NYNAS INTERIM REPORT JANUARY JUNE SEK million

Transcription

1 Q 2 INTERIM REPORT 1 JANUARY 30 JUNE 2015 Nynas AB (Publ.), corporate re.no , parent company for Nynas. Nynas is a leading international group specialised in naphthenic specialty oils and bitumen. SECOND QUARTER SUMMARY Net sales decreased to SEK 4,907 million (6,364) as a consequence of lower oil prices compared to last year. Bitumen volumes showed strong growth compensating for most of the lost volume from the closure of the Continental Europe bitumen business. Operating result before depreciation (EBITDA) excluding non-recurring items for the second quarter amounted to SEK 260 million (402). It includes SEK -113 million (-36) of negative hedge effects. The refinery turnaround in Nynäshamn was executed successfully and safely with no accidents being reported. Production was started again in May. Second Quarter Summary, 1 Key figures President s comments, Market and economic 2 conditions Segment information 3 Financial overview, 4 Cash flow Financial position 5 Quarterly Overview 6 Nynas Consolidated Group Income statement 7 and statement of comprehensive income Statement of 8 financial positions Statement of 10 changes in equity Cash flow statement 11 Condensed financial statements, parent company 12 Notes 13 KEY FIGURES SEK million Full year Net sales 4,907 6,364 8,115 10,491 22,522 Operating result before depreciation ,336 (EBITDA) 1 Cash flow from operating activities Cash flow after financing activities , Capital expenditures Net debt 4,454 4,025 3,421 Working capital 3,918 4,153 3,654 Return on average capital employed (12 months rolling) Number of full-time employees ) Excluding non-recurring items 1

2 PRESIDENT S COMMENTS Developments during the first six months of 2015 have con firmed Nynas recovery of last year. Despite the eco nomic slowdown in China and the problems in South America s largest country, Brazil, sales volumes developed posi tively in both business areas Naphthenics and Bitumen. The operating result (EBITDA) for the first six months amounts to SEK 274 million (476). The lower result is explained by the negative impact of oil and currency hedging activities including unrealised mark-to-market impact. The operating result excluding all net hedge effects amounts to SEK 503 million (501). This is even more impressive as margins in the first half of the year continued to suffer from high raw material costs, with most products sold in the first six months having been manufactured from crude oil purchased at high prices in the fourth quarter of. The key event in the second quarter was the turnaround of our Nynäshamn refinery during April and May. All inspection and maintenance work was completed according to schedule and on budget, and most importantly without any accidents. Unfortunately, we encountered some problems during the start-up phase that led to some loss of production. By hiring additional short-term transport capacity, our supply chain experts managed to keep supply problems to an absolute minimum. However, this highlights the importance of fully integrating the Harburg refinery into our supply network to increase the supply security for our customers. During September both parts of the Harburg site will commence their shutdowns the base oil plant south of the river Elbe, as well as the crude oil refinery on the north side of the river that will transfer from Shell to Nynas on January 1, Stockholm, August 2015 Gert Wendroth President and CEO, Nynas AB MARKET AND ECONOMIC CONDITIONS The growth rate in the Eurozone increased, with positive deve lopments in most countries. The second quarter showed the highest Markit Eurozone PMI Composite Output Index for four years, with both manufacturing and service sectors improving over the quarter. Also in the US, the private sector continued its positive trend. The economic development in the global emerging markets was muted during the second quarter, and varied between countries. India continued to grow, beating China which barely showed expansion; meanwhile Brazil experienced a significant contraction and registered its fastest rate of decline since March Crude oil prices stayed at a range of $/bbl as a result of global oversupply. Both the US dollar and the British pound continued to strengthen against the Swedish krona. 2

3 SEGMENT INFORMATION Naphthenics Sales volumes in Naphthenics continued to develop positively in the quarter. Sales in Europe and the Americas were stagnant with negative effects from Russia and Ukraine as well as the economic recession in Brazil. There was a continued strong performance in AMEA (Asia, Middle East and Africa) during the second quarter, with sales well above the same period of. Net sales reached SEK 2,611 million (3,276) for the second quarter and EBITDA SEK 49 million (179). EBITDA for the first six month amounts to SEK 126 million (348) and the EBITDA result excluding all net hedge effects amounted to SEK 322 million (365). Net sales were negatively impacted as a consequence of lower oil prices while currency developments had a positive impact. Margins still suffered from high raw material costs as most products sold in the first six months were manufactured with crude oil purchased at higher prices compared to today. Bitumen The second quarter bitumen sales in the Nordic region exceeded last year despite the rather unfavourable weather conditions. Sales of upgraded premium products were also strong, particularly in Sweden where several joint development projects have been carried out together with customers. The UK bitumen business showed a very good performance in the second quarter benefitting from overall good demand as a result of the continued investment program in road infrastructure. The Polymer Modified Emulsion sales were particularly strong. The Western Europe bitumen business performed in line with expectations focusing on quality bitumen products. Net sales reached SEK 2,440 million (3,567) for the second quarter and EBITDA SEK 157 million (226), and the EBITDA for the first six months amounted to SEK 279 million (129). The EBITDA result excluding all net hedge effects amounted to SEK 162 million (132). Net sales were negatively impacted as a consequence of lower oil prices whilst EBITDA was impacted by high cost inventory due to oil purchased at high prices in Q4,. SEGMENT BUSINESS AREA SEK million NET SALES NAPHTHENICS Full year External sales 2,230 2,666 4,544 5,044 9,876 Internal sales ,952 NET SALES NAPHTHENICS 2,611 3,276 5,183 5,953 11,828 BITUMEN External sales 2,401 3,273 3,260 4,557 10,495 Internal sales NET SALES BITUMEN 2,440 3,567 3,311 4,905 11,342 OTHER/ELIMINATIONS External sales ,151 Eliminations ,257-2,799 NET SALES OTHER TOTAL NET SALES 4,908 6,364 8,115 10,491 22,522 EBITDA Naphthenics Bitumen Other/eliminations TOTAL EBITDA ,336 1) Other net sales relates mainly to external crude sales. 2) Excluding non-recurring items. 3

4 FINANCIAL OVERVIEW Net sales for the second quarter amounted to SEK 4,907 million (6,364). They were negatively impacted by the dramatic drop in oil prices from quarter four and onwards and the closure of the Nynas NV Continental Europe bitumen business. Net sales for the first six months of the year amounted to SEK 8,115 million (10,491). EBITDA excluding non-recurring items amounted to SEK 260 million (402). This result was impacted by oil and currency hedging activities including unrealised mark-tomarket effects with a net of SEK -113 million (-36) in the second quarter. EBITDA for the first six months of the year amounted to SEK 274 million (476). It includes a net effect of SEK -229 million (-25) from oil and currency hedging activities. Hedge accounting will be introduced as of 1 July, 2015, for all new oil and currency hedging contracts related to bitumen crude oil purchases. Margins continued to be somewhat depressed as most products sold in the first six months had been manufactured from crude oil purchased at high prices in the fourth quarter of. Net financial items for the second quarter amounted to SEK -89 million (-87) of which SEK -45 million (-66) is related to net interest expenses. The decrease in net expenses is mainly explained by negatively matured interest rate swap contracts in the second quarter of. SEK million Full year Net sales 4,907 6,364 8,115 10,491 22,522 Operating result (EBITDA) ,336 Depreciation Non-recurring items incl write-down assets 1 EBIT after non-recurring items Net financial items Net income before tax Tax Net income for the year/period ) Non-recurring items included in the result relates primarily to the closure of the Continental Europe bitumen business. CASH FLOW In the second quarter cash flow from operating activities totalled SEK 384 million (-122). Working capital decreased mainly as an effect of the oil price level offset by lower earnings generation. Cash capital expenditures totaled SEK 401 million (94) for the second quarter, where the main parts relate to the conversion and acquisition of the Harburg refinery and the maintenance and investment stop in Nynäshamn. Cash flow from operating activities for the first six months amounted to SEK -386 million compared to last year s SEK -435 million. The positive effect comes mainly from lower working capital level offset by lower EBITDA earnings. STATEMENT OF CASH FLOWS SEK million Full year Cash flow from operating activities before changes in working capital Change in working capital CASH FLOW FROM OPERATING ACTIVITIES Cash flow from investing activities CASH FLOW AFTER INVESTING ACTIVITIES ,

5 FINANCIAL POSITION The seasonal pattern of Nynas bitumen business is reflected in the development of the financial position during the period. Working capital at the end of June 2015 increased by SEK 264 million since last year. Compared to last year, net working capital is SEK 235 million lower, mainly a reflection of the lower oil price level. Inventory net of crude payable is at the same level as the same period last year and compared to the end of. Current receivables at the end of June 2015 reached SEK 3,151 million, which is a decrease of SEK 188 million compared to the same period last year. This development was driven by the lower oil price level. Net debt increased by SEK 429 million compared with the same period last year, primarily reflecting the somewhat higher working capital and the capital expenditures during the first half of BALANCE SHEET SEK million 30 Jun Jun 31 Dec Tangible and intangible assets 4,209 3,494 3,839 Financial assets Inventory 3,557 4,174 3,548 Current receivables 3,151 3,339 2,827 Cash and bank deposit 731 1, TOTAL ASSETS 12,066 12,879 11,538 Equity 3,346 3,284 3,425 Long-term interest-bearing liabilities 5,173 4,991 4,303 Long-term non-interest-bearing liabilities Long-term non-interest-bearing provisions Current interest-bearing liabilities Current non-interest-bearing liabilities 2,791 3,360 2,720 Short term non-interest-bearing provisions TOTAL EQUITY & LIABILITIES 12,066 12,879 11,538 NET DEBT 4,454 4,025 3,421 WORKING CAPITAL 3,918 4,153 3,654 5

6 QUARTERLY OVERVIEW SEK million Q Q Q4 Q3 Q2 Q1 Net sales 4,907 3,208 4,985 7,019 6,364 4,160 Operating result before depreciation (EBITDA) Result after financial items Cash flow from operating activities Cash flow after financing activities Cash capital expenditures Net debt 4,454 4,404 3,421 3,965 4,025 3,836 Working capital 3,918 4,222 3,654 4,163 4,124 3,856 Return on average capital employed, % Equity to assets ratio, % Number of full-time employees

7 NYNAS CONSOLIDATED GROUP INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME SEK million Full year INCOME STATEMENT Net sales 4,907 6,364 8,115 10,491 22,522 Cost of sales -3,975-5,352-6,168-8,976-19,636 GROSS RESULT 932 1,012 1,947 1,515 2,886 Other income and value changes Distribution costs ,348-1,220-2,528 Administrative expenses Share of profit/loss of joint ventures Other operating income Other operating expenses OPERATING RESULT Finance income Finance costs NET FINANCIAL ITEMS NET INCOME BEFORE TAX Tax NET INCOME FOR THE YEAR/PERIOD STATEMENT OF COMPREHENSIVE INCOME Profit for the year/period Other comprehensive income: Items that will be reclassified to the income statement Translation differences Currency hedges Income tax associated with currency hedges Cash flow hedges Income tax associated with cash flow hedges TOTAL AMOUNT THAT WILL BE RECLASSIFIED TO THE INCOME STATEMENT Items that will not be reclassified to the income statement Actuarial gains/losses pensions Income tax associated with actuarial gains/losses pensions TOTAL AMOUNT THAT WILL NOT BE RECLASSIFIED TO THE INCOME STATEMENT Other Comprehensive Income for the year/period, net after tax COMPREHENSIVE INCOME Attributable to owners of the Parent Company

8 NYNAS CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION SEK million 30 Jun Jun 31 Dec ASSETS FIXED ASSETS INTANGIBLE ASSETS Goodwill Supply contracts/customer lists 1 Computer software TOTAL INTANGIBLE ASSETS TANGIBLE ASSETS Land and buildings Plant and machinery 2,732 2,676 2,893 Equipment Construction in progress 1, TOTAL TANGIBLE ASSETS 4,152 3,434 3,783 FINANCIAL ASSETS Investments in associates Derivative instruments Other long-term receivables Deferred tax assets TOTAL FINANCIAL ASSETS TOTAL FIXED ASSETS 4,627 3,795 4,265 CURRENT ASSETS Inventories 3,557 4,174 3,548 Account receivables 2,562 2,807 1,593 Receivables from joint ventures Derivative instruments Tax receivables Other current receivables Prepayments and accrued income Cash and cash equivalents 731 1, TOTAL CURRENT ASSETS 7,440 9,084 7,273 TOTAL ASSETS 12,066 12,879 11,538 8

9 NYNAS CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION SEK million 30 Jun Jun 31 Dec EQUITY AND LIABILITIES EQUITY Share capital Reserves Retained earnings, incl. net income for the year/period 3,585 3,419 3,648 TOTAL EQUITY 3,346 3,284 3,425 LONG-TERM LIABILITIES INTEREST-BEARING LIABILITIES Liabilities to credit institutions 4,787 4,738 3,935 Provisions for pensions TOTAL LONG-TERM INTEREST-BEARING LIABILITIES 5,173 4,991 4,303 NON-INTEREST-BEARING LIABILITIES Other long-term liabilities Derivative instruments Deferred tax liability Provisions for pensions Other provisions TOTAL LONG-TERM NON-INTEREST-BEARING LIABILITIES TOTAL LONG-TERM LIABILITIES 5,650 5,601 4,936 CURRENT LIABILITIES INTEREST-BEARING LIABILITIES Liabilities to credit institutions TOTAL CURRENT INTEREST-BEARING LIABILITIES NON-INTEREST-BEARING LIABILITIES Accounts payable Liabilities to joint ventures Derivative instruments Tax liabilities Other current liabilities Accrued liabilities and deferred income 1,372 1,980 1,323 Other provisions TOTAL CURRENT NON-INTEREST-BEARING LIABILITIES 3,059 3,389 3,161 TOTAL CURRENT LIABILITIES 3,071 3,994 3,177 TOTAL ASSETS 12,066 12,879 11,538 9

10 NYNAS CONSOLIDATED GROUP STATEMENT OF CHANGES IN EQUITY SEK million Share capital Defined benefit pension plans Cash flow hedges Currency hedges Translation reserve Retained earnings Total equity EQUITY AT 31 DEC ,369 3,218 Net income for the year Other comprehensive income COMPREHENSIVE INCOME DIVIDEND PAID CLOSING EQUITY AT 31 DEC ,648 3,425 Net income for the period Other comprehensive income COMPREHENSIVE INCOME DIVIDEND PAID CLOSING EQUITY AT 30 JUN ,585 3,346 10

11 NYNAS CONSOLIDATED GROUP CASH FLOW STATEMENT SEK million Full year OPERATING ACTIVITIES Profit after financial items Reversal of non-cash items Taxes paid CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL WORKING CAPITAL Operating receivables , Inventories , Operating liabilities ,966 1,118 CHANGES IN WORKING CAPITAL CASH FLOW FROM OPERATING ACTIVITIES INVESTING ACTIVITIES Acquisition of intangible assets Acquisition of tangible fixed assets Investment in financial assets Disposal/reduction of financial assets 1 CASH FLOW FROM INVESTING ACTIVITIES FINANCING ACTIVITIES Change in pension liability Proceeds from borrowings 429-1, , CASH FLOW FROM FINANCING ACTIVITIES 432 1, , CASH FLOW FOR THE YEAR/PERIOD 415 1, CASH & CASH EQUIVALENTS AT BEGINNING OF YEAR/PERIOD Exchange differences CASH & CASH EQUIVALENTS AT END OF YEAR/PERIOD 731 1, ,

12 NYNAS PARENT COMPANY CONDENSED FINANCIAL STATEMENTS, PARENT COMPANY SEK million Full year CONDENSED INCOME STATEMENT Net sales 6,938 8,808 9,631 12,605 18,401 OPERATING RESULT Finance income Finance costs NET FINANCIAL ITEMS Appropriations 346 NET INCOME BEFORE TAX Tax NET INCOME FOR THE YEAR/PERIOD SEK million 30 Jun Jun 31 Dec CONDENSED BALANCE SHEET Fixed assets 4,993 4,330 4,371 Inventories 2,731 3,144 2,553 Current receivables 3,156 3,920 3,092 Cash and cash equivalents and short-term investments TOTAL ASSETS 11,383 12,091 10,687 Equity 1,891 1,515 2,188 Untaxed reserves Long-term interest-bearing liabilities 4,943 5,490 4,088 Long-term non-interest-bearing liabilities Current interest-bearing liabilities 1, Current non-interest-bearing liabilities 2,123 2,776 2,383 TOTAL EQUITY AND LIABILITIES 11,383 12,091 10,687 12

13 NYNAS CONSOLIDATED GROUP NOTES TO THE FINANCIAL STATEMENTS NOTE 1 COMPANY INFORMATION Nynas Group comprises the parent company Nynas AB (publ), its subsidiaries and holdings in joint ventures. The parent company is incorporated in Sweden and its registered office is in Stockholm. The address of the Head Office is Lindetorpsvägen 7, SE Johanneshov. Nynas AB is per cent owned by Neste Oil AB, reg. no , registered office Stockholm, Sweden, and per cent by PDV Europa B.V., reg. no , registered office The Hague, Netherlands. Neste Oil AB is part of a group in which Neste Oil Oyj, reg. no. FI with registered office in Espoo, Finland, is the ultimate parent. PDV Europa B.V, is part of a group in which Petróleos de Venezuela S.A., reg. no , registered office Caracas, Venezuela, is the ultimate parent. NOTE 2 ACCOUNTING AND VALUATION POLICIES As in the annual accounts for, Nynas consolidated financial statements 2015 have been prepared in accordance with International Financial Reporting Standards (IFRSs) and, given the nature of Nynas transactions, with IFRSs as adopted by the European Union. The parent company Nynas AB s financial statements have been prepared in accordance with the Swedish Annual Reports Act as well as standard RFR 2 Accounting for Legal Entities and other statements issued by the Swedish Financial Reporting Board. This report has been prepared in accordance with IAS 34 Interim Financial Reporting. The accounting policies adopted are consistent with those of the previous financial year. Group s operations are organised in two business areas, Bitumen and Naphthenics. The market organisation also reflects this structure. In accordance with IFRS 8, segment information is presented only on the basis of the consolidated financial statements. Group staff functions and Group-wide functions are allocated based on those items that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segments. Unallocated items for functions are reported under Other. Items where the accounting method differs between the Business Areas and the Group are also reported under the heading Other. The There are no new IFRS standards adopted by the EU, or IFRIC statements which will have a significant impact on the Group s earnings and financial position during Further information is provided in the description of accounting policies in the Annual Report for. All amounts in this report are presented in SEK million, unless otherwise stated. Rounding differences may occur. NOTE 3 SUSTAINABILITY Our core business is to maximise the upgrading of crude oil to specialty long-lasting naphthenic oils and bitumen products whilst minimising the volume of fuel products produced. The backbone of Nynas approach to sustainable development is its dedicated Policy for Sustainable Development introduced in The policy takes a holistic view, supporting Nynas existing social, environmental and economic policies while strengthening the focus on sustainability. The purpose of Nynas Policy for Sustainable Development is to facilitate a progressive approach towards developing and implementing strategies, ensuring growth of shareholder value while proactively taking care of all stakeholder needs; specifically protecting and sustaining human and natural resources for future generations. Our Policy for Sustainable Development strengthens the interdependence of our sustainability related policies: ECONOMIC: Procurement Policy, Competition Compliance Policy SOCIAL: People and Human Rights Policy, Global Anti-Bribery & Anti-Corruption Policy ENVIRONMENTAL: HSSE & Q (Health, Safety, Security, Environment & Quality Policy) Policy implementation is supported by an internal Notes for Guidance document. This has been developed to support interpretation of policy intent into operational action. The ongoing development of specific Group KPIs and business targets are intended to facilitate delivery. NOTE 4 SEASONAL VARIATIONS Nynas operations in bitumen show seasonal variations particularly in the Nordic area. The majority of net sales and operating result is generated in the second and third quarters. During a rolling twelve-month period ending 30 June 2015, net sales amount to SEK 20,093 million and operating result (EBITDA) to SEK 1,134 million. 13

14 NYNAS CONSOLIDATED GROUP NOTE 5 LOAN FINANCING AND CREDIT RATING Nynas has not taken on any new funding during the second quarter. NOTE 6 INVESTMENTS SEK million Full year CASH CAPEX ONGOING BUSINESS ACQUISITIONS AND OTHER INVESTMENTS Cash Capex Commitment Capex TOTAL NOTE 7 BUSINESS COMBINATIONS Harburg Refinery Nynas has entered into an agreement with Shell to acquire the majority of the Harburg refinery by way of an asset transfer agreement. The project is significantly improving Nynas production footprint in terms of quantity and quality for the NSP (Naphthenic Specialty Products) and bitumen businesses. In the total production at the Harburg Refinery was 396 kton. The scope of the transfer comprises two phases. Phase 1 covers the sale of the southern section, the Base Oil Manufacturing Plant (BOMP). Phase 2 covers the sale of the northern part of the refinery. The takeover of the southern section took place on January 1,. At this time Nynas took full control and responsibility for the operations of the BOMP. At the takeover all relevant Shell staff working at the BOMP was transferred to Nynas (approx. 80 employees). Nynas made cash payments of SEK 112 million during and then a further SEK 51 million in the beginning of 2015 in relation to an amount of products sold. The takeover of the northern part is preliminarily scheduled to take place on January 1, 2016, subject to fulfilment of terms and conditions by the parties. If conditions are fulfilled, payment of the main remaining part will be made. Acquisitions-related expenses Acquisitions-related expenses amounted to EUR 6.8 million and relate to consultant fees mainly in conjunction with due diligence work. These expenses were recognised under operating result. PROFORMA 30 of June 2015, SEK million Harburg Refinery South 1 ) Harburg Refinery North 2 ) Harburg Refinery COST OF COMBINATION Cash consideration Commitment consideration TOTAL COST OF COMBINATION FAIR VALUE OF NET ASSETS ACQUIRED Property, plant and equipment Deferred tax assets Total assets acquired Provisions for pensions Total liabilities assumed TOTAL FAIR VALUE OF NET ASSETS ACQUIRED Goodwill 1) Acquired on January 1,. 2) Expected acquisition date January 1,

15 NYNAS CONSOLIDATED GROUP NOTE 8 REPORTING OF FINANCIAL INSTRUMENTS Financial assets and liabilities in the statement of financial position are measured at fair value, apart from loans and receivables and other financial liabilities not designated as hedged items. Loans and receivables and other financial liabilities not designated as hedged items, are measured at amortised cost. Fair value disclosures are not required when the carrying amount is an acceptable approximation of the fair value. This applies to other items in the categories loans and receivables and other financial liabilities. The difference between fair values and carrying amounts of financial assets and liabilities in Nynas balance sheet is deemed to be insignificant. NOTE 9 IMPORTANT EVENTS AFTER REPORTING PERIOD No important events have taken place after the reporting period. The report has not been reviewed by Nynas auditors. Stockholm, August 2015 Gert Wendroth President and CEO 15

16 Nynas AB Box Visiting address: Lindetorpsvägen 7 SE Stockholm Sweden Phone: G