Key achievements
- INA Group net profit (excl. special items [1]) amounted to HRK 344 million
- net debt decreased by further 37% to the level of HRK 2,991 million and net gearing to 20.4%, compared to 27.0% at the end of 2013
- significant investment level of HRK 1,691 million
- 5% crude oil production increase, first in more than a decade
Zagreb, 14 February 2015 – INA Group operating profit excluding special items in 2014 amounted to HRK 523 million while EBITDA[2] excluding special items amounted to HRK 2.699 million. Net profit (excl. special items) amounted to HRK 344 million.
Investments reached HRK 1,691 million, focused mainly in Croatia, primarily in the Upstream segment.
In order to compensate the effect of adverse regulatory changes, measures have been made resulting in the further improvement of already stable financial position, decreasing net debt by further 37% to the level of HRK 2,991 million and net gearing to 20.4%, compared to 27.0% at the end of 2013.
Reported operating results were impacted by further impairment of Syrian assets of HRK 1.6 billion, not having direct cash effect but applied in accordance with previous good business practice, as well as a significant Brent drop and HRK 395 impairment in the Downstream segment. Also, retroactive refinery taxes (for 2010 and 2011) burdened the results with additional HRK 325 million in 2014. The costs of impairment, however, are an expenditure that is not tax deductible in accordance with the Profit Tax Act.
It should be also emphasized that negative regulatory decisions had a significant and on-going negative effect on Upstream operations. The combined effect of forced gas sale, regulated gas price reduction and doubled royalty on the result reached more than HRK 750 million. Consequently realized hydrocarbon prices decreased and were also influenced by considerable Brent price drop in the second half of the year.
Exploration & Production constant efforts in compensating the natural decline have resulted in crude oil production increase, first time in more than a decade, with a 5% improvement compared to 2013. Furthermore Upstream hydrocarbon production rose significantly by 5 mboepd (million barrel oil equivalent per day) in the last quarter partly due to successful development activities both on- and off- shore.
Refining & Marketing made efforts to increase productivity and market position of INA but the performance was impacted by sustained tight European refining macro environment and the impact of prolonged economic slowdown in Croatia and INA’s other key markets resulting in lower sales volumes. In spite of these negative impacts the retail sales domestically remained rather stable.
The company continued to improve HSE performance in accordance with the increased awareness of promoting work safety culture.
Mr Zoltán Áldott, the president of the Management Board of INA, said that despite the considerable challenges caused by regulatory changes as well as a significant drop in oil and gas prices, INA increased operating profit adjusted for inventory effects and special items by 15%, while further strengthening its financial position. “It needs to be pointed out that the effect of regulatory changes in Upstream segment combined with another refining tax surpassed HRK 1.1 billion, which have to be mitigated by internal efficiency measures. While our EBITDA decreased by 30% in such adverse environment, we kept our investments at the level of HRK 1.7 billion, higher than the average of the last two years.
We are proud with that we increased our oil production by 5%, something not seen in over a decade, despite the almost complete lack of exploration concessions in Croatia. On the other side, Refining and marketing segment is still burdened by the unfavourable crack spread environment as well as lower sale volumes, driven by on-going economic depression.
Nevertheless, reported results are negatively impacted by a further impairment of Syrian assets taking the investment value to a fraction of the original value. After the discussion with management and auditors, it was concluded that the impairment is unavoidable due to the fact that political and security situation in Syria has become even more complex and that INA’s potential return to operations could take a longer time.
Having in mind the adverse regulatory changes and the heavily decreased oil prices, we further strengthened our financial discipline and we are prepared for further optimization of INA’s activities in the coming period in order to ensure sustainable operations and further value creation.” – concluded Mr. Áldott.Documents