Earnings growth, lower debt. LOTOS summarises its financial performance

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Finance 2017-08-17
Earnings growth, lower debt. LOTOS summarises its financial performance

In the first half of 2017, LOTOS generated a consolidated LIFO-based EBITDA of approximately PLN 1,372m (up 26% year on year, net of one-off items) and a consolidated net profit of approximately PLN 568m, up 71% year on year.

Consolidated operating profit (EBIT) for the period came in at PLN 749m, up 9% on last year.

Operating cash flow totalled PLN 870m for the first half of 2017 and was PLN 80m lower year on year, reflecting the costs of a scheduled maintenance shutdown.

Net debt stood at PLN 4.1bn as at June 30th 2017, down PLN 700m relative to December 31st 2016. The net debt to equity ratio was 43.8% as at June 30th, compared with 55.9% at the end of 2016. Net debt to clean LIFO-based EBITDA was 1.4x, compared with 1.9x at the end of 2016 and 2.6x at the end of 2015.

Establishment of LOTOS Upstream

 To ensure effective implementation of its strategy for the Upstream segment, LOTOS decided to restructure this business area around a dedicated holding company, LOTOS Upstream. The new company will hold controlling interests in the operating companies of the Upstream segment. As the owner of financial assets necessary to implement the strategy, it will serve as a platform for growth of the entire upstream business, mainly by supporting the operating companies in arranging financing for new projects.

Daily oil production in Norway, Poland and Lithuania amounted to 25.55 thousand boe in the second quarter of 2017, down 5.4% year on year. In the first half of 2017, LOTOS produced a total of almost 4.6 million boe. Upstream delivered a clean operating profit of just under PLN 133m for the second quarter (up 146% year on year) and clean EBITDA of PLN 213m (up 10% year on year).

Growth in domestic diesel sales

Capacity utilisation at the Gdańsk refinery post-maintenance was above 100% in the second quarter. With its operations stable, the refinery maintained throughput of 2,217 thousand tonnes.

In the second quarter, LOTOS sold 2,537 thousand tonnes of petroleum products, only 3.9% less than in the same period last year despite the maintenance downtime at its refinery. To note, LOTOS reported an over 25% increase in domestic sales of diesel oil in the period, which was a direct effect of the government tightening tax controls and eliminating illegal imports.

In the second quarter, work was almost finished on the engineering design and procurement of materials and equipment for the key units built under the EFRA Project, including the Delayed Coking/Coking Naphtha Hydrotreating Units (DCU/CNHT), Hydrogen Generation Unit (HGU) and Hydrowax Vacuum Distillation Unit (HVDU). Work continued under contracts for the construction of the Project’s core and auxiliary units. In June, the installation of the oxygen production plant was completed. Also, a final acceptance process was carried out with respect to the new power station building. The Project is scheduled for completion in the first half of 2018.

At the end of June 2017, the EFRA Project (including design, procurement and construction) was 76.8% complete.

LOTOS service stations top a ranking by ARC Rynek i Opinia

The LOTOS retail chain has topped a customer satisfaction survey conducted among motorists by ARC Rynek i Opinia in May this year. Eighty percent of respondents were satisfied with the LOTOS service stations. In the survey, respondents cited fuel quality, service quality, signage, cleanliness and network density as the key satisfaction factors.

In the second quarter, the retail business booked an operating profit of PLN 23.6m (up 110.7% year on year) and an EBITDA of PLN 42m (up 47.9% year on year). The stronger year-on-year performance was mainly driven by a 7.8% increase in fuel sales volumes, totalling 292.4 thousand tonnes.

Communications Office, Grupa LOTOS S.A., ul. Elbląska 135, 80-718 Gdańsk, Poland, tel. (+48) 58 308 87 31, (+48) 58 308 83 88, e-mail: media@grupalotos.pl