Strong profits for Hellenic Petroleum Group for the first six months of 2005

HALF-YEAR 2005 FINANCIAL RESULTS
(In accordance with International Financial Reporting Standards)
Strong profits for Hellenic Petroleum Group for the first six months of 2005

Hellenic Petroleum Group reported six-month 2005 Consolidated Net Income of €141.3 million, corresponding to €0.46 per share (EPS), up 78 % compared to the same period in 2004.

Group Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) for the first six months of 2005 were €311.5 million, with Group Profits before tax at €211.2 million.

Compared to last year’s respective period, key financial indicators are as follows:

• Sales €2,863 million, up 29 %
  
• EBITDA €311.5 million, up 55 %
  
• Net Income €141.3 million, up 78 %
  
• Net Income per share (EPS) €0.46, up 78 %
  
• Operating cash flow €211 million, up 201 %.
  
• ROΑCE 7.2 %, up 31 %

Prevailing market factors which affected first-half 2005 results were:

• Continuation of the generally positive refining environment with:
  • Maintenance of high crude oil and product prices.
  • High, but volatile, refining margins for complex refineries in the
• Mediterranean
• (Med Cracking refining margins).
• A reduction in domestic market demand for petroleum products, except motor gasoline and aviation fuels.
• 5 % higher  € / $ exchange rate compared to the corresponding period in 2004, which adversely affects Group results as refining margins are dollar-based

Key developments by business segment in terms of operating profitability and sales volumes were as follows:

Refining, Supply & Trading

• Operating profit for this activity reached 218 million euros (+ 68 %), due to the positive market environment, good refinery performance, supply / refining synergies and lower operating cost.
• Domestic market share is also improved despite the fact that total sales volumes for the six – month period 2005 were 8 million tonnes, down by 3 % compared to the corresponding period of 2004.  This was mainly due to lower heating gasoil and industry segment sales, as well as due to different production planning aiming at optimizing profitability rather than volumes.  Finally, sales volumes from OKTA refinery at Skopje FYROM are up 26 % due to improved refinery utilization and better market conditions. 

Retail Marketing

• Operating profit for this activity reached 24 million euros, mainly due to improved product mix with more high-value products (KINITRON) as well as improved performance of the international marketing companies.
• Group sales volumes in Greece during the first six months of 2005 were 1.848 million tonnes, down 7 % compared to the first six months of 2004. However, new higher-value products marketed under the “KINITRON” brand are gaining momentum and increasing their share of total sales. Finally, international marketing sales were 388 thousand tonnes, 3 % higher compared to the corresponding period of 2004. 

Petrochemicals

• Sales volumes were 182 thousand tonnes, 7 % lower than last year. Domestic petrochemicals market conditions, particularly for PVC, are considered soft due to fewer construction sector projects and overall market slowdown.

 

Significant focus is still being placed on the control and effective management of operating costs and capital expenditure. A new management structure, better coordination, improved group reporting and revised procurement procedures are part of the effort to effectively manage the business and the cost base, thus improving the competitiveness of Group companies and returns on capital employed.  As a result, six-month Group operating expenditure in 2005 is down compared to last year.

Capital investments for the quarter were €101 million, with €54 million going to the construction of the 390 MW power generation plant in Thessaloniki.  The plant is expected to start commercial operation by the end of the year.

High crude oil and product prices lead to increased working capital requirements, with respective increase of net debt to 742 million euros.  Nevertheless, debt gearing is still low at 27 % (D/D+E).

Key Financial Indicators for the Group are attached.

HELLENIC PETROLEUM GROUP

SIX – MONTH 2005 CONSOLIDATED KEY
FINANCIAL RESULTS
(Prepared in accordance with IFRS)

Six month period Ianuary – June
Million €	2004	2005	%
Net Sales	2.223	2.863	29 %
EBITDA	201	311,5	55 %
Earnings before Tax	135,2	211,2	56 %
Net Income	79,5	141,3	78 %
Earnings per Share (EPS) €	0,26	0,46	78 %
Operating Cash Flow (2)	70	211	201 %
Net Debt	386 (1)	742	-
Debt Gearing (D/D+E)	17 (1) %	27 %	-

⁽¹⁾ Comparatives refer to December 2004.

⁽²⁾ Calculated as EBITDA less capital expenditure.