3 Downstream Upstream Key Operational Indicators Doubled production from the key high-margin projects Delivered construction plans at the 2 nd stages of Filanovsky and Korchagin fields Launched main production facilities at Gissar, Uzbekistan % th. boe per day 4q17 3q17 % ,5 Hydrocarbon production (ex. West Qurna-2) , (0,6) crude oil and NGL , ,0 gas ,9 Increased throughput volumes by 2% y-o-y Increased light products yield to 71.3% (+4.5 p.p. y-o-y) Growth in main priority sales channels % 4q17 3q17 % Refinery throughput at own refineries, mln t (0.4) p.p Light product yield, % (2.5) p.p Retail sales volume, mln t (5.4) 2

4 Finance Key Financial Indicators Improved macro enviroment Record high EBITDA and free cash flow before changes in working capital Lower SG&A and transportation expenses Optimized debt structure, decreased weighted-average interest rate on longterm loans and borrowings from third parties % 4q17 3q17 % ,6 Revenue , ,8 EBITDA , ,3 Exploration and production , ,2 in Russia , ,5 outside Russia, excluding West Qurna-2 project , (56,5) West Qurna (20,6) ,9 Refining, marketing and distribution (39,8) ,3 in Russia (37,2) (4,2) outside Russia (48,2) ,5 Profit for the period , ,9 Adjusted profit for the period* , ,9 Capital expenditures , (3,2) Free cash flow (19,2) ,7 Free cash flow before changes in working capital (7,1) (34,6) Net debt (17,0) * Excluding FX, net impairments and sale of diamonds business 3

5 Core Free Cash Flow Growth q16 2q16 3q16 4q16 1q17 2q17 3q17 4q17 Core Core FCF* * Core FCF*, *, 4 LTM quarter rolling rolling sum sum *Excluding working capital changes, West Qurna-2 project and sale of diamonds business 4

6 Upstream Growth of high-margin barrels in overall production 5

7 Macroeconomic and tax environment Upstream Oil price, exchange rate and net price долл./барр. $/bbl тыс. KRUB/bbl руб./барр Price and exchange rate % 4q17 3q17 % 54,3 43,7 24,1 Brent, $/bbl 61,4 52,1 18,0 53,1 41,7 27,3 Urals, $/bbl 60,7 51,2 18, q16 кв q16 кв q16 кв q16 кв q17 кв q17 кв q17 кв. 173q17 44q17 кв. 17 Курс, FX rate, Urals, Юралс, Net Нетто-цена, price, руб./долл. RUB/$ $/bbl долл./барр. KRUB/bbl тыс. руб./барр. (r.sc.) ,4 67,0 (12,8) Exchange rate, RUB/$ 58,4 59,0 (1,0) 32,0 42,0 (23,8) ED lag effect, RUB/bbl 89,0 54,0 64,8 22,1 19,5 13,3 Net price, KRUB/bbl 24,8 22,1 12,0 Oil export duty time lag effect $/bbl q16 2q16 3q17 4q17 1q17 2q17 3q17 4q17 Taxes % 4q17 3q17 % $/bbl Export duty MET KRUB/t (0.3) Export duty MET Source: external information sources, LUKOIL estimates Net price = Urals less export duty and MET 6

8 Key operating indicators Upstream Hydrocarbon production, mln boe West Qurna-2 Gas abroad Gas in Russia Liquids abroad Growth factors Launch of Filanovsky and Pyakyakhinskoye fields Increased production of high-viscosity oil in Timan-Pechora Development of gas projects in Uzbekistan Decline factors External limitations (OPEC+) Decrease in compensation oil from WQ-2 project Liquids production in Russia, mln bbl 36.1 (41.6) Other liquids in Russia Key high-margin projects liquids production* 4q q17 4q Key high-margin projects* * Other projects 2017 * Filanovsky, Korchagina, Pyakyakhinskoye, Yaregskoye and Usinskoye (Permo-carbon) 7

9 Downstream Record light products yield in Russia 8

10 Macroeconomic and tax environment Downstream Gross benchmark refining margin in Russia, $/bbl q16 кв кв. 2q q16 кв q16 кв q17 кв q17 кв q17 кв. 173q17 4 4q17 кв. 17 Gross benchmark refining margin in Europe, $/bbl % 4q17 3q17 % Oil products, KRUB/t Fuel oil Diesel fuel Premium gasoline (0.6) Taxes, KRUB/t (25.2) Export duty, diesel fuel Export duty, fuel oil Excise, gasoline Euro Excise, diesel fuel Gross benchmark refining margin (European part of Russia) $/bbl (49) RUB/bbl (49) q16 кв q16 кв q16 кв q16 кв q17 кв q17 кв q17 кв. 173q17 44q17 кв % 4q17 3q17 % Oil products (FOB Rotterdam), $/t Fuel oil 3.5% Diesel fuel 0.01% Gasoline Gross benchmark refining margin, $/bbl NWE (27.5) MED (34.5) NWE MED Source: external information sources, LUKOIL estimates 9

11 Downstream Efficient Allocation of Russian Oil Oil allocation price in Russia, $/bbl Oil allocation volumes in Russia, mln t Delivery to own refineries in Russia Sales in Russia Brent Brent Other oil exports 10 Нетбэк Oil netback нефти при for refining переработке in Russia* на НПЗ в России* Нетбэк Oil export нефти netback** при экспорте в дальнее зарубежье** 0 1 кв. 1q кв. 2q кв. 3q16 4 кв. 4q кв. 1q кв. 2q кв. 3q кв. 4q q16 3q17 4q17 Exports of oil with reduced export duty * Including retail margin of refined products produced at the refineries across all marketing channels ** West Siberian oil, standard taxation 10

12 Downstream Refineries in Russia Refinery throughput, mln t Refining depth Light products yield Total * % 89.2% 85.3% 63.2% 71.3% 69.3% Refinery throughput (+1.2% q-o-q) Higher througphput at Perm refinery Ukhta 0,8 0,6 0,5 70% 76% 77% 48% 55% 53% Optimized througphput at Ukhta refinery to maximize light products yield Volgograd 3,2 3,7 3,7 88% 93% 91% 58% 73% 73% Refining depth (-3.9 p.p. q-o-q) and light products yield (-2.0 p.p. q-o-q) Perm 3,3 3,7 3,8 96% 99% 93% 67% 70% 67% Units maintenance at Perm, Volgograd and Nizhny Novgorod One-off factors at Nizhny Novgorod refinery Nizhny Novgorod 4,1 3,9 3,9 72% 80% 76% 62% 65% 64% 4q16 3q q16 3q17 4q17 4q16 3q17 4q17 * Total througphput excluding cross-supplies (i.e. dark refined products delivered as feedstock within the Group s refineries) and processing of gas products 11

13 Downstream Refineries in Europe Refinery throughput, mln t Refining depth Light products yield Total % 90.4% 86.2% 74.6% 77.4% 73.2% Refinery throughput (-3.1% q-o-q) Lower capacity utilization due to low refining 99% 99% 99% 78% 83% 79% margins in Europe Ploiești 0,7 0,6 0,7 Zeeland 1,2 1,3 1,2 76% 83% 81% 69% 75% 72% Refining depth(-4.2 p.p. q-o-q) and light products yield (-4.2 p.p. q-o-q) Units maintenance at Burgas, ISAB and Zeeland Optimization of feedstock mix Burgas 1,8 1,8 1,8 87% 88% 85% 78% 78% 77% ISAB 2,2 2,6 2,5 91% 93% 86% 74% 76% 70% 4q16 3q q16 3q17 4q17 4q16 3q17 4q17 12

14 Downstream High-Priority Channels (2017 vs. 2016) Filling stations Lubricants +7% sales volumes growth of premium motor and industrial lubricants Jet +6% into-plane sales volumes growth Motor fuels sales volumes growth +2% EKTO fuels sales volumes: - Russia 14% - Abroad 9% Non-fuel sales: - Russia 11%, - Abroad 11% Bunkering Increase by 36% mainly due to the increase in market share in the Baltic region and Novorossyisk port 13

15 Financial Results 14

16 Revenue (4q17 vs 3q17) (9) (0) (26) (2) 2 64 Revenue 3q17 Oil (Russia) Oil (International) Refined products (Russia) Refined products (International) Other Revenue 4q17 Volume factor Price and structure factor 15

17 Revenue (y-o-y) (6) Revenue 2016 Oil (Russia) Oil (International) Refined products (Russia) Refined products (International) Other Revenue 2017 Volume factor Price and structure factor 16

18 EBITDA (4q17 vs 3q17) (23) (9) EBITDA 3q17 in Russia outside Russia in Russia outside Russia Corporate and other Elimination EBITDA 4q17 Exploration and production Refining, marketing and distribution segment 17

19 EBITDA (y-o-y) (3) EBITDA 2016 in Russia outside Russia in Russia outside Russia Corporate and other Elimination EBITDA 2017 Exploration and production Refining, marketing and distribution segment 18

20 Operating Expenses Operating expenses, Lifting costs in Russia, RUB per boe Other 12.1 Petrochemical Power generation and distribution Crude oil transportation to refineries Refining at the third party refineries 4q16 1q17 2q17 3q17 4q Refining at the Group s refineries 4q Average RUB 257 /bbl Hydrocarbon production (ex. W.Qurna-2) LUKOIL - Nizhnevolzhskneft LUKOIL - Perm LUKOIL - West Siberia LUKOIL - Komi 19

21 SG&A and Transportation Expenses (4q17 vs 3q17) SG&A Transportation expenses 43 (2) 5 (3) (1) 69 3q17 Labor costs Other SG&A Share-based Provision for remuneration doubtful debts program 4q17 3q17 Oil Refined products Other 4q17 20

22 SG&A and Transportation Expenses (y-o-y) SG&A Transportation expenses 196 (8) (3) (20) (26) Lower tariffs abroad and stronger ruble 2016 Labor costs Other SG&A Share-based Provision for remuneration doubtful debts program Labor costs Refined products Other

23 Profit (4q17 vs 3q17) 97 (8) 3 15 (10) q17 Finance income / costs and other EBITDA FX Effect of sale of diamonds business Income tax Others DD&A 4q17 22

24 Profit (y-o-y) 92 (10) (30) (13) Effect of sale of diamonds business 2016 EBITDA Finance income / costs and other Finance income / costs and other Effect of sale of diamonds business Others DD&A 2017 Income tax 23

25 Capital Expenditures (4q17 vs 3q17) (1) (5) 0 3q17 Caspian (projects in Russia) West Siberia (Yamal) Russia (ex. Caspian and Yamal) WQ-2 Uzbekistan Abroad (ex. WQ-2 and Uzbekistan) Russia Abroad Other 4q17 Upstream Downstream 24

26 Capital Expenditures (y-o-y) 26 (13) 18 (22) 15 (9) (1) Caspian (projects in Russia) West Siberia (Yamal) Russia (ex. Caspian and Yamal) WQ-2 Uzbekistan Abroad (ex. WQ-2 and Uzbekistan) Russia Abroad Other 2017 Upstream Downstream 25

27 Cash Flows (4q17 vs 3q17) Free cash flow before changes in working capital, (19) 13 (5) 216 (138) FCF ex. WC 3q17 Capex OCF ex. WC and sale of diamonds business FCF ex. WC 4q (31) (5) 330 Cash and cash equivalents at the beginning of 4q17 OCF before working capital Working capital change Capex Debt and interest Other Cash and cash equivalents at the end of 4q17 26

28 Cash Flows (y-o-y) Free cash flow before changes in working capital, (14) 81 (25) (511) FCF 2016 ex. WC Capex OCF ex. WC and sale of diamonds business FCF 2017 ex. WC 783 (139) 261 (96) (24) Cash and cash equivalents at the beginning of 3q17 OCF before working capital Working capital change Capex Dividends Debt and interest Other Sale of subsidiaries, net of cash disposed Cash and cash equivalents at the end of 3q17 27

29 Financial Position Net debt, Debt maturity profile, 860 Cash and cash equivalents Total debt Net debt Credit lines * Cash Net debt/ EBITDA As of and further * Stand-by revolving committed credit lines. Debt structure as of Credit ratings USD / EUR / Other debt 89% 8% 3% S&P BBB- BBB Secured / Unsecured debt Fixed / Variable rate 11% 59% 89% 41% Fitch BBB- BBB+ Eurobonds (all in $) / Other debt 57% 43% Moody s Ba1 Baa3 28

30 Financial Results % y-o-y Revenue EBITDA % y-o-y Profit * % y-o-y 4q16 1q17 2q17 3q17 4q17 * Excluding FX, net impairments and sale of diamonds business 29

31 Consolidated Statement of Profit or Loss (in USD mln, at the average exchange rate for the period) q17 3q17 Revenue 89,504 78,016 Sales (including excise and export tariffs) 28,467 25,144 Costs and other deductions (7,816) (6,812) Operating expenses (2,022) (2,044) (44,688) (38,952) Cost of purchased crude oil, gas and products (15,465) (13,270) (5,120) (4,463) Transportation expenses (1,174) (1,067) (3,359) (2,928) Selling, general and administrative expenses (804) (727) (5,335) (4,651) Depreciation, depletion and amortization (1,305) (1,422) (7,591) (6,617) Taxes other than income taxes (2,944) (2,293) (8,276) (7,214) Excise and export tariffs (2,054) (1,980) (142) (124) Exploration expenses (173) (14) 7,177 6,256 Profit from operating activities 2,526 2, Finance income (805) (702) Finance costs (89) (100) Equity share in income of affiliates (1,917) (1,671) Foreign exchange gain (loss) 89 (160) (177) (154) Other income (expenses) (200) (12) 4,666 4,067 Profit before income taxes 2,510 2,176 (996) (868) Current income taxes (426) (511) (115) (100) Deferred income taxes (9) (7) (1,111) (968) Total income tax expense (435) (518) 3,556 3,099 Profit for the period 2,075 1,657 (15) (13) Profit for the period attributable to non-controlling interests (11) (8) 3,541 3,086 Profit for the period attributable to PJSC LUKOIL shareholders 2,064 1,650 30

32 Always moving forward