Financial results Q1-Q3 2021

INA Group achieving positive result, mainly driven by external recovery

  • Recovering hydrocarbon prices driving result rebound, but economic turmoil and pandemic still a threat
  • The ongoing intensive investment cycle continues; Rijeka Refinery Upgrade moves forward as major strategic investment
  • Key achievements:
  • Net sales revenues amounted to HRK 16,248 million
  • EBITDA amounted to HRK 2,341 million
  • CAPEX amounted to HRK 903 million
  • Simplified Free Cash Flow amounted to HRK 1,206 million

Zagreb, October 29, 2021 – Economic recovery continued in the third quarter of 2021, but COVID-19 pandemic and other worldwide macroeconomic developments continue to pose a threat to future prospects.

EBITDA of INA Group for the first nine months of 2021 amounted to HRK 2.3 billion and net profit to HRK 1 billion, rebounding from a negative base. Exploration and Production business is the main contributor to the results with EBITDA of HRK 1.6 billion, which represents an increase driven by improved average realized hydrocarbon price level of 58 USD/boe. Still, natural production decline continues across the asset base. Refining and Marketing incl. Consumer services and Retail results reached HRK 1 billion on the back of a better than expected tourist season.

Investment activities increased throughout the businesses compared to the first nine months of 2020. The Rijeka Refinery Upgrade remains the major strategic investment, aimed at improving the long-term competitive position of the Refining business. At the same time building a profitable Egyptian Exploration and Production portfolio continues with exploration and development activities expected in the newly acquired Block 10 share. Financial position with net debt of HRK 1,639 million and net gearing of 13.5% enables INA Group to continue the ongoing intensive investment cycle.

Statement of Mr. Sándor Fasimon, President of the Management Board of INA:

“Following the unseen market turmoil during 2020, this year shows a more favorable environment but the disturbances in the world economy continue. Oil and gas prices not just recovered, but the sudden spike in demand pushed them well above expected levels, with Brent exceeding USD 70 during Q3 2021 and further growing in Q4. Such an environment increased INA Group revenue to more than HRK 16 billion. This spike in prices is the primary driver behind the strong results, especially in the Exploration & Production business, once again the biggest cash generator. Still, we need to be aware that this relief is externally driven, and the continued natural decline remains a challenge. To address this challenge INA will try to maximize its Croatian portfolio, onshore but also offshore, with a new drilling campaign aimed at increasing gas production.

Refining sales improved at captive markets, while Retail sales recorded a 14% recovery compared to the first nine months of 2020, which were mostly marked by the pandemic. This is the result of better than expected tourist season that also lasted longer, visible in both fuel and non-fuel part. Refining margins, although currently showing signs of recovery, remain a major factor affecting profitability of the business and represent a risk for the future market outlook.

Capital investments during the first nine months of 2021 increased by 20%, with roughly half spent in the Refining business.

We hope that the market turmoil, that we witness in this and previous year, will soon be stabilized. Regardless of the direction of the market situation, INA is committed to ensuring stable cash flow in order to carry out all the strategic projects that started.”

Financial results Q1-Q3 2021