Oil Refineries Announces Results for First Quarter 2010
By Oil Refineries Ltd, PRNESunday, May 23, 2010
First Quarter 2010 Revenues Increase to $1,705 Million Compared to $984 Million in the First Quarter of 2009
HAIFA, Israel, May 24, 2010 -
- Quantity refined increases to 2,133 tons compared to 1,967 in
the same quarter of the previous year
- Consolidated adjusted EBITDA at $33 million compared to $48
million in the same quarter of the previous year
- Consolidated loss of $3.5 million for the first quarter 2010
compared with consolidated income of $75 million in the first quarter of
2009
- Acquisition of remaining shares of Haifa Basic Oils ("HBO") and
Carmel Olefins ("CAOL") led to a decline in the reported net profit in
the amount of about $12 million
- Adjusted refining margin USD/bbl 3.2 compared to USD/bbl 3.5
average Reuter's quoted Mediterranean Ural Cracking Margin
- Last Twelve Months (LTM) adjusted refining margin for the year ending
March 31, 2010 was at $4.5 per barrel, compared to $ 2.0 per barrel for
Reuter's quoted Mediterranean Ural Cracking Margin
Oil Refineries Ltd. (TASE: ORL.TA) (hereinafter "the Company,"
"ORL"), Israel's largest oil refiner, announced today its financial results
for the first quarter 2010, ending March 31, 2010. Results are reported in US
Dollars and under International Financial Reporting Standards (IFRS).
- During this period, which was characterized by high volatility
and low refining margins, the Petrochemical sector contributed positively
to Oil Refineries' results.
- LTM adjusted refining margin for the year ending March 31, 2010
was at $4.5 per barrel, compared to $ 2.0 per barrel for Reuter's quoted
Mediterranean Ural Cracking Margin
- Adjusted refining margin USD/bbl 3.2, compared to USD/bbl 3.5
average Reuters' quoted Mediterranean Ural Cracking Margin.
- Adjusted EBITDA in the Refining sector reaches $9 million in
the first quarter of 2010 compared with $32 million in the first quarter
of 2009.
- EBITDA from Polymers reached $17 million in the first quarter
of 2010 compared with $8 million in the corresponding quarter of the
previous year. In actuality, the EBITDA in CAOL was $17 million for both
quarters mentioned, wherein the difference is attributed mainly to the
increase of the Company's stake in CAOL.
- EBITDA from Aromatics reached $10 million in the first quarter
of 2010 compared with $8 million in the corresponding quarter of the
previous year.
- EBITDA from Lube-Oils reached $3 million in the first quarter of 2010
compared to a zero balance in the corresponding quarter of the previous
year. The activities of Lube-Oils were first merged in 2010 with
acquisition of shares in HBO.
Note: This quarter saw volatility in the price of crude oil
and its products, with crude oil ending the year at $78 per barrel, declining
to $70 per barrel in the course of the quarter, climbing to $80 per barrel by
the end of the first quarter 2010, and declining once more to $71 per barrel
at the time of publishing these first quarter results.
The first quarter 2010 also saw volatility in the product
prices produced by the Company, which are derived from crude oil produced and
sold by the company. Since there is no absolute correlation in the timing and
scope in the price differences of these products and that of world crude oil,
a significant volatility is caused in the refining margins.
As accepted by major leading international refiners and
marketers of oil and its products, the results are presented as reported as
well as net of the accounting provision for inventory gains or write offs, in
addition to buying and selling timing and derivative accounting methods under
IFRS. This is in order to enable a common base for comparison of the
Company's ongoing operations.
FIRST QUARTER 2010
Adjusted refining margin for Q1 2010 totaled USD/bbl 3.2,
compared with the average Mediterranean Ural Cracking Margin quoted by
Reuters of USD/bbl 3.5. Adjusted refining margin for Q1 2009 totaled USD/bbl
4.4 compared with the average margin of USD/bbl 3.4.
The utilization rate for Q1 2010 was at 89%, compared to 88.6%
for Q1 2009.
Reported consolidated EBITDA for Q1 2010 totaled $35 million
compared with $98 million in Q1 2009.
Adjusted consolidated EBITDA for Q1 2010 totaled $33 million
compared with $48 million in Q1 2009.
Financing expenses for Q1 2010 totaled $12 million, compared with
a financing income of $14 million in Q1 2009. The rise in financing expenses
is mainly attributed to a decline in the fair value of hedging instruments,
interest costs from short-term financing, a decline in the market value of
tradable securities, and a loan to the early retirement fund.
The consolidated loss for Q1 2010 totaled $3.5 million, compared
with a consolidated income of $75 million in Q1 2009.
PROGRESS OF THE STRATEGIC PLAN
Hydrocracker - In February 2010, the Company signed a binding
agreement with a consortium of financiers, led by Bank Hapoalim Ltd., in
which the consortium will offer financing of up to 600 million dollars to
fund part of the project.
In addition, following an approval by Congress, the US export
credit agency, the Export-Import Bank of the United States, approved the
provision of guarantees totaling about $300 million in conjunction with other
export credit agencies from Europe, for a loan that will be provided by a
foreign bank to the Company for the purpose of acquiring the necessary
equipment to establish the hydrocracker. Following the finalization of the
financing arrangements, the Company has embarked on full investments in
installing the facility.
CAOL and HBO Acquisition - After completing the acquisition of
shares in CAOL and HBO, the Company is acting for a rapid realization of the
consolidation benefits between the two companies and for the optimization of
the resulting operational synergies.
Mr. Yashar Ben Mordechai, CEO of Oil Refineries: Fluctuations in
the price of fuel oil during the first quarter of 2010 reduced the company's
refining margins in the short term. However, flexibility in ORL's facilities,
together with the increased integration of the petrochemicals sector and
completing a merger with CAOL, supported the company's results, despite the
reduction in refining margins. To these recent developments of the past year,
including facility upgrades and conversions, we will be adding the activation
of Phase 2 of the hydrocracker this June. We expect that its operation will
contribute to overall margins by increasing the production scale of diesel
fuel by about 1.5 - 2% per annum and, together with Phase 1, it will enhance
the capabilities of the company's diesel fuel production by about 3 - 4% in
total. ORL is at an advanced stage of consolidating CAOL into the Company.
With every phase of this process, additional operational synergies are
obtained, contributing to the capabilities and flexibility of the Company and
will increase the long-term profitability of ORL by executing general
operational optimization and optimal investment planning."
Mr. Ben Mordechai added: "ORL will take advantage of its
capabilities developed in recent years in creating new markets for its
products in order to achieve maximum value. These capabilities allow the
Company to reduce its exposure to troubled markets, as required. With the
establishment of the hydrocracker, which is expected to be operational in
mid-2012, the Company will be able to demonstrate the advantages and
flexibility of its facilities to its full effect, making the most of the
opportunities in global markets
Mr. Yossi Rosen, Chairman of the Board of Oil Refineries: "ORL
is aware of what is happening in the European market and the company's
management has been working to shift its products away from European markets
in favor of more profitable markets. The exposure of the fuel products and
aromatics in the European market is minimal and the Company is not expecting
a significant impact of the instability regarding the sales of these
products. It should be stressed, that despite the instability currently
prevailing in Europe, the Company's exposure to currency fluctuations is
negligible and has no effect on the Company's results. The implementation of
the long-term strategy of ORL demonstrates the company's ability to weather
the existing markets and volatility of the economic crisis, while yielding
good results over time. Accordingly, the $900 million financing plan for the
purpose of financing the hydrocracker, at the expected cost of $500 million
and the refinancing of the Company's debt, is going as planned.
This is the largest real investment plan implemented in the
Israeli market in the last year. The plan is intended for implementation of
the strategic plan and to assure the Company's other needs in the coming four
years as well as for the Company's long-term resilience.
Mr. Rosen further added: "Construction of the hydrocracker is
an important part of the Company's strategic plan and will convert Oil
Refineries into a unique refinery in the Eastern Mediterranean, integrating
the capabilities of its petrochemical industries with its refining capability
at a high level. The company thanks the government for its determination in
continuing its efforts regarding the connection of the natural gas pipeline
to the Haifa Bay. ORL's expected transition to the use of natural gas
constitutes an important facet of the Company's strategic implementation, in
order to enable construction of the hydrocracker, and ORL is ready, after
investing $45 million in preparations, for its integration.
Conference Call
The Company will also be hosting a conference call later today,
Monday, May 24th, 2010. On the call, management will present a presentation
reviewing the first quarter highlights and industry trends. The presentation
is available for download from the Company's website www.orl.co.il:
Investor Relations > Financial Reports.
To participate in the conference call, 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 number.
US Dial-in Numbers: 1-866-860-9642
UK Dial-in Number: 0-800-051-8913
Israel Dial-in Number: 03-918-0692
International Dial-in Number: +972-3-918-0692
at: 14:30 UK Time, 9:30 ET, 6:30 PT, 16:30 Israel time. A replay
of the call will be available after the call on the Company's website at
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 oil refinery. 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. The
Company is also active in the area of Polymers and Aromatics through its
holdings in Carmel Olefins Ltd and Gadiv Petrochemical Industries Ltd. The
Company's shares are listed on the Tel Aviv Stock Exchange under the ticker
ORL. For additional information please visit www.orl.co.il.
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 reports.
Condensed Consolidated Interim Statements of Financial Position
USD thousands
As at
March 31, March 31, December
2010 2009 31, 2009
(Unaudited) (Audited)
Current assets
Cash and cash equivalents 21,817 12,607 34,961
Deposits 93,436 63,746 77,637
Financial derivatives - 12,820 -
Investments in financial assets at
fair value through comprehensive
income 110,162 95,427 107,034
Trade receivables 437,049 236,399 360,876
Other receivables and debt balances 103,786 75,049 62,495
Inventory 1,203,044 717,370 1,016,453
Current tax assets 5,164 39,734 3,957
Total current assets 1,974,458 1,253,152 1,663,413
Non-current assets
Investments in equity-accounted
Investees 13,785 35,725 13,673
Investments in available-for-sale
financial assets 17,535 - 10,909
Loan to Haifa Early Pensions Ltd. 71,302 71,117 76,053
Long term loans and debit balances 3,806 2,522 3,951
Financial derivatives 143,892 26,921 120,671
Employee benefit plan assets 10,462 4,619 9,993
Property, plant and equipment 1,893,458 1,119,015 1,891,659
Deferred expenses, net 1,360 322 1,366
Intangible assets, net 89,126 22,239 93,187
Total non-current assets 2,244,726 1,282,480 2,221,462
Total assets 4,219,184 2,535,632 3,884,875
Condensed Consolidated Interim Statements of Financial Position
USD thousands
As at
March 31, March 31, December
2010 2009 31, 2009
(Unaudited) (Audited)
Current liabilities
Loans and borrowings 845,259 476,544 603,685
Trade payables 647,342 326,382 542,025
Other payables and credit balances 140,964 67,319 105,903
Financial derivatives 35,622 1,384 28,051
Provisions 11,514 12,185 11,582
Dividend declared 75,000 - -
Total current liabilities 1,755,701 883,814 1,291,246
Non-current liabilities
Debentures 853,695 649,655 853,205
Bank loans 324,216 210,799 358,310
Liabilities for finance lease 8,858 7,656 8,768
Other long-term liabilities 14,739 7,306 15,973
Financial derivatives 9,198 8,339 3,111
Employee benefits 64,358 54,616 63,871
Deferred tax liabilities 126,854 91,209 138,464
Total non-current liabilities 1,401,918 1,029,580 1,441,702
Total liabilities 3,157,619 1,913,394 2,732,948
Capital
Non-controlling interests - - 17,183
Share capital 586,390 472,478 586,390
Share premium 100,242 - 100,242
Reserves 40,851 16,564 35,571
Retained earnings 334,082 133,196 412,541
Total equity attributed to 1,061,565 622,238 1,134,744
shareholders of the Company
Total capital 1,061,565 622,238 1,151,927
Total liabilities and capital 4,219,184 2,535,632 3,884,875
Condensed Consolidated Interim Statements of Comprehensive Income
USD thousands
Three months period ended Year ended
March 31, March 31, December
2010 2009 31, 2009
(Unaudited) (Audited)
Revenue 1,704,771 984,358 5,141,480
Cost of sales, refinery and services 1,664,497 880,977 4,850,744
Revaluation of open positions in
derivatives on prices of goods and
margins, net 4,644 1,245 38,606
Total cost of sales 1,669,141 882,222 4,889,350
Gross profit 35,630 102,136 252,130
Selling expenses (19,617) (8,773) (44,509)
General and administrative expenses (20,218) (13,121) (57,794)
Negative goodwill arising on a business
combination - - 137,000
Profit from revaluation of a prior
holding due to increase in control - - 77,561
Loss from the loss of material impact
in a former equity-accounted investee,
net of tax - - (7,091)
Operating profit (loss) (4,205) 80,242 357,297
Finance income 29,583 58,772 61,223
Finance expenses (41,690) (44,407) (86,866)
Finance income (expenses), net (12,107) 14,365 (25,643)
Company's share in profits of
equity-accounted investees (net of tax) 179 4,591 4,892
Profit (loss) before taxes on income (16,133) 99,198 336,546
Tax benefits (taxes on income) 12,546 (24,607) 12,698
Profit (loss) for the period (3,587) 74,591 349,244
The following tables present selected information compared to the
corresponding period last year (USD Millions)
Petrochemicals
Refining Trade Polymers
2010 2009 2010 2009 2010 2009
Revenue 1,233 784 67 58 261 84
Inter-company
operations 246 86 - - - -
Total sales 1,479 870 67 58 261 84
Cost of sales 1,454 778 68 57 127 50
Inter-company
operations 11 9 - - 114 27
Total cost of
sales 1,465 787 68 57 241 77
Gross profit
(loss) 14 83 (1) 1 20 7
Selling,
general and
administrative
expenses 13 11 2 1 14 4
Inter-company
operations - - - - 1 1
13 11 2 1 15 5
Segment
operating
profit (loss) 1 72 (3) - 5 2
Amortization
of the excess
cost arising
from
acquisition of
investees
Operating
profit (loss)
Finance income
(expenses)
Share in
profits of
investees, net
of tax
Profit (loss)
before taxes
on income
Tax benefits
(income tax)
Net profit
(loss)
(continued)
Adjustments to
Aromatics Oils consolidated Consolidated
Three months ended
March 31,
2010 2009 2010 2009 2010 2009 2010 2009
Revenue 127 58 17 - - - 1,705 984
Inter-company
operations 11 9 - - (257) (95) - -
Total sales 138 67 17 - (257) (95) 1,705 984
Cost of sales 5 (3) 3 - - - 1,657 882
Inter-company
operations 117 58 11 - (253) (94) - -
Total cost of
sales 122 55 14 - (253) (94) 1,657 882
Gross profit
(loss) 16 12 3 - (4) (1) 48 102
Selling, general
and administrative
expenses 8 6 - - - - 37 22
Inter-company
operations - - - - (1) (1) - -
8 6 - - (1) (1) 37 22
Segment operating
profit (loss) 8 6 3 - (3) - 11 80
Amortization of
the excess cost
arising from
acquisition of
investees (15) -
Operating profit
(loss) (4) (80)
Finance income
(expenses) (12) (14)
Share in profits
of investees, net
of tax - 5
Profit (loss)
before taxes on
income (16) 99
Tax benefits
(income tax) 12 (24)
Net profit (loss) (4) 75
Company Contact:
Rony Solonicof
Chief Economist and Head of IR
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
Company Contact: Rony Solonicof, Chief Economist and Head of IR, Tel. +972-4-878-8152, Contact IREn at orl.co.il; Investor Relations Contact: Ehud Helft / Porat Saar, CCG Israel, Tel. (US) +1-646-233-2161 / (Int.), +972-52-776-3687, info at ccgisrael.com
Tags: Haifa, Israel, May 24, Oil Refineries Ltd
