INA made positive results in 2016
Key achievements
- INA Group’s CCS EBITDA excl. special items, amounted to HRK 2,219 million, while net profit, excl. special items, amounted to HRK 336 million, 477% above the level in 2015
- Continued trend of growth of domestic crude production: increase of 12% compared to 2015
- Stable financial position of the Company
- CAPEX and other investments amounted to HRK 1,587 million
- Refinery production increased by 9% and refined product sales by 6%
Zagreb, February 27, 2017 – INA Group’s EBITDA in 2016, excl. special items reached HRK 2,428 million, while the operating profit excl. special items amounted to HRK 842 million, 510% above the level in 2015. Operating cash flow amounted to HRK 2,274 million, 16% increase compared to 2015. Total CAPEX and other investments reached HRK 1,587 million. Additionally, INA Group increased its share in Energopetrol from 33% to 67%, further strengthening the regional position. On the back of a disciplined approach to CAPEX spending, the financial position of the Company remained stable during 2016.
INA Group made positive results in 2016, with profit from operations reaching HRK 607 million for the period, compared to a HRK 1,338 million loss for 2015. Despite the challenging environment in the form of Brent and crack spreads decrease, affecting both the Exploration and Production as well as the Refining operations, the Company registered a positive development in results. This was achieved primarily with the ongoing program of operational adjustment to lower commodity prices. Net gearing decreased to 19.1%, whilst net debt reached HRK 2,506 million, a 17% decrease compared to the corresponding period of 2015.
Exploration and Production remained the main cash generator during 2016. Despite a decrease in EBITDA mainly due to lower Brent and natural gas prices, E&P operating profit, excluding special items, reached HRK 1,186 million for the period, a strong result given the continued difficulty to collect Egyptian receivables. Domestic crude oil production following a campaign of well optimisation and workovers increased by 12%. E&P CAPEX in 2016 amounted to HRK 717 million. Capital investments in Croatia amounted to HRK 612 million and capital investments abroad HRK 105 million.
Downstream operations achieved a positive result. The introduction of a more competitive operating model in Retail has already resulted in a decrease in fixed OPEX, which, supported by an increase in non-fuel revenues, has led to an improvement in underlying profitability. Refining and Marketing (including Retail) CCS-based EBITDA excl. special items amounted to HRK 350 million, a HRK 55 million increase compared to 2015. Reported EBITDA amounted to HRK 339 million, an increase of HRK 926 million compared to the same period of last year. However, free cash flow is still negative, in the amount of HRK (269) million, burdened by refining operations. In 2016, Sisak Refinery generated negative free cash flow of HRK (194) million and the financial effect of Sisak Refinery on operating result level amounts to HRK (264) million loss in 2016. The situation stresses the need for a revised operational model of INA’s refining business.
President of the Management Board of INA Mr. Zoltán Áldott said: “2016 was a successful year for INA. After a long period of negative price environment and political turmoil in Syria, in the second half of 2016 the situation relatively stabilized, which was reflected on INA financial results: for the first time after several years no significant impairments were booked. The first half of 2016 though was marked with historically low oil and gas prices that pushed us to optimize our spending. This was executed through cost optimisation program which, combined with business expansion, ensured the strongest balance sheet in the last decade, making INA eligible for strategic investments in the future.
Despite the unfavourable environment and the necessary cost optimisation, almost all business operation indicators were improved: Exploration and Production continues successfully increasing domestic oil production which, after several year of increase, has reached the 2009 level. Compared to 2015, domestic oil production has grown by 12%. Oil production increase helped partially compensate the decrease in mature gas production, especially offshore.
Refining and marketing operations register growth for the third year in a row, in Croatian and regional sales and refinery processing as well, but also through regional expansion of Retail. Energopetrol is fully consolidated in INA results, and the number of retail sites almost reaches 500. Still, there is room for further improvement, especially in the Refining operations, which is addressed through the preparation of detailed design for the Residue Upgrade Project. Also, Deloitte consultants have been engaged to implement the project of identifying options for a sustainable business operation at Sisak site.
CAPEX and other investments levels in 2016 stayed strong, having in mind the environment, reaching almost HRK 1.6 billion. Comparing INA’s CAPEX performance and trends after the start of oil price collapse in 2014 with global and regional oil and gas companies, it is evident that INA is among the few which maintained robust investments with a reinvestment ratio well above 60%.”
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