Hellenic Petroleum (ELPE), Greece’s largest refiner, announced on May 18 strong financial results, according to IFRS, with Adjusted EBITDA in the first quarter of 2017 at €229 million (+35%) and Adjusted Net Income at €126 million (+80%). Benchmark refining margins remained at high levels and operational performance was improved in all Group activities.
Improved refining operations led to higher production (+11%) and sales (+16%), with total turnover exceeding 4 million metric tonnes. All sales channels recorded growth, with exports up by 18% at 2.2 million metric tonnes and domestic market sales at 1.3 million metric tonnes (+13%), reflecting strong heating gasoil demand and increased market shares. Crude supply optimisation also had a positive effect on financial results; the above led over-performance vs benchmark margins higher compared to previous quarters.
Petrochemicals reported their strongest quarterly operational profitability, despite weaker benchmark margins, while Marketing recorded higher volumes and contribution to Group results.
Reported Net Income in the first quarter of 2017 amounted to €124 million, verses €32 million in 1Q16 (+287.5%), as reduced oil prices volatility in the first months of 2017 had a limited impact on inventory valuation.
Implementation of the Organization of Petroleum Exporting Countries’ (OPEC) decision to reduce crude oil production led to higher prices for most of the first quarter of 2017, with Brent averaging $55 per barrel for the quarter, up significantly vs the first quarter of 2016.
Macro developments and monetary policy in Eurozone and the US resulted to the further strengthening of the US dollar, with EUR/USD at 1.06, the lowest in the last 15 years.
Domestic fuels demand was up by 3% in the first quarter of 2017, with total consumption at 1.8 million metric tonnes, due to colder weather conditions. Heating gasoil market was increased by 11%, while transport fuels were lower by 2%. The marine & aviation market was also higher by 26%, driven by bunkering demand, according to Hellenic Petroleum.
The implementation of Group financial strategy in 2016, with the new bond issue and the tender offer, as well as the improvement of financial ratios and debt covenants, was the key lever for balance sheet improvement, it said.
In exploration and production, the planned exploration works at Patraikos Gulf area continued, while the Lease Agreement for offshore block 2 (joint venture with France’s Total – operator and Italy’s Edison) is in final form and negotiations for offshore blocks 1 and 10 are in process. The Lease Agreements for onshore areas Arta-Preveza and NW Peloponisos are expected to be signed in the next few weeks.
Hellenic Petroleum expects the singing of all agreements and ratification from the Greek Parliament in order to proceed immediately with the start of exploration works.
Regarding the 35% indirect participation (through Greece’s public natural gas supply corporation DEPA) on natural gas transmission system operator DESFA share capital, the Group in cooperation with the HRADF, is reviewing alternatives for the value maximisation of its participation, Hellenic Petroleum said.