Oil Refineries Announces Results for Third Quarter and First Nine Months of 2009
HAIFA, Israel, November 11 /PRNewswire-FirstCall/ --
- Consolidated Quarterly net Income Reaches $100 Million, Compared Break
Even in Third Quarter 2008;
- Consolidated net Income for the Nine Months Reaches $167 Million
- Adjusted Refining Margin Totals USD/bbl 8.1 Compared to Reuters'
Mediterranean Ural Cracking Margin Benchmark of USD/bbl 1.6;
- Refining Capacity Increases to 197 kbpd, up From 180 kbpd, Following
Upgrade of Largest Crude Unit;
- Continue to Prepare for Merger of Carmel Olefins With ORL; Following
General Meeting Approval and Completion of Transaction -- ORL will
Wholly-own Carmel Olefins
Oil Refineries Ltd. (TASE: ORL.TA) (“Oil Refineries” or the “Company”)
announced today its financial results for three and nine month periods ending
Financial Reporting Standards (IFRS).
- Adjusted refining margin USD/bbl 8.1, compared to USD/bbl
1.6 average Reuters' quoted Mediterranean Ural Cracking Margin
- Adjusted refining and trading segment EBITDA totaled $55
million, compared to a $83 million in nine months 2008
- Polymer sector EBITDA totaled $17 million, an increase from
the $16 million in last year
- Aromatic sector EBITDA totaled $8 million, an increase from
the $7 million in last year
- Consolidated net income of $100 million, compared to break
even in the first nine months 2008
As accepted by major leading international refiners and marketers of oil
and its products, the results are presented as reported as well as net of the
accounting provision for inventory gains or 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
The increase in crude oil prices had a substantial impact on the
Company’s results during the reporting period. 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.
As of
options for the instance of a significant decline in crude oil prices.
Third Quarter 2009 Results
Adjusted refining margin for the third quarter of 2009 totaled USD/bbl
8.1 (USD/ton 60.1), compared to the average Mediterranean Ural Cracking
Margin quoted by Reuters for the third quarter 2009 of USD/bbl 1.6 (USD/ton
11.0). Adjusted refining margin for the third quarter 2008 totaled USD/bbl
8.1 (USD/ton 58.9). The Company estimates that the adjusted refining margin
for the quarter was substantially higher than the regional “Ural” benchmark
for several reasons: the completion of unit upgrades, differences in the
refined crude oil mix as compared to the “Ural”, full capacity activation of
downstream units despite the decline in refining throughput due to the
periodic turnaround of the largest crude unit and crossover impacts between
quarters in volatile environment.
Utilization rate for the third quarter totaled 76.5%, compared to 92.5%
in the same period last year. The decline in utilization rate is mainly due
to the periodic turnaround of the Company’s largest crude unit.
Refining and Trading sector adjusted EBITDA totaled
third quarter of 2009, compared to
year.
Polymer Segment EBITDA, conducted through 50%-held Carmel Olefins,
totaled
the comparable period last year.
Aromatic Segment EBITDA, conducted through wholly-owned Gadiv
Petrochemical Industries, increased to
2009, compared to
Finance expense for the third quarter of 2009, on a consolidated basis,
totaled
quarter of last year. The decline in finance expenses resulted from the fair
value adjustment of financial derivatives, as accepted under IFRS accounting
standard, as well as from the decline in interest expenses, resulting from
the lower LIBOR rate. Furthermore the Company generated an income on its
traded securities’ portfolio.
Taxes on Income: As a result of the Israeli “Economic Efficiency Law”
which determined, among others, the gradual reduction in the corporate tax
rate to 18% in 2016 and onwards, the Company’s deferred tax liabilities were
reduced resulting in the Company recording a related tax income of
approximately
Consolidated net income for the third quarter of 2009 totaled
million
Nine Month 2009 Results
Adjusted refining margin for the nine months of 2009 totaled USD/bbl 4.9
(USD/ton 36.0), compared to the average Mediterranean Ural Cracking Margin
quoted by Reuters for the period of USD/bbl 2.1 (USD/ton 15.0). Adjusted
refining margin for the comparable period last year totaled USD/bbl 5.7
(USD/ton 41.7).
Utilization rate for the first nine months totaled 81.7%, compared to
91.0% in the same period last year. The decline in utilization rate is mainly
due to the periodic turnaround of the Company’s main crude unit.
Refining and Trading sector adjusted EBITDA totaled
first nine months of 2009, compared to
last year. The year over year decline mainly followed lowering refined
volumes resulting from the periodic shutdown of the Company’s main refining
unit paired with the lower refining margins. This was partially offset by the
proactive decrease in operating expenses.
Polymer Segment EBITDA increased to
2009, compared to
increase resulted primarily from higher quantities sold, offset by a decline
in product margins.
Aromatic Segment EBITDA totaled
compared to
Finance expense for the nine months of 2009, on a consolidated basis,
totaled
quarter of last year. The decline in finance expenses resulted primarily for
the fair value adjustment of financial derivates as accepted under IFRS
accounting standards, as well as a decline in interest payments resulting
from the lower LIBOR interest rate.
Taxes on Income: As a result of the Israeli “Economic Efficiency Law”
which determined, among others, the gradual reduction in the corporate tax
rate to 18% in 2016 and onwards, the Company’s deferred tax liabilities were
reduced resulting in the Company recording a related tax income of
approximately
Consolidated net income for the nine months of 2009 totaled
compared to
Significant Recent Developments
Agreement to acquire the entire holdings of Israel Petrochemical
Enterprises in Carmel Olefins (“CAOL”): On
signed an agreement with Israel Petrochemical Enterprises (“IPE”) under which
IPE will sell to the Company its entire shareholding in CAOL, representing
50% of CAOL’s issued and outstanding share capital, in such a manner that
following the acquisition, the Company will hold 100% of CAOL’s issued share
capital. In return for the acquired CAOL shares, the Company will issue
431,610,944 ordinary shares to IPE, representing, after the allocation
(undiluted), 17.75% of the Company’s issued share capital. The acquisition of
CAOL’s entire share capital will enable the Company to take advantage of
potential inherent synergies between the refining, aromatic and polymer
industries, enabling total optimization of the production process in the
three plants – ORL, CAOL and Gadiv, through joint planning of crude oil and
feedstock purchases, optimized manufacturing and materials allocation to the
plant where it will achieve the highest added value.
Mild Hydrocracker – In
first phase of the HVGO desulphurization plant conversion into a mild
hydrocracker. Subsequently the unit started contributing to added value by
increasing gasoil production capacity by 2% per annum — an even higher rate
than initially forecast. The Company is currently bringing forward the second
stage of the project, which is expected to further increase capacities by the
same level as the first stage.
Periodic Turnaround and Upgrade of Crude Unit 4 – The turnaround and
upgrade of the largest crude unit was completed at the end of
upgrade enables the Company to refine a broader range of regional crudes,
capturing higher refining margins. With the commissioning of the upgraded
unit, the refinery’s capacity has increased from 180,000 barrels per day to
approximately 197,000 barrels per day.
Full Hydrocracker – As part of the strategic plan, under which a 25 kbpd
hydrocracker was approved, the Company is now finalizing the financing
package.
Efficiencies – The Company adopted a comprehensive efficiency work plan
for 2009. Under the plan, the Company has substantially reduced ongoing
operating expenses and intends to continue to implement efficiencies and cost
savings in the coming quarters.
Mr.
continues to present refining margins consistently higher than the regional
benchmark. The measures recently implemented, including the conversion and
upgrade of units, substantially contributed to our flexibility and to the
added value of the plant. We are witnessing an increase in demand, primarily
for transportation fuels in the local market. However, we continue to feel
the impact of the global economic slowdown. The global economic recovery is
key to driving demand, and as such we are positioning ourselves to take
advantage of this opportunity to the maximum. The acquisition of CAOL will
enable us to immediately leverage synergies through the optimization of
activities, including optimal long term investment planning. The unique
integration dynamics of our fuels industry with the aromatic and polymer
industries, offers us an advantage in the competitive landscape. This
optimization includes all areas of refining, petrochemicals and trade, and
will enable us to generate higher added values for each raw material. The
merger will enable us to better leverage our advantages and market, in
tandem, fuels, polymers and aromatic products based on demand from the local
and international markets.”
Mr.
more accelerated efficiency measures, though these measures do not relate to
downsizing, but rather to increasing in-house activities while reducing
outsourcing to contractors.”
Mr.
operates in a highly volatile market and stands strong both its flexibility
and response time in all areas of purchasing, trade and manufacturing
optimization. The Company continues to implement its strategic plan with a
view to enhancing its core businesses, preserving a relatively high EBITDA
due to ongoing efficiency measures and declining overheads. Furthermore, the
CAOL ORL merger serves as a focal point in the strategic plan to expand Oil
Refineries’ activities in the petrochemical areas while taking advantage of
synergies to improve profitability and leverage, with a view to presenting
long term growth. Once the transaction is completed, ORL will be unique in
the East Mediterranean, integrating the capabilities of the petrochemical
industries with its refining industry.
Mr. Rosen further commented on the delays in bringing the natural gas
pipeline to the Haifa Bay: “Bringing the natural gas pipeline to the Haifa
Bay is critical to the continued development of
and this includes the
swiftly to fulfill its promise and complete the gas pipeline. The company and
its subsidiaries have invested hundreds of millions of Shekels to prepare for
the reception of the natural gas for immediate use, and following these
substantial investments, which were based on the Governments’ promises, they
do not intend to invest in alternative means to reduce emissions.”
Conference Call
The Company will also be hosting a conference call later today at
ET
On the call, management will present a presentation reviewing the third
quarter and first nine 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: 1-800-994-4498
UK Dial-in Number: 0-800-917-9141
Israel Dial-in Number: 03-918-0644
International Dial-in Number: +972-3-918-0644
at: 8:30am Eastern Time, 5:30am Pacific Time; 1:30pm UK, 3:30pm Israel
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 9.8 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. Oil Refineries’ major shareholders are the Israel
Corporation and Israel Petrochemical Enterprises, both public companies
listed on the Tel Aviv Stock Exchange. The Company’s shares are listed 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
September September December
30, 2009 30, 2008 31, 2008
(Unaudited) (Audited)
Current assets
Cash and cash equivalents 7,468 26,333 14,840
Deposits 77,247 - 25,000
Derivatives at fair value through profit 522 3,106 15,374
or loss
Investments in other financial assets at
fair value through profit or loss 108,588 131,320 101,509
Trade receivables 312,088 517,815 253,215
Other receivables 79,491 121,868 82,642
Inventory 868,216 1,150,429 569,407
Current tax assets 46,530 30,129 42,047
Total current assets 1,500,150 1,981,000 1,104,034
Non-current assets
Investments in equity-accounted investees 35,844 40,197 36,005
Investments in available-for-sale
financial assets (*) 10,510 - -
Loan to Haifa Early Pensions Ltd. 73,126 93,864 84,740
Long term loans and debit balances 2,965 4,885 2,606
Derivatives at fair value through profit
or loss 112,975 103,706 64,369
Employee benefit plan assets 5,877 6,689 5,007
Property, plant and equipment 1,161,698 1,066,178 1,083,446
Intangible assets and deferred expenses, 24,992 24,816 25,170
net
Total non-current assets 1,427,987 1,340,335 1,301,343
Total assets 2,928,137 3,321,335 2,405,377
(*) See Note 8 F to the Company’s financial statements for the periods
ending
Oil Refineries Ltd.
Condensed Consolidated Interim Statements of Financial Position (cont.)
In thousand US Dollars
As at
September September December
30, 2009 30, 2008 31, 2008
(Unaudited) (Audited)
Current liabilities
Loans and credit 488,394 387,307 380,339
Trade payables 427,229 536,240 270,594
Other payables 81,997 160,155(*) 70,971(*)
Derivatives at fair value through profit
or loss 26,954 3,398 1,853
Provisions 14,385 30,994 12,949
Total current liabilities 1,038,959 1,118,094 736,706
Non-current liabilities
Debentures 736,253 817,816 726,554
Bank loans (**) 272,074 381,265 233,749
Liabilities for finance lease 8,816 9,452 8,448
Other long-term liabilities 7,581 8,964 7,394
Derivatives at fair value through profit
or loss 5,558 732 6,900
Employee benefits 50,967 70,760(*) 67,930(*)
Liabilities for deferred taxes (***) 66,664 125,600 65,827
Total non-current liabilities 1,147,913 1,414,589 1,116,802
Total liabilities 2,186,872 2,532,683 1,853,508
Capital
Share capital 472,478 472,478 472,478
Capital reserves 34,919 21,015 20,953
Retained earnings 233,868 295,159 58,438
Total capital 741,265 788,652 551,869
Total liabilities and capital 2,928,137 3,321,335 2,405,377
(*) Reclassified, see Note 2 D(1) to the Company’s financial statements
for the periods ending
(**) See Note 8 H to the Company’s financial statements for the periods
ending
(***) See Note 8 P to the Company’s financial statements for the periods
ending
Oil Refineries Ltd.
Condensed Consolidated Interim Statements of Comprehensive Income
In thousand US Dollars
Nine months ended Three months ended Year
September 30 September 30 ended
December
31
2009 2008 2009 2008 2008
(Unaudited) (Unaudited) (Audited)
Revenue 3,647,109 6,981,424 1,454,708 2,624,665 8,257,458
Cost of sales,
refinery and
services 3,360,451 6,738,068 1,340,590 2,574,325 8,324,149
Revaluation of open
transactions in
derivatives on
prices of goods and
margins, net 39,395 2,087 (8,468) (31,456) (7,465)
Total cost of sales 3,399,846 6,740,155 1,332,122 2,542,869 8,316,684
Gross profit (loss) 247,263 241,269 122,586 81,796 (59,226)
Selling expenses 31,275 32,215 13,425 11,029 40,582
General and
administrative
expenses 42,144 58,610 15,470 17,959 67,061
Negative goodwill
arising on
acquisition - (14,535) - (692) (14,535)
Loss from the loss
of material impact
in a former
equity-accounted
investee (**) 7,091 - - - -
Operating profit
(loss) 166,753 164,979 93,691 53,500 (152,334)
Financing revenue 62,390 56,298(*) 18,119 (25,863)(*) 64,979
Financing expenses (70,275) (145,441)(*)(34,477) (25,702)(*)(126,034)
Financing expenses,
net (7,885) (89,143) (16,358) (51,565) (61,055)
Group's share in
profits (losses) of
equity accounted
investees, net of
tax 4,711 437 873 (3,289) (3,111)
Profit (loss)
before taxes on
income 163,579 76,273 78,206 (1,354) (216,500)
Tax benefits (taxes
on income) 3,149 (2,754) 21,912 1,396 107,292
Net profit (loss)
for the period 166,728 73,519 100,118 42 (109,208)
Other components of
comprehensive
income
Actuarial gains
(losses) from a
defined benefit
plan, net 8,702 (5,050) 2,023 (4,885) (9,318)
Foreign currency
translation
differences for
foreign operations 168 (867) 195 (1,086) (1,078)
Group's share of
other comprehensive
income of an equity
accounted investee
(**) 10,433 (10,339) - 751 (10,433)
Change in fair
value of
available-for-sale
financial assets,
net of tax (**) 1,777 - 954 - -
Other comprehensive
income for the
period, net of tax 21,080 (16,256) 3,172 (5,220) (20,829)
Comprehensive
income for the
period 187,808 57,263 103,290 (5,178) (130,037)
Earnings (loss) per
share (USD)
Basic and diluted
earnings (losses)
per ordinary share 0.083 0.037 0.050 (****) (0.055)
(*) Reclassified, see Note 2 D (2) to the Company’s financial statements
for the periods ending
(**) See Note 8 F to the Company’s financial statements for the periods
ending
(***) See Note 8 P to the Company’s financial statements for the periods
ending
(****) Less than
periods ending
Due to first-time adoption of the revised IAS 1 commencing from
1, 2009
statement of comprehensive income was changed. See also Note 3A (1) for a
description of first-time adoption of the new standards.
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
Refining Trade
Nine months ended September 30
2009 2008 2009 2008
Revenue 2,683 5,822 422 348
Inter-company
operations 324 576 29 21
Total revenue 3,007 6,398 451 369
Cost of sales 2,797 6,182 449 360
Inter-company
operations 30 45 - -
Total cost of
sales 2,827 6,227 449 360
Gross profit
(loss) 180 171 2 9
Selling,
general and
administrative
expenses 35 51 2 1
Inter-company
operations - - - -
Operating
profit (loss)
for segments 145 120 - 8
Negative goodwill arising on
acquisition
Loss from the loss of
material impact in a
former equity-accounted
investee
Operating
profit
Financing
expenses
Share in profits of
equity-accounted investees
Profit before income tax
Income tax
Net profit
Table continued below
Petrochemicals
Polymers Aromatics
Nine months ended September 30
2009 2008 2009 2008
Revenue 289 382 253 429
Inter-company
operations - - 30 45
Total revenue 289 382 283 474
Cost of sales 146 158 8 40
Inter-company
operations 116 204 234 389
Total cost of
sales 262 362 242 429
Gross profit
(loss) 27 20 41 45
Selling,
general and
administrative
expenses 17 18 19 21
Inter-company
operations 2 3 1 1
Operating
profit (loss)
for segments 8 (1) 21 23
Negative goodwill arising on
acquisition
Loss from the loss of
material impact in a
former
equity-accounted
investee
Operating
profit
Financing
expenses
Share in profits of
equity-accounted investees
Profit before income tax
Income tax
Net profit
Table Continued Below
Adjustments to
consolidated Consolidated
2009 2008 2009 2008
Revenue - - 3,647 6,981
Inter-company
operations (383) (642) - -
Total revenue (383) (642) 3,647 6,981
Cost of sales - - 3,400 6,740
Inter-company
operations (380) (638) - -
Total cost of
sales (380) (638) 3,400 6,740
Gross profit
(loss) (3) (4) 247 241
Selling,
general and
administrative
expenses - - 73 91
Inter-company
operations (3) (4) - -
Operating
profit (loss)
for segments - - 174 150
Negative goodwill arising on
acquisition - 15
Loss from the loss of
material impact in a
former
equity-accounted
investee (7) -
Operating
profit 167 165
Financing
expenses (8) (88)
Share in profits of
equity-accounted investees 5 -
Profit before income tax 164 77
Income tax 3 (3)
Net profit 167 74
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.