Oil Refineries Announces Results for First Quarter 2012
HAIFA, Israel, May 29, 2012 /PRNewswire/ --
Oil Refineries Ltd. (TASE: ORL.TA) (hereinafter "the Company,""ORL"), Israel's largest integrated refining and petrochemical group, announced today its financial results for the first quarter ending March 31, 2012. Results are reported in US Dollars and under International Financial Reporting Standards (IFRS).
Key 2012 First Quarter Highlights
- Revenues totaled $2.45 billion, compared with $2.06 billion in the same quarter last year, an increase of 19%.
- Operating profit totaled $42 million, compared with $11 million in the same quarter last year, an almost fourfold increase.
- Net loss of $6 million, compared with a net loss of $13 million in the same quarter last year, a decrease of over 50%.
- Consolidated EBITDA totaled $80 million, as compared with $43 million in the corresponding quarter last year.
- Adjusted Consolidated EBITDA totaled $42 million, as compared with $48 million in the corresponding quarter last year.
- Adjusted refining margin totaled $4.0 per barrel, as compared with an adjusted refining margin of $3.4 per barrel in the corresponding quarter last year.
- The Company continues to report high refining margins than its peers.
- Signed agreements to extend payment terms from suppliers which will diversify funding sources, optimize the management of working capital, and build the Company's financial strength.
Mr. Yossi Rosen, Chairman of the Board of Oil Refineries: "The start of 2012 continued to be characterized by extreme volatility and a range of unforeseeable events in the global fuel and refining industry. However, ORL succeeded during the first quarter in achieving its operating and strategic targets, reporting a significant improvement in results, both as compared with the same quarter last year as well as the fourth quarter of 2011.
"Looking forward to the rest of the year, we ascribe great importance to the hydrocracker project and its successful and timely activation. This has considerable significance for the Company's profitability in view of its complexity and advanced technology. Progress in this large-scale project is in line with our timetable, and its running and activation are expected during the third quarter of 2012. To date the Company has made investments in this project of $391 million, and we have taken on ourselves additional liabilities of $43 million.
"The lack of full availability of natural gas has become a national issue, and we too are feeling the effect. ORL was on time in its preparation of its infrastructure and for its connection to the facilities of the national transport system, and the Company even commenced using the gas at its facilities. However, the events of recent months are preventing us today from consuming the amount of gas we need. We are making every effort to soon ensure a supply of gas to ORL, and we are optimistic that we will succeed in doing so."
Mr. Pinhas Buchris, CEO of Oil Refineries: "I would first like to thank Yossi Rosen, the Chairman of ORL, for his many contributions to the Company. This was both a significant and challenging period for the Company, from the privatization of a government corporation and transforming it into a public company, to the merger with the petrochemical companies, to the organizational restructuring and the realization of our ambitious strategic plan of which the highlight was the hydrocracker. On a personal level I would like to thank Yossi Rosen for his work. Yossi welcomed me to the role of CEO, enabling me and the management team, with great bravery, wisdom and responsibility and with the ability to see into the long-term, to affect profound changes on the Company and its activities. I wish Yossi all the best and thank him for his tremendous contribution to ORL.
"In addition, the Board of Directors approved yesterday an agreement for the supply of petroleum products to the Palestinian Territories (PA). The agreement will allow the Company, for the first time, to supply petroleum products directly to the PA over a two-year period, starting from October 1, 2012, in a provision of up to 50% of the PA's needs and of a value estimated at NIS 1.9 billion per year.
"In the first quarter of 2012 ORL successfully managed to handle the challenging global business environment while reporting a 19% increase in revenues. We are achieving better results than others in our business environment and we are placing a strong emphasis on also achieving our targets in the coming quarters.
"The Company is succeeding in maintaining relatively high margins as compared with other refineries, and the refining margins are consistently better than the benchmark margin. EBITDA in the quarter totaled $80 million and the Company finished the quarter with an operating profit of $14 million, as compared with $11 million in the corresponding quarter last year.
"Up until the reporting date, we have made significant progress in anticipation of our hydrocracker activation. We successfully completed running the hydrogen unit that is part of the hydrocracker. I see the completion of this stage as an important achievement given that this is a new and extremely complex operation that has been done for the first time at ORL - and done successfully.
"We have made other investments to expand our production capacity and to increase our expected cash flows. Based upon the comprehensive investment program that is intended to maximize synergies in the polymer and propylene field, the Company is forecasting additional annual cash flow of $85 million.
"We are placing much emphasis on our financing operations and have completed steps to extend supplier credit and to optimize the fuel inventory we are holding in order to enhance liquidity, which will be seen very clearly in coming quarters.
"At the end of the first quarter, ORL started to work on its new corporate structure, including three Business units: Fuels, Polyolefins and Aromatics, which also includes the Oils and Wax businesses. The changeover to the new corporate organization creates synergy, increases the Company's efficiency and reduces costs by creating a direct, clear link throughout the value chain of the main product groups. This process joins other management processes, which include merging and integrating the staff work of the ORL's companies.
"The Company's management continues to work intensively to achieve the strategic and management targets that we set ourselves, and I am satisfied with the very real progress we made this quarter. We shall continue to act similarly in the coming quarters, to turn ORL into an efficient, competitive, profitable and technologically advanced company, in order to create high profitability for our shareholders."
Key Points for First Quarter 2012
- Shareholders' equity as of March 31, 2012 totaled $991 million, 20% of the balance sheet.
- Continuation of the strategy to increase profitability and turn ORL into a globally competitive organization, including carrying out an investment program and setting up the new organizational structure.
- Running the hydrogen plant, an important element of the hydrocracker, commenced in April and was highly successful. It demonstrates that the Company is prepared to operate the hydrocracker.
- Flexibility in sources of credit: we have signed agreements for inventory availability and extension of supplier payment terms, a potential cash flow to the Company of $1 billion.
- Negative cash flow from ongoing operations of $116 million, mainly as a result of increases in assets and current liabilities.
- Investments program:
- Hydrocracker: up to the end of the quarter the Company had invested $391 million. Running and activation are expected during the third quarter of 2012.
- Synergy projects: CCR gas utilization facility will yield optimal extraction of existing streams in the refinery from January 2012. $45 million were invested with an estimated cash flow of $30 million a year expected. Increasing propylene production capacity brings an investment of $90 million and will bring in an estimated cash flow of $55 million a year.
- In the areas of environmental protection, safety and Corporate Social Responsibility, as of report date $144 million has been invested since 2007.
- After the reporting period the Company received a waiver letter for the first quarter from the financial institutes which stated, according to them, that the Company will not have to meet certain conditions in the first quarter of 2012. There are currently negotiations between the Company and the financial institutes, to obtain relief and / or set new financial ratios until the end of the construction of the Hydrocracker project. The Company believes that it will meet all conditions in order to avoid an early repayment for a breach of conditions during the period of at least 12 months period from March 31, 2012.
- During the quarter the Company continued its commitment to the community, in line with the policy discussed and approved by the Communal Involvement Committee of the ORL Board of Directors. The Company awarded grants for higher education to students from Ussifiya, did planting at the Chasidim Youth Village, and took part in packaging pre-Passover care packages for the needy.
FIRST QUARTER RESULTS 2011 ($ millions)
Operating profit EBITDA
Q1 12 Q1 11 Q1 12 Q1 11
Refining 11 (2) 27 10
Polymers (CAOL) (4) 29 10 40
Aromatics (GADIV) 13 4 14 6
Lube oils (HBO) (1) 3 (1) 3
Trade (1) (7) (1) (7)
Adjustments (7) (4) (7) (4)
Total consolidated (with
adjustments) 11 23 42 48
Total consolidated
(without adjustments) 49 18 80 43
Amortization of excess
cost (7) (7) - -
Total 42 11 80 43
The adjustedrefining margin for the first quarter of 2012 was $4.0 per barrel compared with the average Mediterranean Ural Cracking Margin quoted by Reuters of $3.0 per barrel. This is in comparison with the adjusted refining margin for the first quarter of 2011, which was $3.4 per barrel as compared with the benchmark margin of $0.5 per barrel.
Adjusted EBITDA in the first quarter of 2012 totaled $42 million, compared with $48 million in the corresponding period last year. The drop was due to a fall in margins in the petrochemicals sector and an increase in operating costs, which were partially offset by an increase in the refining margin, sales and other revenues
Negative cash flow from current operations for the reporting period totaled $116 million, as compared with $66 million in the corresponding period last year. The drop was mainly the result of increases in assets and current liabilities.
Net consolidated financing expenses amounted to $41 million in the reporting period compared with $23 million in the corresponding period last year.
Consolidated loss in the reporting period totaled $6 million, compared with a loss of $13 million in the corresponding period last year.
Conference Call
The Company will also be hosting a conference call today, May 29, 2012, at 14:00 UK time, 9:00 ET, 6:00 PST and 16:00 Israeli Time.
On the call, management will present a presentation reviewing the first quarter 2012 highlights and industry trends. The presentation is available for download from the Company's website http://www.orl.co.il: Investor Relations > Financial Reports.
To participate, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.
US Dial-in Numbers: 1-888-668-9141
UK Dial-in Number: 0-800-917-5108
Israel Dial-in Number: 03-918-0610
International Dial-in Number: +972-3-918-0610
at: 14:00 UK Time, 9:00 ET, 6:00 PT, 16:00 Israel time. A replay of the call will be available after the call on the Company's website at http://www.orl.co.il .
About Oil Refineries Ltd.
Oil Refineries Ltd. (ORL), located in the bay area of the city of Haifa, operates Israel's largest integrated refining and petrochemical group. It is one of the leading refineries in the Eastern Mediterranean area and integrates, on-site, petrochemical businesses. ORL runs sophisticated and state-of-the-art industrial facilities with a refining capacity of 9.8 million tons of crude oil per year and a Nelson Complexity Index of 7.4, providing a variety of quality products used in industrial operation, transportation, private consumption, agriculture and infrastructure. Besides production of fuels, the company produces in its wholly owned subsidiaries Polymers (through Carmel Olefins Ltd), Aromatics (through Gadiv Petrochemical Industries Ltd), and Lube-Oils (through Haifa Basic Oils Ltd). The Company's shares are listed on the Tel Aviv Stock Exchange under the ticker ORL. For additional information please visit http://www.orl.co.il.
ORL is controlled by the Israel Corporation Ltd. and Israel Petrochemical Enterprises Ltd., both public companies whose shares are traded on the Tel Aviv Stock Exchange.
The above noted in this release includes forward-looking statements based on Company data, as well as Company plans and estimations based on this data. The activity, results and other data may be substantially different in reality given uncertainty and various risks, including those discussed under risk factors in the Company's financial statements and Director's report
- The following table presents selected information of the Group for the three months period (USD millions)
Petrochemicals
Fuels Trade Polymers Aromatics Oils
Three months ended March 31
2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
Revenue 1,922 1,572 2 53 301 302 206 107 17 23
Inter-company
operations 372 298 -- -- -- -- 12 10 1 --
Total sales 2,294 1,870 2 53 301 302 218 117 18 23
Cost of sales 2,214 1,853 3 59 136 107 1 (25) 2 12
Inter-company
operations 11 10 -- -- 157 154 196 132 16 8
Total cost of
sales 2,225 1,863 3 59 293 261 197 107 18 20
Gross profit
(loss) 69 7 (1) (6) 8 41 21 10 -- 3
Selling,
general and
administrative
expenses 20 14 -- 1 14 12 8 6 1 --
Other revenue -- -- -- -- (2) -- -- -- -- --
Operating
profit for
segments 49 (7) (1) (7) (4) 29 13 4 (1) 3
Amortization
of excess cost
arising on
acquisition of
investees
Operating
profit
Financing
expenses, net
Company's
share in
losses of
investees, net
of tax
Profit (loss)
before income
tax
Income tax
Loss for the
period
Table continues...
Adjustments
to
consolidated Consolidated
Three months ended March 31
2012 2011 2012 2011
Revenue -- -- 2,448 2,057
Inter-company
operations (385) (308) -- --
Total sales (385) (308) 2,448 2,057
Cost of sales -- -- 2,356 2,006
Inter-company
operations (380) (304) -- --
Total cost of
sales (380) (304) 2,356 2,006
Gross profit
(loss) (5) (4) 92 51
Selling,
general and
administrative
expenses -- -- 43 33
Other revenue 2 -- -- --
Operating
profit for
segments (7) (4) 49 18
Amortization
of excess cost
arising on
acquisition of
investees (7) (7)
Operating
profit 42 11
Financing
expenses, net (41) (23)
Company's
share in
losses of
investees, net
of tax (1) --
Profit (loss)
before income
tax 1 (12)
Income tax (6) (1)
Loss for the
period (6) (13)
Condensed Consolidated Interim Statement of Financial Position
USD thousands
March 31, March 31, December
2012 2011 31, 2011
(Unaudited) (audited)
Current assets
Cash and cash equivalents 6,210 23,408 20,465
Deposits 23,457 127,112 21,821
Trade receivables 744,100 559,350 561,403
Other receivables 165,102 83,171 147,328
Financial derivatives 42,237 28,279 45,958
Investments in financial assets at fair
value through profit or loss 76,464 108,655 73,680
Inventories 1,409,626 1,203,355 1,083,037
Current tax assets 3,825 1,553 3,528
Total current assets 2,471,021 2,134,883 1,957,220
Non-current assets
Investments in equity-accounted investees 4,322 16,603 4,238
Investments in financial assets at fair
value through other comprehensive income 7,909 18,079 5,460
Loan to Haifa Early Pensions Ltd. 66,285 72,243 69,130
Long term loans and debit balances 3,154 2,959 1,993
Financial derivatives 144,514 189,184 139,687
Employee benefit plan assets, net 6,345 7,674 6,111
Deferred tax assets 2,906 12,540 2,893
Property, plant and equipment 2,304,541 2,114,863 2,245,194
Intangible assets 60,607 76,140 65,145
Deferred costs 9,455 12,280 11,267
Total non-current assets 2,610,038 2,522,565 2,551,118
Total assets 5,081,059 4,657,448 4,508,338
Condensed Consolidated Interim Statement of Financial Position
USD thousands
March 31, March 31, December
2012 2011 31, 2011
(Unaudited) (audited)
Current liabilities
Loans and borrowings 1,834,215 790,416 844,349
Trade payables 1,080,183 786,160 780,458
Other payables 87,802 126,962 73,490
Current tax liability 23,756 24,464 21,663
Financial derivatives 52,311 106,114 42,990
Provisions 9,704 9,367 9,121
Total current liabilities 3,087,971 1,843,483 1,772,071
Non-current liabilities
Bank loans 194,155 734,859 915,359
Debentures 676,281 904,929 665,147
Liabilities for finance lease 9,297 9,749 8,991
Financial derivatives, net 12,093 4,046 12,198
Employee benefits, net 74,735 70,693 78,413
Deferred tax liabilities 35,052 54,001 36,328
Total non-current liabilities 1,001,613 1,778,277 1,716,436
Total liabilities 4,089,584 3,621,760 3,488,507
Capital
Share capital 586,390 586,390 586,390
Share premium 100,242 100,242 100,242
Reserves 78,641 46,357 101,078
Retained earnings 226,202 302,699 232,121
Total capital attributed to
shareholders of the Company 991,475 1,035,688 1,019,831
Total liabilities and capital 5,081,059 4,657,448 4,508,338
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
Condensed Consolidated Interim Statement of Comprehensive Income
USD thousands
Year
Three months ended ended
March 31, March 31, December
2012 2011 31, 2011
(Unaudited) (audited)
Revenues 2,447,528 2,057,506 9,561,601
Total cost of sales 2,360,071 2,010,514 9,389,677
Gross profit 87,457 46,992 171,924
Sales and marketing expenses (25,071) (21,512) (104,493)
General and administrative expenses (20,743) (14,648) (53,534)
Operating profit 41,643 10,832 13,897
Financing income 4,981 7,164 34,574
Financing expenses (46,248) (30,384) (123,692)
Financing expenses, net (41,267) (23,220) (89,118)
Company's share in earnings (losses) of
equity accounted investees, net of tax,
including impairment losses (1,002) 270 (21,932)
Loss before income tax (626) (12,118) (97,153)
Tax benefits (income tax) (5,293) (1,266) 20,687
Loss for the period (5,919) (13,384) (76,466)
Items of other comprehensive income
(loss)
Actuarial gains (losses) from a defined
benefit plan, net of tax -- 274 (7,222)
Foreign currency translation differences
for foreign operations 98 726 238
Effective share of the change in fair
value of cash flow hedging, net of tax (104) 927 (3,425)
Net change in fair value of debentures at
fair value through profit or loss,
attributable to change in credit risk,
net of tax (25,106) (21,274) 48,871
Change in fair value of financial assets
at fair value through other comprehensive
income, net of tax 2,155 332 (10,772)
Other comprehensive income (loss) for the
period, net of tax (22,957) (19,015) 27,690
Comprehensive loss for the period (28,876) (32,399) (48,776)
Loss per share (USD)
Basic and diluted loss per ordinary share (0.002) (0.006) (0.031)
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
Company Contact:
Rony Solonicof
Chief Economist and Head of Investor Relations
Tel. +972-4-878-8152
Contact IREn@orl.co.il
Investor Relations Contact:
Ehud Helft / Porat Saar
CCG Israel
Tel. (US) +1-646-233-2161 /
(Int.) +972-52-776-3687
info@ccgisrael.com
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