HELLENiQ ENERGY_Annoucement 4Q/FY23 Fin. Results

Helleniq Energy Holdings S.A.

29 February 2024

 

Maroussi, 29 February 2024

Fourth Quarter / Full Year 2023 financial results

Strong profitability on increased production and exports, amid a favorable refining environment - Total DPS of €0.90 - First wave of transformation efforts close to completion

HELLENiQ ENERGY Holdings S.A. ("Company") announced its FY23 financial results, with Adjusted EBITDA coming in at €1,237m and Adjusted Net Income amounting to €606m.

Results were mainly driven by strong international industry backdrop, higher refinery availability and increased exports, improved performance from our international portfolio as well as higher contribution from RES.

Downstream production in FY23 was up by 13% to 14.6m MT and sales volume reached 15.5m MT; exports accounted for 54% of total sales volume, one of the highest on record.

FY23 Reported Net Income amounted to €478m, reflecting a negative impact from crude and products inventory valuation following a decline of international prices since 2022.

Considering the strong performance and outlook, the Board of Directors will propose to the AGM the distribution of a final dividend of €0.60 per share. This will add to the interim dividend of €0.30 per share, which has already been distributed, resulting in a total FY23 dividend of €0.90 per share. Using the 2023 year-end share price, the total dividend represents a higher than 12% dividend yield.

Strategy Implementation - Vision 2025

During 2023, the Group recorded progress in all strategic areas and has implemented significant initiatives that will deliver value upon their completion in the coming years.

The objective in our core business, is to further enhance financial performance and accelerate projects that profitably promote energy transition. In this context, we are progressing projects that improve energy efficiency and increase energy autonomy in the downstream business, aiming for both improved economics, as well better environmental footprint. As part of the energy transition process, we are implementing a Hydrotreated Vegetable Oil (HVO) co-processing unit in Thessaloniki, an investment that will initiate the substitution of a small part of the fossil fuels output. Additionally, investments are being evaluated for the first Greek Sustainable Aviation Fuel (SAF) production unit in Aspropyrgos, the implementation of a CO₂ capture project in Elefsina, a project that is highly dependent upon regulatory framework and EU/national strategy, as well as the production of green hydrogen and synthetic fuels in Elefsina and Thessaloniki. These solutions are of great significance, as they support the reduction of the Company's carbon footprint and help transition the transportation fuels sector to a greener future. Finally, the expansion of the polypropylene production plant is already in progress, which, further to economic value increase, it reduces our reliance on fuel sales and further improves environmental impact of our business.

In Fuels Marketing, the continuous expansion of the international network, the promotion of e-mobility and the ongoing improvement of our service stations, which are key to the delivery of our value proposition to the end-consumer, remain a key priority.

In the RES business, HELLENiQ Renewables has significantly accelerated the expansion of its portfolio in 2023, positioning itself as a leading player in both the Greek market and selected international markets. Specifically, through the completion of a series of agreements in Greece, Cyprus and Romania, it had achieved an installed capacity of 356 MW by the end of 2023, along with projects under construction or in advanced stages of development with a total capacity of 0.7 GW. The current pipeline has increased further to 4.3 GW, with growing aspirations for our international footprint as well. The progress achieved to date credibly supports our claim of attaining an operational capacity of over 1 GW by 2025 and more than 2 GW by 2030.

In the E&P business, the acquisition of 3D seismic data in three offshore areas ("Ionian", "Block 2", "Block 10") was completed. Furthermore, the acquisition of 2D seismic data in two offshore areas in Crete has been finalized, with data processing currently under way. In Crete, 3D seismic surveys are ongoing and are expected to contribute to further evaluation and the final decisions for next steps.

The implementation of the digital transformation program is ongoing, with an investment of €50m to date and an annualized benefit of €44m in 2023, which is expected to exceed €50m in 2025.

Normalization of crude oil prices and refining margins in 2023

Despite the recovery of international crude oil prices during 2H23, primarily due to the reduction of OPEC+ output, crude oil prices for FY23 normalized compared to the particularly high average prices of 2022. Specifically, the Brent crude averaged $83/bbl, down by 18% y-o-y. In 4Q23 the average price was $84/bbl, 12% lower y-o-y.

The Euro strengthened against the US dollar by 3% averaging 1.08 in 2023, up from 1.05 in 2022.

Refining margins in 2023 declined from FY22 all-time highs, but remained strong compared to the most recent five-year cycle (2015-2019), prior to the pandemic. They were primarily driven by demand for main products, as well as the sanctions imposed on Russia and the geopolitical tensions in Middle East in 4Q23. Our refineries' system benchmark margin averaged $9.8/bbl in 2023 compared to $11.8/bbl in 2022, while for 4Q23 it averaged $8.2/bbl vs $13.3/bbl in 4Q22.

Improved demand for motor, aviation and marine fuels

Domestic market demand reached 6.6m MT in 2023, -3% y-o-y, due to a drop in heating oil demand. Excluding heating oil, demand rose by 4%, with gasoline and diesel consumption improving by 3% to 4.91m MT. Aviation and marine fuel demand reached 1.45m MT (+7%) and 2.7m MT (+3%) respectively.

Balance sheet and capital expenditure

Thanks to a strong financial performance in FY23, operating cash flows amounted to €965m, while capital expenditure reached €291m, primarily directed to refinery maintenance and infrastructure upgrading projects, with a smaller portion allocated to Marketing and RES. It is anticipated that total capital expenditure for 2024 will increase, mainly due to the acceleration of RES capacity development.

As a result of significant free cash flow generation and despite the gradual payment of the solidarity contribution (€200m in 2023 out of a total amount of €267m) and the distribution of dividends totaling €229m, Net Debt decreased by €0.3bn to €1.63bn, while Gearing (Net Debt to Capital Employed) fell to 36% compared to 42% in 2022.

Furthermore, in 2023 the refinancing of debt totaling €1.2bn was successfully completed, improving the maturity profile, while available credit lines as at the end of 2023 amounted to €1.1bn.

Andreas Shiamishis, Group CEO, commented on the results:

"The Group concluded 2023 as yet another successful year, with the first phase of the Vision 2025 strategic plan almost completed and having a positive impact in terms of operational performance and profitability. Following the unprecedented and exceptional highs of last year, 2023 results, albeit lower than last year, are still very good and the qualitative analysis supports an optimism about the next few years.

Initially, a substantial portion of the 2023 profitability was driven by improvements in the Company's operations and the execution of the strategic transformation program and operational excellence. These are factors that are more controllable and predictable than a volatile international commodity environment which, nevertheless, can have a material impact on the results of the Company. Our efforts include the strengthening of the International Marketing business, expansion into new markets for either fuels products or RES projects, and a substantial renewal and development of our human capital, supporting an ongoing cultural shift across the organization.

An even more important point to note is the gradual departure from a more extreme, if not condemning, approach towards the energy sector, with a shift towards realism. This shift acknowledges that fossil fuels are part of the solution and should contribute to the energy transition in a more environmentally friendly manner. Highlighting this message is the official conclusion, for the first time at the recent COP28, that extreme and unfeasible solutions have a detrimental impact on the environment. They hinder medium-term investments which would otherwise improve existing energy sector performance in the medium term and pave the road towards the future state, while at the same time compromising energy cost and security, particularly in Europe.

Referring to our financial performance, 2023 strong profitability, with Adjusted EBITDA and Adj. Net Income of €1.24bn and €0.6bn respectively, has further solidified the Group's position and based on that, the Board of Directors will propose to the AGM a final dividend of €0.60 per share, resulting in a total dividend of €0.90 per share.

Moreover, alongside the positive financial results, notable progress has been made in ESG matters, including advancements in ESG Key Performance Indicators (KPIs), such as a reduction of over 7% in the CO₂ emission index (per activity level), as well as an improvement in ESG ratings with increased participation and contribution to society's needs.

In conclusion, I would like to thank our colleagues, who actively participated in this effort, as well as the shareholders for their trust in the Company throughout the years. I would also like to extend my appreciation to the new shareholders who appreciated in the Group's prospects and participated in the recent placement of 11% of the Company's shares, in an effort undertaken by our main shareholders to expand the investor base."

Key highlights and contribution for each of the main business units in 4Q/FY 23 were:

Refining, Supply & Trading

-       Refining, Supply & Trading Adjusted EBITDA came in at €236m in 4Q23 and at €1,043m in FY23, supported by high international refining margins, the system's overperformance and increased sales volume (+8% in FY23) on the back of increased refineries' availability. Exports accounted for 54% of total sales, up from 49% in FY22.

-       Production came in at 16.2m MT in FY23, +14% y-o-y, while contribution of high-value-added products in the product mix surpassed 80%.

Petrochemicals

-       FY23 Adjusted EBITDA came in at €43m, lower y-o-y, on weak PP margins.

Marketing

-       Despite a 2% decline in Domestic Marketing's total sales volume in 2023, automotive sales volume increased by 4%, with improved market shares and higher contribution from premium products. Aviation and bunkering sales volume rose by 2% and 1% respectively. Excluding the impact from inventory valuation and the pricing timing on aviation fuels, profitability was broadly stable y-o-y, with regulatory constraints on retail gross margin remaining in place.

-       International Marketing recorded higher sales volume in 4Q23 and FY23, with profitability at slightly lower levels y-o-y on lower margins at some markets.

Renewables

-      Higher RES operating capacity (356 ÌW) led to 8% increase in power generation in 4Q23 and by 39% in FY23, with Adjusted EBITDA coming in at €8m and €42m (+44%) respectively.

Associate companies

-      In FY23 the contribution from associate companies, which are consolidated using the equity method, came in at €18m, lower y-o-y. Specifically, a) Elpedison's profitability was adversely affected by the lower availability of the Thisvi power plant, while b) DEPA's contribution was primarily impacted by lower domestic market demand, reduced margins and increased costs associated with securing capacity in the gas network.

HELLENiQ ENERGY Holdings S.A.

Key consolidated financial indicators for 4Q/FY 2023

(prepared in accordance with IFRS)

€ million	4Q22	4Q23	% Ä	FY22	FY23	% Ä
P&L figures
Refining Sales Volumes ('000 ÌÔ)	3,685	3,956	7%	14,284	15,438	8%
Sales	3,542	3,304	-7%	14,508	12,803	-12%
EBITDA	149	147	-1%	1,717	1,053	-39%
Adjusted EBITDA 1	465	269	-42%	1,601	1,237	-23%
Operating Profit	75	67	-11%	1,413	736	-48%
Net Income	-232	13	-	890	478	-46%
Adjusted Net Income 1	257	111	-57%	1,006	606	-40%
Balance Sheet Items
Capital Employed				4,669	4,573	-2%
Net Debt				1,942	1,627	-16%
Gearing (ND/ND+E)				42%	36%	-6pps2

Note 1: Adjusted for inventory effects and other non-operating/one-off items, as well as the IFRS accounting treatment of the EUAs deficit.

Note 2: pps stands for percentage points

Further information:

Investor Relations

8A Chimaras str., 151 25 Maroussi, Greece

Tel: [phone]

Email: [e-mail]

Group Consolidated statement of financial position

		As at
	Note	31 December 2023	31 December 2022
Ássets
Non-current assets
Property, plant and equipment	6	3.643.045	3.639.004
Right-of-use assets	7	232.189	233.141
Intangible assets	8	333.692	518.073
Investments in associates and joint ventures	9	404.743	402.101
Deferred income tax assets	19	95.546	91.204
Investment in equity instruments	3	514	490
Derivative financial instruments	23	746	958
Loans, advances and long term assets	10	57.771	64.596
		4.768.246	4.949.567
Current assets
Inventories	11	1.472.536	1.826.242
Trade and other receivables	12	880.986	866.109
Income tax receivable	29	66.148	14.792
Derivative financial instruments	23	930	5.114
Cash and cash equivalents	13	919.457	900.176
		3.340.057	3.612.433
Total assets		8.108.303	8.562.000
Equity
Share capital and share premium	14	1.020.081	1.020.081
Reserves	15	291.010	297.713
Retained Earnings		1.568.384	1.341.908
Equity attributable to the owners of the parent		2.879.475	2.659.702
Non-controlling interests		66.916	67.699
Total equity		2.946.391	2.727.401
Liabilities
Non- current liabilities
Interest bearing loans and borrowings	17	1.388.010	1.433.029
Lease liabilities	18	182.335	177.745
Deferred income tax liabilities	19	174.063	202.523
Retirement benefit obligations	20	176.305	175.500
Derivative financial instruments	23	1.541	-
Provisions	21	33.835	36.117
Other non-current liabilities	22	25.348	22.662
		1.981.437	2.047.576
Current liabilities
Trade and other payables	16	1.598.726	1.835.957
Derivative financial instruments	23	13.333	1.761
Income tax payable	0	285.570	432.385
Interest bearing loans and borrowings	17	1.158.495	1.409.324
Lease liabilities	18	32.220	30.372
Dividends payable	31	92.131	77.224
		3.180.475	3.787.023
Total liabilities		5.161.912	5.834.599
Total equity and liabilities		8.108.303	8.562.000

Group Consolidated statement of comprehensive income

		For the year ended			For the three-month period ended
	Note	31 December 2023	31 December 2022		31 December 2023	31 December 2022
Revenue from contracts with customers	5	12.803.061	14.508.068		3.304.010	4.189.237
Cost of sales	24	(11.474.830)	(12.580.489)		(3.066.811)	(3.867.099)
Gross profit / (loss)		1.328.231	1.927.579		237.199	322.138
Selling and distribution expenses	24	(415.225)	(393.350)		(113.297)	(100.638)
Administrative expenses	24	(185.877)	(176.345)		(53.430)	(40.091)
Exploration and development expenses	25	(6.707)	(26.548)		(897)	(1.064)
Other operating income and other gains	26	65.203	134.393		39.550	77.356
Other operating expense and other losses	26	(49.400)	(53.109)		(41.710)	(8.580)
Operating profit / (loss)		736.225	1.412.620		67.415	249.121
Finance income	27	11.918	3.315		5.754	91
Finance expense	27	(133.944)	(108.233)		(36.660)	(25.631)
Lease finance cost	20, 27	(9.669)	(9.261)		(2.644)	(2.172)
Currency exchange gains / (losses)	28	(4.743)	2.499		(10.100)	21.476
Share of profit / (loss) of investments in associates and joint ventures	9	4.272	120.042		3.148	50.617
Profit / (loss) before income tax		604.059	1.420.982		26.913	293.502
Income tax (expense) / credit	29	(123.450)	(526.004)		(12.181)	(38.506)
Profit / (loss) for the period		480.609	894.978		14.732	254.996
Profit / (loss) attributable to:
Owners of the parent		477.732	889.501		15.458	252.169
Non-controlling interests		2.877	5.477		(726)	2.827
		480.609	894.978		14.732	254.996
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	20	(10.746)	29.709		(9.035)	-
Changes in the fair value of equity instruments	15	97	14		107	(21)
		(10.649)	29.723		(8.928)	(21)
Other comprehensive income / (loss) that may be reclassified subsequently to profit or loss (net of tax):
Share of other comprehensive income / (loss) of associates	15	1.460	658		759	12.323
Fair value gains / (losses) on cash flow hedges	15	6.615	5.733		(36.700)	(1.393)
Recycling of (gains) / losses on hedges through comprehensive income	15	(17.725)	(4.941)		-	-
Currency translation differences and other movements	15	(404)	(278)		(71)	(127)
		(10.054)	1.172		(36.012)	10.803
Other comprehensive income / (loss) for the period, net of tax		(20.703)	30.895		(44.940)	10.782
Total comprehensive income / (loss) for the period		459.906	925.873		(30.208)	265.778
Total comprehensive income / (loss) attributable to:
Owners of the parent		457.160	920.330		(32.580)	262.927
Non-controlling interests		2.746	5.543		2.372	2.851
		459.906	925.873		(30.208)	265.778
Åarnings / (losses) per share (expressed in Euro per share)	30	1,56	2,91		0,05	0,83

Group Consolidated statement of cash flows

		For the year ended
	Note	31 December 2023	31 December 2022
Cash flows from operating activities
Cash generated from operations	32	1.315.349	630.118
Income tax (paid) / received	29	(350.782)	(6.499)
Net cash generated from/ (used in) operating activities		964.567	623.619
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets	6, 8	(291.035)	(512.175)
Proceeds from disposal of property, plant and equipment & intangible assets		5.630	14.167
Acquisition of share of associates and joint ventures		(174)	-
Cash and cash equivalents of acquired subsidiaries		101	3.053
Grants received		2.832	-
Interest received	27	11.918	3.315
Prepayments for right-of-use assets		(2.710)	(748)
Dividends received		34.980	-
Proceeds from disposal of assets held for sale		-	265.516
Net cash generated from/ (used in) investing activities		(238.458)	(226.872)
Cash flows from financing activities
Interest paid on borrowings		(128.277)	(101.565)
Dividends paid to shareholders of the Company	31	(229.006)	(244.983)
Dividends paid to non-controlling interests		(3.707)	(2.240)
Proceeds from borrowings	17	1.519.407	1.102.636
Repayments of borrowings	17	(1.816.846)	(1.259.597)
Payment of lease liabilities - principal	18	(33.505)	(36.522)
Payment of lease liabilities - interest	18	(9.669)	(9.261)
Net cash generated from/ (used in) financing activities		(701.603)	(551.532)
Net increase/ (decrease) in cash and cash equivalents		24.506	(154.785)
Cash and cash equivalents at the beginning of the year	13	900.176	1.052.618
Exchange (losses) / gains on cash and cash equivalents		(5.225)	2.343
Net increase / (decrease) in cash and cash equivalents		24.506	(154.785)
Cash and cash equivalents at end of the period	13	919.457	900.176

Parent Company Statement of Financial Position

		As at
	Note	31 December 2023	31 December 2022
Assets
Non-current assets
Property, plant and equipment		673	671
Right-of-use assets	7	9.155	10.817
Intangible assets		63	138
Investments in subsidiaries, associates and joint ventures	9	1.785.115	1.654.517
Deferred income tax assets		8.416	11.020
Investment in equity instruments		-	38
Loans, advances and long term assets	10	242.249	230.243
		2.045.671	1.907.444
Current assets
Trade and other receivables	12	26.101	86.159
Income tax receivables		2.625	-
Cash and cash equivalents		150.528	209.054
		179.254	295.213
Total assets		2.224.925	2.202.657
Equity
Share capital and share premium	14	1.020.081	1.020.081
Reserves	15	292.638	281.104
Retained Earnings		784.155	765.156
Total equity		2.096.874	2.066.341
Liabilities
Non-current liabilities
Lease liabilities	18	6.973	9.611
Retirement benefit obligations		-	7.977
Other non-current liabilities		-	174
		6.973	17.762
Current liabilities
Trade and other payables		24.597	36.491
Income tax payable	0	1.928	3.582
Lease liabilities	18	2.422	1.257
Dividends payable	31	92.131	77.224
		121.078	118.554
Total liabilities		128.051	136.316
Total equity and liabilities		2.224.925	2.202.657

        Parent Company Statement of Comprehensive Income

		For the year ended			For the three-month period ended
	Note	31 December 2023	31 December 2022		31 December 2023	31 December 2022
Revenue from contracts with customers		39.473	38.167		15.173	8.073
Cost of sales		(35.885)	(34.697)		(13.793)	(7.338)
Gross profit / (loss)		3.588	3.470		1.380	735
Administrative expenses		(7.512)	(7.628)		(1.386)	(22)
Other operating income and other gains	26	28.043	180.131		11.000	147.287
Other operating expense and other losses	26	(27.420)	(21.373)		(10.814)	(3.536)
Operating profit /(loss)		(3.301)	154.600		180	144.464
Finance income		17.474	6.761		2.733	1.566
Finance expense		-	(513)		8	(2)
Lease finance cost		(380)	(461)		(93)	(89)
Currency exchange gain / (loss)		47	-		(5)	-
Dividend income	31	267.785	234.069		-	202.354
Profit / (loss)  before income tax		281.625	394.456		2.823	348.293
Income tax (expense) / credit	29	(4.249)	(3.558)		(1.037)	(193)
Profit / (loss) for the period		277.376	390.898		1.786	348.100
Other comprehensive income / (loss) that will not be reclassified to profit or loss (net of tax):
Actuarial gains / (losses) on defined benefit pension plans		(2.335)	917		(1.300)	-
Other comprehensive income / (loss) for the year, net of tax		(2.335)	917		(1.300)	-
Total comprehensive income / (loss) for the period		275.041	391.815		486	348.100

Parent Company Statement of Cash flows

		For the year ended
	Note	31 December 2023	31 December 2022
Cash flows from operating activities
Cash generated from / (used in) operations	32	2.528	8.122
Income tax (paid) / received		(4.799)	-
Net cash generated from / (used in) operating activities		(2.271)	8.122
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets		(24)	(112)
Proceeds from disposal of property, plant and equipment & intangible assets		-	10.960
Participation in share capital increase of subsidiaries, associates and joint ventures		(132.362)	(41.142)
Loans and advances to Group Companies	10	(8.500)	(128.197)
Interest received		16.079	3.713
Dividends received		300.236	208.354
Net proceeds from disposal of assets held for sale		-	265.516
Net cash generated from / (used in) investing activities		175.429	319.092
Cash flows from financing activities
Interest paid		-	(513)
Dividends paid to shareholders of the Company	31	(229.006)	(244.984)
Payment of lease liabilities - principal, net	18	(2.298)	(2.202)
Payment of lease liabilities - interest	18	(380)	(461)
Net cash generated from / (used in) financing activities		(231.684)	(248.160)
Net increase / (decrease) in cash and cash equivalents		(58.526)	79.054
Cash and cash equivalents at the beginning of the period		209.054	843.493
Net cash outflow due to demerger		-	(713.493)
Net increase / (decrease) in cash and cash equivalents		(58.526)	79.054
Cash and cash equivalents at end of the period		150.528	209.054

 

END