Oil Refineries Announces Results for Third Quarter 2010
HAIFA, Israel, November 21, 2010 /PRNewswire-FirstCall/ --
- Consolidated Adjusted EBITDA for the First Nine Months of 2010 at $161
Million Compared With $150 Million for the First Nine Months of 2009
- Third Quarter Quantity Refined Totaled 2,314 Tons With 94.5%
Utilization Rate Compared With 1.765 Tons and 76.5% Utilization Rate
in the Same Period of the Previous Year
Oil Refineries Ltd. (TASE: ORL.TA) (hereinafter "the Company," "ORL"), Israel's largest integrated refining and petrochemical group, announced today its financial results for the third quarter 2010, ending September 30, 2010. Results are reported in US Dollars ($) and under International Financial Reporting Standards (IFRS).
- First nine months adjusted refining margin at $/bbl 3.1, compared with
$/bbl 2.9 average Reuter's quoted Mediterranean Ural Cracking Margin
for the same period. Third quarter 2010 adjusted refining margin at
$/bbl 1.7, the same as $/bbl 1.7 average Reuter's quoted Mediterranean
Ural Cracking Margin.
- First nine months EBITDA from Petrochemicals segment totaled $124
million compared with $54 million in the same period of the previous
year. Third quarter EBITDA from Petrochemicals segment totaled $47
million compared with $22 million in the same quarter of the previous
year. In 2009 50% of CAOL's results were consolidated with ORL's
annual reports. HBO was not consolidated at all in 2009.
- First nine months adjusted EBITDA in the Refining and Trade segment
totaled $42 million compared with $96 million in the same period of the
previous year. Third quarter consolidated adjusted EBITDA in the
Refining and Trade segment totaled $4 million compared with $57
million in the same quarter of the previous year.
Note: This period saw volatility in the price of crude oil and its products, with crude oil prices in April rising to levels not seen since the end of 2008 when Brent crude oil was trading at a price of $85/barrel. The rise in oil prices was supported by the expectation of strong growth and demand of future crude oil contracts, which are also used as an investment instrument. In May this year, with the development of the debt crisis in the euro zone and the decline in the financial markets, crude oil prices were pushed down sharply to about $68/barrel. Prices rose again in the third quarter, reaching $81/barrel by the end of the quarter. Meanwhile, the global demand for crude oil has increased, reaching 87 million barrels a day with an increase in demand also coming from developed countries (OECD) for the first time since 2004.
As accepted by major leading international refiners and marketers of oil and its products, the results are presented as reported as well as net of the accounting provision for inventory gains or write offs, in addition to buying and selling timing and derivative accounting methods under IFRS. This is in order to enable a common base for comparison of the Company's ongoing operations.
FIRST NINE MONTHS 2010 ($ millions)
Operating Profit EBITDA
Q1-Q3/10 Q1-Q3/09 Q1-Q3/10 Q1-Q3/09
Refining Segment 24 64 55 96
Adjusted
Trade Segment (13) - (13) -
Petrochemicals 57 8 91 28
Segment - Polymers
Petrochemicals 20 21 24 26
Segment - Aromatics
Petrochemicals 8 - 9 -
Segment - Lube-Oils
The utilization rate for the first nine months of 2010 was at 93.6%, compared with 81.7% for same period in 2009. Quantity refined totaled 6,803 tons compared with 5,536 tons in the same period of the previous year. Output in petrochemicals segment for the first nine months of 2010 was as follows: Polymers, approximately 543 thousand tons; Aromatics, approximately 387 thousand tons; Lube-Oils, approximately 51 thousand tons.
Adjusted refining margin for the first nine months totaled $/bbl 3.1, compared with the average Mediterranean Ural Cracking Margin quoted by Reuters of $/bbl 2.9. Adjusted refining margin for the first nine months 2009 totaled $/bbl 4.9 compared with the average Mediterranean Ural Cracking margin of $/bbl 2.1.
Adjusted consolidated EBITDA for the first nine months totaled $161 million compared with $150 million in the same period of the previous year.
Financing expenses for the first nine months totaled $28 million, compared with a financing income of $8 million in the same period of the previous year.
The consolidated net income for the first nine months totaled $53 million, compared with a net income of $167 million in the same period of the previous year.
KEY DEVELOPMENTS
- Following the completion of the acquisition of Carmel Olefins
(CAOL) shares, the Company has consolidated the headquarters and
operational activities of CAOL with ORL and is pursuing a rapid
achievement of the merger benefits between the companies.
- In June, the company activated the second and final stage of
converting the HVGO desulphurization plant. Activation of Stage 2 is
expected to increase the Company's production of diesel fuel by an
additional 3-4%.
- Significant progress was made during the period in completing
the connection of the natural gas pipeline to the Company's
facilities. This project, which is expected to be completed by the
end of 2010, will enable all of the Company's facilities to run on
natural gas and is expected to yield operational efficiencies.
- In order to leverage potential synergies, the company decided to invest
about $45 million for the production of polymers using existing raw
materials already available in the refinery. The expected return of
this investment is estimated at $ 30 million per year. Likewise, the
Company decided also to invest $60 million for expanding the
production capacity of propylene, which is expected to yield a return
of about $50 million a year.
- As part of the company's strategic plan, carried out various projects
in the areas of the environment as well as the reliability, safety and
security of the facilities, totaling approximately $117 million, since
the initiation of the strategic plan.
- The company recently completed a financing agreement designated to
provide for the credit needs of the company until the end of 2012. The
financing agreement was signed between the Company and a consortium of
financing bodies led by Bank Hapoalim (totaling up to $600 million) and
an American financial institution, with financing guaranteed by the
U.S. Export Credit Agency (totaling up to $300 million). The Company
has drawn $200 million of this credit towards the end of the first
nine months 2010 period for investments.
THIRD QUARTER 2010 ($ millions)
Operating Profit EBITDA
Q3/10 Q3/09 Q3/10 Q3/09
Refining Segment (3) 48 8 60
Adjusted
Trade Segment (4) (3) (4) (3)
Petrochemicals 27 8 37 14
Segment - Polymers
Petrochemicals 7 6 8 8
Segment - Aromatics
Petrochemicals 2 - 2 -
Segment - Lube-Oils
Adjusted refining margin for Q3 2010 totaled $/bbl 1.7, which was the same as the average Mediterranean Ural Cracking Margin quoted by Reuters of $/bbl 1.7. Adjusted refining margin for Q3 2009 totaled $/bbl 8.1 compared with the average Mediterranean Ural Cracking Margin of $/bbl 1.6.
Consolidated adjusted EBITDA for Q3 2010 totaled $49 million, compared with $80 million in Q3 2009.
Financing expenses for Q3 2010 totaled $20 million, compared with financing expenses of $17 million in Q3 2009.
The consolidated net income for Q3 2010 totaled $25 million, compared with a net income of $100 million in Q3 2009.
Mr. Yashar Ben Mordechai, CEO of Oil Refineries: "The Company's financial results during the first nine months and third quarter 2010 indicate the tremendous benefit and synergies of having three business segments under one roof. Despite the weakness in the fuel markets, there is an impressive strengthening of the petrochemical markets, particularly in the area of polymers. Moreover, we are beginning, following the reported period, to see signs of stronger refining margins in the Mediterranean basin. The Company is continuing to invest in its core business and has added two new investments, the first of which is $45 million investment in using existing raw materials already available in the refinery for increasing the efficiency of polymer production. The expected return of this investment is estimated at about $30 million per year. Likewise, the Company decided also to invest $60 million for expanding the propylene production capacity, which is expected to yield a return of about $50 million a year. The completion of the hydrocracker and the transition to the use of natural gas will enable the Company to become one of the strongest and most competitive refining and petrochemical company in the Mediterranean basin.
Mr. Ben Mordechai added: "In addition to our activities in strengthening the Company, we are investing great resources in improving our environmental track record. The transition to natural gas, along with other activities, will make ORL one of the more environmentally responsible oil refinery and petrochemical company in Western Europe. The completion of the hydrocracker will allow us to begin the production and sale of vastly improved diesel fuel which will result in decreased pollutant emissions from vehicles throughout the country. This process is compatible with company policies, which is to continually strive to improve the fuel quality it produces. ORL is also currently completing the turnaround and upgrade of its facilities so that it can continue working at maximum utilization for the next five years, having extended the time in between renovations from four to five years."
Mr. Yossi Rosen, Chairman of the Board of Oil Refineries: "ORL once again demonstrates its ability to defuse risk by leveraging the flexibility and diversity of its refining abilities to produce products, as needed. Upon completion of the Company's acquisition of CAOL, ORL merged the two companies' headquarters, operations and sales team, creating a management system that efficiently leveraged the advantages of the integration and added value. During the first nine months of 2010, much progress was made in the construction of the natural gas pipeline, which is expected to be completed at the end of 2010. Transitioning to the use of natural gas as a power source for the Company's facilities will give rise to further operational efficiencies.
Mr. Rosen added: "The Company has completed a number of facility upgrades which have significantly contributed to higher utilization rates and refining capacity, as well as increased EBITDA for first nine months as compared with the same period last year, despite the lower refining margins. The Company will continue to advance its strategic plan and progress with its establishment of the hydrocracker."
Conference Call
The Company will also be hosting a conference call later today, Monday, November 22nd, 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 http://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: 1-888-281-1167
UK Dial-in Number: 0-800-917-5108
Israel Dial-in Number: 03-918-0664
International Dial-in Number: +972-3-918-0664
at: 15:00 UK Time, 10:00 ET, 7:00 PT, 17:00 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. The Company's petrochemical sector produces Polymers (through its ownership of Carmel Olefins Ltd), Aromatics (through its ownership of Gadiv Petrochemical Industries Ltd), and Lube-Oils (through its ownership of 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.
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 Statement of Financial Position
USD thousands
September 30, December 31
2010 2009 2009
(Unaudited) (Audited)
Current assets
Cash and cash equivalents 31,342 7,468 34,961
Deposits 84,846 77,247 77,637
Trade receivables 501,637 312,088 360,876
Other receivables and debt balances 73,518 79,491 62,495
Financial derivatives - 522 -
Investments in financial assets at fair 102,957 108,588 107,034
value through comprehensive income
Inventory 1,190,655 868,216 1,016,453
Current tax assets 807 46,530 3,957
Total current assets 1,985,762 1,500,150 1,663,413
Non-current assets
Investments in equity-accounted
investees 16,580 35,844 13,673
Investments in available-for-sale 11,165 10,510 10,909
financial assets
Loan to Haifa Early Pensions Ltd. 74,142 73,126 76,053
Long term loans and debit balances 3,701 2,965 3,951
Financial derivatives 196,052 112,975 120,671
Employee benefit plan assets 10,536 5,877 9,993
Property, plant and equipment 1,936,241 1,163,691 1,891,659(*)
Deferred costs 9,154 310 1,366(*)
Intangible assets 82,204 22,689 93,187
Total non-current assets 2,339,775 1,427,987 2,221,462
Total assets 4,325,537 2,928,137 3,884,875
(*) Reclassified, see Note 3 (A)
The accompanying notes are an integral part of the financial statements.
Condensed Consolidated Interim Statement of Financial Position
USD thousands
September 30, December 31,
2010 2009 2009
(Unaudited) (Audited)
Current liabilities
Loans and borrowings 760,178 488,394 603,685
Trade payables 673,699 427,229 542,025
Other payables and credit balances 118,225 81,997 105,903
Current tax liability 23,828 - -
Financial derivatives 27,585 26,954 28,051
Provisions 11,507 14,385 11,582
Total current liabilities 1,615,022 1,038,959 1,291,246
Non-current liabilities
Bank loans 501,807 272,074 358,310
Debentures 869,816 736,253 853,205
Liabilities for finance lease 9,187 8,816 8,768
Other long-term liabilities (**) - 7,581 15,973
Financial derivatives 19,872 5,558 3,111
Employee benefits 59,201 50,967 63,871
Deferred tax liabilities 132,058 66,664 138,464
Total non-current liabilities 1,591,941 1,147,913 1,441,702
Total liabilities 3,206,963 2,186,872 2,732,948
Capital
Non-controlling interests (*) - - 17,183
Share capital 586,390 472,478 586,390
Share premium 100,242 - 100,242
Reserves 41,103 34,919 35,571
Retained earnings 390,839 233,868 412,541
Total equity attributed to
shareholders 1,118,574 741,265 1,134,744
of the Company
Total capital 1,118,574 741,265 1,151,927
Total liabilities and capital 4,325,537 2,928,137 3,884,875
(*) See Note 8(C).
(**) See Note 8(Q)
The accompanying notes are an integral part of the financial statements.
Condensed Consolidated Interim Statement of Comprehensive Income
USD thousands
Nine months ended Three months ended Year ended
September September September September December
30, 2010 30, 2009 30, 2010 3 0, 2009 31, 2009
(Unaudited) (Unaudited) (Audited)
Revenue 5,294,531 3,647,109 1,711,721 1,454,708 5,141,480
Cost of sales,
refinery and
services 5,098,379 3,353,522(*) 1,606,693 1,339,789(*) 4,842,805(*)
Revaluation of
open positions in
derivatives on
prices of goods
and margins, net (3,216) 39,395 34,816 (8,468) 38,606
Total cost of
sales 5,095,163 3,392,917 1,641,509 1,331,321 4,881,411
Gross profit 199,368 254,192 70,212 123,387 260,069
Selling and
marketing
expenses (80,117) (54,357)(*) (24,243) (19,907)(*) (74,067)(*)
General and
administrative
expenses (45,721) (25,991)(*) (11,304) (9,789)(*) (36,175)(*)
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) - - (7,091)
Operating profit 73,530 166,753 34,665 93,691 357,297
Finance income 87,632 62,390 28,355 18,119 61,223
Finance
expenses (115,894) (70,275) (48,178) (34,477) (86,866)
Financing
expenses, net (28,262) (7,885) (19,823) (16,358) (25,643)
Company's share in
profits of equity
accounted
investees, net of
tax 600 4,711 258 873 4,892
Profit before
income tax 45,868 163,579 15,100 78,206 336,546
Tax benefit 7,322 3,149 9,406 21,912 12,698
Profit for the
period 53,190 166,728 24,506 100,118 349,244
Items of other
comprehensive
income (loss)
Actuarial gains
from a defined
benefit plan, net
of tax 108 8,702 212 2,023 4,859
Foreign exchange
translation
differences (176) 168 642 195 77
Group's share in
other
comprehensive
income of an
equity-accounted
investee - 10,433 - - 10,433
Effective share of
the change in fair
value of cash flow
hedging 4,995 - 4,995 - -
Change in fair
value of
available-for-sale
financial assets,
net of tax 210 1,777 1,669 954 2,270
Other
comprehensive
income for the
period, net of tax 5,137 21,080 7,518 3,172 17,639
Comprehensive
income for the
period: 58,327 187,808 32,024 103,290 366,883
Earnings per share
(dollar)
Basic and diluted
earnings per
ordinary share 0.022 0.083 0.010 0.050 0.175
(*) Reclassified, for details see Note 2(D) below
The accompanying notes are an integral part of the financial statements.
Results of the Group's operations
The following table presents selected information of the Group for the
nine months period
Petrochemicals
Refining Trade Polymers Aromatics
Nine months ended September 30
2010 2009 2010 2009 2010 2009 2010 2009
Revenue 3,950 2,683 130 422 772 289 383 253
Inter-company
operations 735 324 - 29 - - 31 30
Total sales 4,685 3,007 130 451 772 289 414 283
Cost of sales 4,570 2,789 139 449 321 146 27 9
Inter-company
operations 31 30 - - 351 116 343 234
Total cost of
sales 4,601 2,819 139 449 672 262 370 243
Gross profit
(loss) 84 188 (9) 2 100 27 44 40
Selling, general
and
administrative
expenses 49 43 4 2 41 17 23 18
Inter-company
operations - - - - 2 2 1 1
49 43 4 2 43 19 24 19
Operating profit
(loss) for
segments 35 145 (13) - 57 8 20 21
Loss from loss
of material
impact in an
equity-accounted
investee
Amortization of
the excess cost
arising from
acquisition of
investees
Operating profit
Financing
expenses, net
Share in profits
(losses) of
investees, net
of tax
Profit before
income tax
Income tax
Profit for the
period
(continued)
Petrochemicals
Adjustments to
Oils consolidated Consolidated
Nine months ended September 30
2010 2009 2010 2009 2010 2009
59 - - - 5,294 3,647
Revenue - - (766) (383) - -
Inter-company
operations 59 - (766) (383) 5,294 3,647
Total sales
17 - - - 5,074 3,393
Cost of sales 33 - (758) (380) - -
Inter-company
operations 50 - (758) (380) 5,074 3,393
Total cost of
sales
9 - (8) (3) 220 254
Gross profit
(loss)
1 - - - 118 80
Selling, general
and
administrative
expenses - - (3) (3) - -
Inter-company
operations 1 - (3) (3) 118 80
8 - (5) - 102 174
Operating profit
(loss) for
segments
- (7)
Loss from loss
of material
impact in an
equity-accounted
investee
(29) -
Amortization of
the excess cost
arising from
acquisition of
investees 73 167
Operating profit
(28) (8)
Financing
expenses, net 1 5
Share in profits
(losses) of
investees, net
of tax 46 164
Profit before
income tax 7 3
Income tax 53 167
Profit for the
period
The following tables present selected information of the Group for the
three months period
Petrochemicals
Refining Trade Polymers Aromatics
Three months ended September 30
2010 2009 2010 2009 2010 2009 2010 2009
Revenue 1,305 1,042 34 192 237 113 116 107
Inter-company
operations 248 135 - 11 - - 8 11
Total sales 1,553 1,177 34 203 237 113 124 118
Cost of sales 1,518 1,071 38 205 72 48 5 7
Inter-company
operations 8 11 - - 127 49 106 98
Total cost of
sales 1,526 1,082 38 205 199 97 111 105
Gross profit
(loss) 27 95 (4) (2) 38 16 13 13
Selling,
general and
administrative
expenses 15 14 - 1 10 7 6 7
Inter-company
operations - - - - 1 1 - -
15 14 - 1 11 8 6 7
Operating
profit (loss)
for segments 12 81 (4) (3) 27 8 7 6
Amortization
of the excess
cost arising
from
acquisition of
investees
Operating
profit (loss)
Finance income
(expenses),
net
Share in
losses of
investees, net
of tax
Profit (loss)
before taxes
on income
Tax benefits
(income tax)
Net profit
(loss) for the
period
(continued)
Oils Adjustments to Consolidated
consolidated
Three months ended September 30
2010 2009 2010 2009 2010 2009
20 - - - 1,712 1,454
Revenue - - (256) (157) - -
Inter-company
operations 20 - (256) (157) 1,712 1,454
Total sales
5 - - - 1,638 1,331
Cost of sales 12 - (253) (158) - -
Inter-company
operations 17 - (253) (158) 1,638 1,331
Total cost of
sales
3 - (3) 1 74 123
Gross profit
(loss)
1 - - - 32 29
Selling,
general and
administrative
expenses - - (1) (1) - -
Inter-company
operations 1 - (1) (1) 32 29
2 - (2) 2 42 94
Operating
profit (loss)
for segments
(7) -
Amortization
of the excess
cost arising
from
acquisition of
investees
35 94
Operating
profit (loss)
(20) (17)
Finance income
(expenses),
net - 1
Share in
losses of
investees, net
of tax 15 78
Profit (loss)
before taxes
on income 10 22
Tax benefits
(income tax) 25 100
Net profit
(loss) for the
period
Company Contact:
Rony Solonicof
Chief Economist and Head of IR
Tel. +972-4-878-8320
Contact [email protected]
Investor Relations Contact:
Ehud Helft / Porat Saar
CCG Israel
Tel. (US) +1-646-233-2161 / (Int.) +972-52-776-3687
[email protected]
SOURCE Oil Refineries Ltd
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