Full Year 2007 Financial Results

 

 FY 2007 Net Income grew 35% to €351m, corresponding to €1.15 per share (EPS), while Group Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) increased 23% to €617m. Adjusting for inventory effects, “Clean” EBITDA were lower by 13% to €458m.

The Board of Directors will propose at the forthcoming AGM the payment of a final dividend of €0.35 per share. Including the interim dividend of €0.15 per share, the total dividend for 2007 amounts to €0.50 per share, a 16% increase over 2006 levels and implying a yield of 5.1% (based on yesterday’s closing share price).
 

Key financials for the 12-month period to 31 December 2007 and comparisons to last year’s results, are:

• Sales Revenue                 €8.5bn, up 5% (4Q: €2.6bn, up 32%)
• EBITDA                           €617m, up 23% (4Q: €173m, up 149%)
• Net Income                      €351m, up 35% (4Q: €86m, up 90%)
• Earnings per share          €1.15, up 35% (4Q: €0.28, up 90%)
• “Clean” EBITDA            €458m, down 13% (4Q: €66m, down 23%)
• Free cash flow                  €240m, compared to -€152m in FY06, driven by the higher
                                             profitability, lower working capital needs and tax payments
• Capex                                €195m, versus €145m in FY06
• ROΑCE (12-mth trailing)   11%
• ROE (12-mth trailing)        14%

 

 

 2007 performance highlights:

a) Refining, Supply & Trading

• Refining, Supply & Trading, accounted for the bulk of our earnings, contributing 80% to Group EBITDA. FY07 Reported EBITDA was up 31% to €488m, however ”Clean” EBITDA posted an 17% decline to €329m.

• Mediterranean complex refining margins were flat y-o-y, remaining above mid-cycle levels, driven by strength in middle distillates cracks. However, a sharp retraction in fuel oil margins and the persistence of high oil prices put increased pressure on hydroskimming and topping margins towards year-end.

• During 2007, the EUR strengthened considerably against the USD, with an adverse translation effect on refining margins and thus profitability. However, weakness in the USD positively affected the revaluation of USD-denominated loans, resulting in €31m as currency gains in FY07.

• Crude oil prices resumed their ascent in 2007, moving higher by some 50% y-o-y and, thus, leading to a large positive inventory effect.

• Total volume sales increased by 1% y-o-y to 17.1m tonnes, despite a slight decline in the Greek market due to weakness in heating gasoil.

• EBITDA at our refinery in FYROM, OKTA, grew 14% to €31m.

b) Retail Marketing

• Retail marketing accounted for 12% of Group EBITDA. In FY07, EBITDA was flat y-o-y, amounting to €75m.

• Greek volume sales (ie EKO) were up 7% to 4.3m tonnes, with market share gains in premium products, such as gasoline and diesel, which volume sales increasing 5% and 3%, respectively.

• Network rationalisation in the domestic market continued, with company-controlled petrol stations accounting for 24% of the total network, versus 18% at end-2006.

• EKO’s FY07 EBITDA fell 12% y-o-y to €41m, due to increased industry rivalry putting pressure on margins and increased operating expenses.

• Our International Marketing division posted a FY07 EBITDA of €33m, a 20% y-o-y increase, accounting for 45% of total Group Marketing EBITDA.

• The continuous rollout of network in key international markets (Bulgaria and Serbia) and improvements in average throughputs led to a 22% increase in international volume sales.

 

c) Petrochemicals

• The continued strength of the polypropylene business, together with cost containment efforts, led to a sharp improvement in profitability. In 2007, sales volume increased 3% to 430k tonnes and EBITDA increased by 40% to €55m.
 

d) Power Generation & Trading

• In 2007, power generation sales grew to 1,878GWh and T-Power’s spark spread improved. FY07 turnover and EBITDA were up by 2% to €148m and 21% to €38m, respectively.

 

John Costopoulos, CEO of Hellenic Petroleum, commented:

“We are pleased to report strong results for 2007, supported by increasing oil prices. In the future we will focus more on our core businesses, namely refining and marketing, driving for further operational efficiency improvements and increased profitability. Key elements to our strategy are the refinery upgrades in Elefsina and Thessaloniki, which are proceeding as planned; and business development in areas were we can leverage our competitive advantage.”

 
Key Financial Indicators for the Group are shown below: