Helleniq Energy reported strong nine-month results (Beta Sec)

Helleniq Energy (9M/Q3:23 results review): Helleniq Energy reported strong nine-month results due to the favorable refining environment, operating performance and exports. Helleniq announced its Q3:23 consolidated financial results, with strong Adjusted EBITDA at €400m and Adjusted Net Income at €218m coming above consensus across the board. The beat is primarily driven by refining performance as blended refining margin reached 20.5 $/bbl vs. 10.9 $/bbl in Q2:23 and 21.8$/bbl in Q3:22. Accordingly, 9Μ:23 Adjusted EBITDA came in at €968m and Adjusted Net Income at €496m.  Moreover, oil products output increased by 5% y-o-y to 3.65m MT, while sales volumes reached 3.84m MT, with exports corresponding to 46% of total. Contribution increased in Domestic Marketing and in RES, on installed capacity growth. Reported Net Income came in at €300m in Q3:23 (2022: €252m) and €462m in 9M23 (2022: €1,121m). The decrease in 9M:23 reported results reflects the impact of prices on the inventory valuation of crude and oil products. In more details:

§  Refining, Supply & Trading Q3:23 Adjusted EBITDA came in at €327m, supported by high international refining margins as well as the System’s overperformance, outweighing a stronger EUR and increased production costs due to inflationary pressures. The Group’s refining availability remained at high levels, with exports accounting for 46% of sales and the high value-added products reaching 80% of output. Production came in at 3.65m MT in Q3:23, +5% y-o-y.

§  Domestic market demand in Q3:23 reached 1.65m MT, mainly as a result of a growing economy and tourism, with gasoline and diesel consumption at last year’s levels. Aviation fuels sales were also flat y-o-y at 650k MT, while bunkering fuels offtake fell by 1% to 751k MT. International Marketing recorded slightly lower profitability in Q3:23, driven by lower margins at some markets. In 9M:23, profitability remained broadly flat y-o-y.

§  Petrochemicals Q3:23 Adjusted EBITDA came in at €8m, flat y-o-y, on weak PP margins.

§  In the RES sector, installed capacity at the end of Q3:23 amounted to 356 MW, with RES projects in advanced development stages reaching 0.7 GW of capacity in Greece and Romania, following the completion of several agreements during last quarter. Moreover, the acquisition of RES projects with a total capacity of 26 MW in Cyprus was recently announced, the second during 2023 in the Cypriot market, targeting an installed capacity of at least 1 GW by 2025, while the total projects portfolio under development amounts to 4.2 GW.

§  In Q3:23 the contribution of associate companies, which are consolidated using the equity method, was negative. Specifically, a) Elpedison’s profitability was negatively affected by Thisvi power plant’s lower availability, while b) DEPA’s contribution was mainly affected by lower domestic market demand as well as increased costs for securing capacity in the gas network.

§  Capex amounted to €53m in Q3:23 and €200m in 9M:23, directed primarily to refinery maintenance and infrastructure improvement projects as well as the expansion of the installed RES capacity.

§  Net Debt shaped at €1.48bn, lower by €0.5bn since the beginning of the year, due to positive cash flow generation in 9M:23, despite the gradual payment of the temporary solidarity contribution and dividends distribution of approximately €230m in 9M:23. Gearing (Net Debt to Capital Employed) fell to 33%, the lowest level since 2009. During Q4:23, refinancing of a €400m RCF for 5 years was concluded, maintaining the level of the Group’s available credit lines at €1.3bn and, at the same time, improving our debt’s maturity profile.

§  BoD decided to distribute an interim dividend of €0.30 per share. Ex-date on January 10, 2024 payment starts on Wednesday January 17, 2024.

Following the soft indication of Q4:23 trends Helleniq Adj. EBITDA will exceed 1.1bn adj. EBITDA in FY:23 which implies an EV/ΕΒΙΤDA multiple of 3.7x vs. 5.0x historical average.

The following table summarise reported results vs. consensus estimates:

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