Satisfactory operational performance and improved balance sheet
The Group’s Adjusted EBITDA amounted to €572 million (2018: €730 million), mainly due to the weaker refining environment, with Med benchmark margins deteriorating considerably, as well as reduced refining units availability, due to maintenance. The above were partially offset by improved fuels marketing performance and the stronger USD vs. the euro. Adjusted Net Income amounted to €185 million (2018: €296 million), which apart from the above, was moderated by the decrease in financial expenses.
As a result of lower availability due to the heavier maintenance program compared to the previous year, production at the Group's refineries was 8% lower at 14.2 million tons, with a respective decline in sales which came in at 15.2 million tons. During the year, once again the Group was able to capture crude oil pricing opportunities in the Med market and benefited from supply optimization, partially offsetting weaker benchmark refining margins, while refining operational performance improved, leading to over-performance vs. benchmark margins.
All Group activities recorded satisfactory performance, with Petrochemicals sustaining their profitability at high levels, reporting €93 million in Adjusted EBITDA, on account of increased vertical integration between the propylene unit at the Aspropyrgos Refinery and the petrochemical plant in Thessaloniki, despite weaker benchmark margins.
In the domestic Fuels Marketing business (EKO and BP brands), motor fuel sales continued to increase and market share improved to over 32%. In addition, lubricants and LPG sales were higher, while the Group maintained its leading position in aviation and marine fuels, mainly due to increased tourism.
Reported results were affected by inventory gains of €24 million, due to the recovery in international crude oil prices, with EBITDA amounting to €574 million. Reported Net Income was affected, apart from the above, by the decrease in financial expenses and tax rates and one-off events, including the impact of the tender offer for the 2021 Eurobonds, and came in at €164 million.
|Adjusted Net Income||185||296|
The new €500 million bond issue, combined with the partial refinancing of existing 2021 notes through a tender offer, the corresponding repayment of €325 million in 3Q19, as well as the improvement in commercial terms of bank facilities, led to an additional improvement in the Group’s balance sheet and a significant cost reduction, which for the full year was 21% lower at €116 million (excluding impact of the new IFRS16 and other nonrecurring items).
It is noted that, at a three-year level, a 42% decrease in the net financial expenses was recorded, as a result of the successful implementation of the Group’s financial planning.
Net Debt for 2019 amounted to €1.5 billion, in line with the Group’s strategic objectives, with the Gearing Ratio (Net Debt / Capital Employed) at 40%.