INA published financial results for Q1 2016

Key achievements

  • INA Group’s CCS EBITDA, excl. special items, amounted to HRK 379 million
  • Crude production up by10%compared to Q1 2015, reaching the best result since 2011
  • Refined product sales stable in comparison to Q1 2015
  • Total CAPEX amounted to HRK 342 million, 45% higher than in Q1 2015, out of which 85% invested in Croatia

Zagreb, April29, 2016 –INA Group’s EBITDA in Q1 2016, excl. special items,reached HRK 263 million, while the CCSEBITDA, excl. special items,amounted to HRK 379million. Net result, excl. special items, amounted to HRK (66) million.CAPEX level of HRK 342 million was 45% higher than in Q1 2015, which is a very strong result having in mind the overall deteriorated environment.

The results in Q1 2016 reflect the continuation of adverse market conditions.Negative drivers impacting Exploration and Production have further deteriorated with Brent falling to 34 USD/bbl, thus also impacting the gas price, both regulated and market. On the other hand the upward trend in domestic crude production continued, driving total crude production over 15 mboe/d, a result not achieved since 2011.Net debt is still 20% below Q1 2015 figures and amounts to very safe HRK 3,352 million with gearing ratio of 24.3.

The rationalization of Retail operations that started in 2015, continued with the transfer of retail staff to INA Maloprodajniservisi. This will ensure a more sustainable and competitive business model for future operations.The overall result was impacted by special items related to severance payments, amounting to HRK 168 million on EBITDA level.

In Q1 2016, Exploration and Production EBITDA excl. special items reached HRK 547 million. Significant negative impact derived primarily from Brent price drop and lower natural gas prices. Gas prices decreased as a consequence of reduced households gas price but also general intensification of the market competition pushing down prices. E&P CAPEX in Q1 2016 amounted to HRK 165 million. Capital investments in Croatia amounted to HRK 134 million whereas capital investments abroad were HRK 31 million.

In Q1 2016, Refining and Marketing (including Retail) CCS EBITDA excl. special items amounted to HRK (80) million while reported EBITDA amounted to HRK (344) million. The result was driven by lower crude processing levels (due to the Turnaround of the Rijeka Refinery) and lower total sales performance partially offset with better unit sales margins, mainly on export markets. Additionally, retail business operations were extended with development of new, additional non-fuel services.Total capital expenditures amounted to HRK 172 million in Q1 2016, HRK 134 million higher compared to Q1 2015. Refining and Marketing capital expenditures amounted to HRK 140 million, mainly relating to logistics development projects, maintenance and investment projects implemented during Rijeka Refinery turnaround, which was completed in Q1 2016. Retail segment expenditures reached HRK 32 million, being HRK 21 million above the same period in 2015.

President of the Management Board of INA Mr. Zoltán Áldott said: “Q1 2016 was the first full quarter marked by the extremely low Brent environment of around USD 34 per barrel. Consequently, CSS EBITDA excluding special items reached HRK 379 million which represents a drop from last year’s result. Additionally, the accounting result was affected by one-offs caused by the restructuring in the Retail segment.
As a response to the volatile environment, the Company management launched a stabilisation program with the aim to mitigate negative effects of low prices and to ensure healthy foundations for future investments. Also, for full year we expect stronger results even if the price environment does not improve.

In this light, CAPEX has increased compared to the same period of 2015, reaching the level of HRK 342 million.

Despite the fact that INA currently has limited exploration concessions, we managed to increase the crude oil production by 10%, mainly in Croatia, but also in our Egyptian concession. This is a strong result showing the effect of the continued workover campaign and of a stable capital expenditure level.

In the Downstream segment, Retail operations have made a significant step in adjusting to market conditions and aligning with the competitors with the transfer of operational staff to INA Maloprodajniservisi. Refining production level and sales volumes are somewhat lower compared to same period last year, as a result of turnaround in Rijeka Refinery completed in Q1 2016. By the end of the year we expect higher volumes both for production and sales.”Documents