Oil Refineries Announces Results for Second Quarter and First Six Months of 2009
HAIFA, Israel, August 17 /PRNewswire-FirstCall/ --
- Adjusted refining margin 45% higher than Reuters' Mediterranean
Ural Cracking Margin benchmark;
- Net loss for the quarter total $8 million, compared to $71
million net income in second quarter 2008;
- Mild Hydrocracker activated in May 2009 - Increasing overall
gasoil production capacity by 1.5%;
- Completed maintenance and upgrade of largest crude unit in
July, to contribute to higher margins starting from Q3 2009
Oil Refineries Ltd. (TASE: ORL.TA) (“Oil Refineries” or the “Company”)
announced today its financial results for three and six month periods ending
Financial Reporting Standards (IFRS).
Six Month 2009 Highlights
- Adjusted refining margin USD/bbl 3.5, 45% higher than
average Reuters' quoted Mediterranean Ural Cracking Margin of USD/bbl
2.4
- Adjusted refining and trading segment EBITDA totaled $39
million, compared to a $51 million in first half 2008
- Aromatic sector EBITDA totaled $20 million, compared to $22
million last year
- Polymer sector EBITDA totaled $28 million, compared to $14
in last year; represents results of 100% of Carmel Olefins results,
in which the Company holds 50%
- Net profit of $67 million, compared to $73 million in first
half 2008
As accepted by major leading international refiners and marketers of oil
and its products, the results below are presented as reported as well as net
of the accounting provision for inventory write offs, in addition to buying
and selling timing and derivative accounting method under IFRS. This, in
order to enable a common base for comparison of the Company’s ongoing
operations.
Volatility in Global Fuel Prices and Refining Margins
During the first six months of 2009, crude oil prices rose from
approximately
barrel at the end of the period, and this follows substantial volatility in
crude oil prices throughout 2008. In parallel, there was a decline in fuel
end-products as compared to the same period last year; however, the timing
and scope of product price changes were not directly aligned with the timing
and scope of raw material price changes. This resulted in substantial
volatility and refining margin erosions the world over.
The increase in crude oil prices had a substantial impact on the
Company’s first six month 2009 results. The Company maintains a basic
un-hedged inventory of 600,000 tons of crude oil. The change in the value of
this inventory does not draw a cash flow impact on the Company, therefore the
Company reports its operating results net of these and other factors as
outlined below.
Six Month 2009 Results
Adjusted refining margin for the first six months of 2009 totaled USD/bbl
3.5 (USD/ton 25.4), compared to the average Mediterranean Ural Cracking
Margin quoted by Reuters for the first six months 2009 of USD/bbl 2.4
(USD/ton 17.5). Adjusted refining margin for the first six months of 2008
totaled USD/bbl 4.6 (USD/ton 33.2).
Utilization rate for the first six months totaled 87.2%, compared to
90.3% in the same period last year. The decline in utilization rate followed
the shutdown of the Company’s main refining unit for periodic maintenance and
upgrade.
In order to better equip the Company to handle the eroding margins, the
Company implemented a comprehensive efficiency plan, as part of its 2009 work
plan, contributing to a substantial, 15% decline, in ongoing operating
expenses.
Refining and Trading sector adjusted EBITDA totaled
first six months of 2009, compared to a
last year. During the quarter, the trading sector primarily contributed to
supporting the Company’s core business, sourcing raw materials with a view to
maximizing margins in the refining and aromatic areas.
Aromatic Segment EBITDA totaled
2009, compared to
of the increased margins in the segment, the Company’s trading arm guided
sales to areas bearing highest added value, leveraging, and maximizing,
synergies with the refining sector.
Polymer Segment EBITDA totaled
the first six months last year. These results represent 100% of Carmel
Olefins’ results (in which the Company holds 50%).
Finance income for the first six months of 2009, on a consolidated basis,
totaled
six months of 2008. The finance income in the six months primarily resulted
from the fair value adjustment of financial derivatives as well as the impact
of the depreciation of the Shekel against the US dollar on the Company’s
shekel based loans, as are recorded under IFRS.
Consolidated net income for the first six months of 2009 totaled
million
Second Quarter 2009 Results
Adjusted refining margin for the second quarter of 2009 totaled USD/bbl
2.4 (USD/ton 17.4), compared to the average Mediterranean Ural Cracking
Margin quoted by Reuters for the second quarter 2009 of USD/bbl 1.4 (USD/ton
10.2). Adjusted refining margin for the second quarter 2008 totaled USD/bbl
6.7 (USD/ton 48.9). As highlighted above, during the quarter the global fuel
market suffered from high volatility resulting from the increase in raw
materials to USD/bbl 68, paired with the stiffening of fuel end-product
prices, due, among others, to the global economic crisis. This drew a
substantial narrowing in refining margins, the world over.
Refining and Trading sector adjusted EBITDA totaled
second quarter of 2009, compared to a
last year.
Aromatic Segment EBITDA increased to
2009, compared to
mentioned above, the increase in aromatic margins was optimally leveraged by
shifting product sales to lucrative markets.
Polymer Segment EBITDA totaled
compared to flat EBITDA in the comparable period last year. These results
represent 100% of Carmel Olefins’ results (in which the Company holds 50%).
Finance expense for the second quarter of 2009, on a consolidated basis,
totaled
quarter of last year.
Consolidated net loss for the second quarter of 2009 totaled
compared to a
Significant Recent Developments
Mild Hydrocracker – During the first six months of the year the Company
completed, and activated, the first phase of the HVGO conversion into a mild
hydrocracker. Subsequently the unit started contributing to flexibility by
increasing gasoil production capacity by 1.5% per annum. The Company is
currently moving to bring forward the second stage of the project, which is
expected to further increase capacities by the same level.
Periodic Maintenance and Upgrade of Crude Unit 4 – Following the balance
sheet date the Company completed the maintenance and upgrade of the Company’s
largest crude unit, Crude Unit 4. The upgrade, for a total investment of
million
increasing refining flexibility, subsequently contributing to an increase in
refining margins starting from the third quarter 2009.
Full Hydrocracker – As part of the strategic plan, under which a 25 kbpd
hydrocracker was approved, the Company is now in advance negotiations with
equipment suppliers, as well as finalizing the financing package.
Efficiencies – In order to best meet the challenges posed by the low
margin environment, the Company adopted, as part of its 2009 work plan, a
comprehensive efficiency plan. Under the plan, the Company has substantially
reduced ongoing operating expenses (approximately 15%).
Mr.
presented, during the quarter and six months, refining margins in excess of
the regional Mediterranean benchmark. The global economic crisis has drawn a
stiffening of fuel product prices which, paired with the increase in crude
oil prices, has eroded global refining margins. Oil Refineries has succeeded,
on an ongoing basis, to compensate for the shortfall, through its units’
flexibility and utilization as well as its geographic advantage. The Company
continues to maximize the benefits of its strategic location, given both its
proximity and access to a broad variety of crude oils as well as its ability
to market products to several local markets in the Mediterranean basin, such
as
The Company recently completed the activation of the first stage of the
mild hydrocracker, which will substantially contribute to an increase in the
Company’s flexibility, as well as expanding its product slate. Following the
end of the quarter, the Company also completed the maintenance and upgrade of
its largest crude unit, a process which is expected to further contribute to
margin expansion, starting already in the third quarter. In addition to these
activities targeted as expanding refining margins, the Company has adopted a
widespread efficiency program aimed at reducing ongoing operating overheads
with a view to better equiping the Company to navigate the current low margin
environment.”
Mr.
and upgrade new products, such as the
announce its readiness to supply bio-diesel fuels to the local market, and as
such, to be instrumental in advancing the local market into the modern world
which already utilizes these new, higher quality, fuels which reduce
greenhouse emissions.”
Mr.
Refineries’ continues to assimilate the long term strategy determined by the
controlling shareholders, enabling the Company to preserve its refining
margins, despite the substantial decline in global margins and lower local
market demand. The Company’s trade segment’s contributed to a positive shift
in the aromatic sector’s exports, resulting from the trade segments ability
to aptly identify and leverage global trends. Furthermore, the continued
implementation of the efficiency plan, reducing operating expenses, enabled
the Company to present a relatively high EBITDA, despite the margin erosion.”
Mr. Rosen added, commenting on the new accounting method, “The current
accounting method does not enable the reader to aptly understand Oil
Refineries ongoing activities. In the current report we have chosen to supply
additional information in order to enable investors to better understand and
evaluate the Company’s business.”
Conference Call
The Company will also be hosting a conference call later today at
ET
reviewing the second quarter and first six months 2009 highlights and
industry trends. The presentation is available for download from the
Company’s website http://www.orl.co.il: Investor Relations > Financial
Reports. To participate in the conference call, please call one of the
following teleconferencing numbers. Please begin placing your calls at least
10 minutes before the conference call commences. If you are unable to connect
using the toll-free numbers, please try the international number.
US Dial-in Numbers: 1-888-281-1167
UK Dial-in Number: 0-800-051-8913
Israel Dial-in Number: 03-918-0650
International Dial-in Number: +972-3-918-0650
at:
A replay of the call will be available, after the call, on the Company’s
website at http://www.orl.co.il.
About Oil Refineries Ltd.
Oil Refineries Ltd. (ORL), located in the bay area of the city of
operates
state-of-the-art industrial facilities with refining capacity of 9 million
tons of crude oil per year, with a Nelson Complexity Index of 7.4, providing
a variety of quality products used in industrial operation, transportation,
private consumption, agriculture and infrastructure. The Company is also
active in the area of Polymers and Aromatics through its holdings in Carmel
Olefins Ltd and Gadiv Petrochemical Industries Ltd. The Company also provides
power and heat services to industrial customers in the Haifa Bay, as well as
infrastructure services. ORL is traded on the Tel Aviv Stock Exchange under
the ticker ORL. For additional information please visit http://www.orl.co.il.
The above noted in this release includes forward-looking statements based
on Company data, as well as Company plans and estimations based on this data.
The activity, results and other data may be substantially different in
reality given uncertainty and various risks, including those discussed under
risk factors in the Company’s financial statements and Director’s reports.
Oil Refineries Ltd.
Condensed Consolidated Interim Statements of Financial Position
In thousand US Dollars
As at
June 30, June 30, December
2009 2008 31, 2008
(Unaudited) (Audited)
Current assets
Cash and cash equivalents 16,827 9,092 14,840
Deposits 99,274 - 25,000
Derivatives at fair value through
profit or loss 337 391 15,374
Investments in other financial
assets at fair value through
profit or loss 102,130 223,688 101,509
Trade receivables 306,644 675,608 253,215
Other receivables 65,959 84,082 82,642
Inventory 785,256 1,346,296 569,407
Current tax assets 43,845 5,894 42,047
Total current assets 1,420,272 2,345,051 1,104,034
Non-current assets
Investments in equity-accounted
Investees 34,971 42,043 36,005
Investments in available-for-sale
financial assets 9,238 - -
Loan to Haifa Early Pensions Ltd. 69,769 99,248 84,740
Long term loans and debit balances 2,625 4,990 2,606
Derivatives at fair value through
profit or loss 74,038 120,891 64,369
Employee benefit plan assets 5,378 7,446 5,007
Property, plant and equipment 1,135,845 1,052,605 1,083,446
Intangible assets and deferred
expenses, net 22,971 25,700 25,170
Total non-current assets 1,354,835 1,352,923 1,301,343
Total assets 2,775,107 3,697,974 2,405,377
Oil Refineries Ltd.
Condensed Consolidated Interim Statements of Financial Position (cont.)
In thousand US Dollars
As at
June 30, June 30, December
2009 2008 31, 2008
(Unaudited) (Audited)
Current liabilities
Loans and credit 678,484 572,222 380,339
Trade payables 302,229 697,525 270,594
Other payables 67,169 131,461 70,971
Derivatives at fair value through
profit or loss 35,174 28,309 1,853
Provisions 13,192 31,856 12,949
Total current liabilities 1,096,248 1,461,373 736,706
Non-current liabilities
Debentures 698,583 827,898 726,554
Bank loans 187,847 407,999 233,749
Liabilities for finance lease 8,285 9,447 8,448
Other long-term liabilities 7,678 10,372 7,394
Derivatives at fair value through
profit or loss 656 - 6.900
Employee benefits 50,388 70,451 67,930
Liabilities for deferred taxes 87,872 117,614 65,827
Total non-current liabilities 1,041,309 1,443,781 1,116,802
Total liabilities 2,137,557 2,905,154 1,853,508
Equity
Share capital 472,478 472,478 472,478
Capital reserves 33,345 20,340 20,953
Retained earnings 131,727 300,002 58,438
Total equity 637,550 792,820 551,869
Total liabilities and capital 2,775,107 3,697,974 2,405,377
Oil Refineries Ltd.
Condensed Consolidated Interim Statements of Comprehensive Income
In thousand
US Dollars
Six months ended Three months ended Year
June 30, June 30, ended
December
31,
2009 2008 2009 2008 2008
(Unaudited) (Unaudited) (Audited)
Revenue 2,192,401 4,356,759 1,208,043 2,471,063 8,257,458
Cost of sales,
refinery
and services 2,019,861 4,163,743 1,138,884 2,339,570 8,324,149
Revaluation of
open transactions
in derivatives on
prices of goods and
margins, net 47,863 33,543 46,618 13,056 (7,465)
Total cost of sales 2,067,724 4,197,286 1,185,502 2,352,626 8,316,684
Gross profit (loss) 124,677 159,473 22,541 118,437 (59,226)
Selling expenses 17,850 21,186 9,077 10,718 40,582
General and
administrative
expenses 26,674 40,651 13,553 25,918 67,061
Negative goodwill
arising on acquisition - (13,843) - (13,843) (14,535)
Loss from the loss of
material impact in a
former equity-accounted
investee 7,091 - 7,091 - -
Operating profit
(loss) 73,062 111,479 (7,180) 95,644 (152,334)
Financing revenue 44,271 82,161 (14,501) 50,749 64,979
Financing expenses (35,798) (119,739) 8,609 (71,655)(126,034)
Financing income
(expenses), net 8,473 (37,578) (5,892) (20,906) (61,055)
Group's share in
profits (losses) of
equity accounted
investees, net
of tax 3,838 3,726 (753) 8,796 (3,111)
Profit (loss) before
taxes on income 85,373 77,627 (13,825) 83,534 (216,500)
Tax benefits (taxes on
income) (18,763) (4,150) 5,844 (12,150) 107,292
Net profit (loss) for
the period 66,610 73,477 (7,981) 71,384 (109,208)
Oil Refineries Ltd.
Selected Pro-forma Consolidated Data from the Report of the Board of
Directors on the State of the Corporation's Affairs for the Period
In millions US Dollars
Petrochemicals
Refining Trade Polymers
2009 2008 2009 2008 2009 2008
Revenue 1,622 3,522 248 311 177 241
Inter-company
operations 207 380 - - - -
Total revenue 1,829 3,902 248 311 177 241
Cost of sales 1,724 3,757 244 307 99 93
Inter-company
operations 19 28 - - 66 140
Total cost of
sales 1,743 3,785 244 307 165 233
Gross profit
(loss) 86 117 4 4 12 8
Selling, general
and
administrative
expenses 22 36 1 - 11 11
Inter-company
operations - - - - 1 2
Operating profit
(loss) for
segments 64 81 3 4 - (5)
Negative
goodwill arising
on acquisition
Loss from the
loss of material
impact in a
former
equity-accounted
investee
Operating profit
Financing
revenue
(expenses)
Share in the
profits of
equity accounted
investees
Profit before
income tax
Income tax
Net profit
(continued)
Adjustments to
Aromatics consolidated Consolidated
Six months ended June 30,
2009 2008 2009 2008 2009 2008
Revenue 146 282 - - 2,193 4,356
Inter-company
operations 19 28 (226) (408) - -
Total revenue 165 310 (226) (408) 2,193 4,356
Cost of sales 1 40 - - 2,068 4,197
Inter-company
operations 136 235 (221) (403) - -
Total cost of
sales 137 275 (221) (403) 2,068 4,197
Gross profit
(loss) 28 35 (5) (5) 125 159
Selling, general
and
administrative
expenses 11 15 - - 45 62
Inter-company
operations 1 1 (2) (3) - -
Operating profit
(loss) for
segments 16 19 (3) (2) 80 97
Negative
goodwill arising
on acquisition 14
Loss from the
loss of material
impact in a
former
equity-accounted
investee (7) -
Operating profit 73 111
Financing
revenue
(expenses) 9 (38)
Share in the
profits of
equity accounted
investees 4 4
Profit before
income tax 86 77
Income tax (19) (4)
Net profit 67 73
Contacts
Company Contact:
Rony Solonicof
Chief Economist and Head of Investor Relations
Tel. +972-4-878-8152
ContactIREn@orl.co.il
Investor Relations Contact:
Ehud Helft \ Fiona Darmon
GK Investor Relations
Tel. (US) +1-646-797-2868 \ (Int.) +972-52-695-4400
info@gkir.com
SOURCE Oil Refineries Ltd