May 25, 2020

Cepsa reduces its profit by 42% in September, to 380 million



Cepsa got a net profit of 380 million euros in the first nine months of the year, which represents a decrease of 42% over the same period last year, the company said. Eliminating non-recurring items and calculating the variation of inventories at replacement cost, the group recorded an adjusted net profit of 424 million euros as of September, which represents a 20% drop.

The group controlled by Mubadala and The Carlyle Group noted that this decline in profit has been due mainly to low refining margin environment In the first half of the year, they have recovered slightly during this last third quarter, as well as the falling margins of some petrochemical products.

In the period from January to September, Cepsa recorded an adjusted gross operating profit (Ebitda) of 1,551 million euros, 26% higher than in the same period of 2018.

This increase was mainly due to the good performance of the Exploration and Production businesses, which grew 60% compared to the same period of 2018, and Marketing, with an increase of 47%.

The investments of the oil company in the period amounted to 634 million euros, mainly destined to the development of the fields in Abu Dhabi and to projects in the Refining area for the optimization of the refineries, and the free cash flow was 731 million euros, before the payment of dividends.

For its part, the company has carried out in the period an optimization process of its capital structure, extending the average life of the debt to more than five years. In this way, the company's net debt has been reduced by 4% compared to the same period of the previous year, despite the appreciation of the dollar. The net debt / Ebitda ratio has been 1.4 times; four tenths lower than last year's close.

By business areas, Exploration and Production reached an adjusted gross operating result of 712 million euros, representing an increase of 60% compared to the same period of 2018, driven by the start of operations of the SARB and Umm fields Lulu (Abu Dhabi), acquired in 2018.

The adjusted net profit of this business reached 119 million euros, 38% less, mainly due to the lower result in Colombia due to lower sales prices and higher depreciation and taxes, as well as the still limited contribution of SARB and Umm Lulu, which He was partially compensated for the good result in Algeria.

The average price of realization of the crude products that Cepsa produces and sells was $ 64.3 per barrel, 5% lower than in 2018 and with a Brent discount of $ 0.4 per barrel.

Meanwhile, crude oil production stood at 93,500 barrels per day, 9% higher figure to that of the first nine months of last year, mainly due to the entry into production in the first quarter of 2019 of the SARB and Umm Lulu fields.

In the Refining area, the adjusted gross operating result in the first nine months of this year was 347 million euros, 16% less. The adjusted net profit stood at 101 million euros, with a fall of 38%.

Cepsa indicated that this decrease was mainly due to lower refining margins, impacted by the cracks of light and medium distillates in the Mediterranean, as well as higher supply costs due to the rise in premiums for high sulfur crude.

In the first nine months of 2019, the level of utilization of refinery distillation capacity was 90%, in line with the same period of 2018, and 16.4 million tons of petroleum derivatives were produced. The group's investments in the Refining area totaled 325 million euros until September.

In the middle of last October, Mubadala completed the agreement with The Carlyle Group for the acquisition of a 37% stake in Cepsa, in an operation based on a company valuation of 12,000 million dollars (about 10,600 million euros).

The group also indicated that it has distributed as dividend in kind its 42% from Medgaz to Mubadala. The sovereign fund of Abu Dhabi agreed to sell Naturgy and Sonatrach this share in the pipeline for 548 million euros.

In addition, according to the new shareholding structure of Cepsa, Carlyle and Mubadala agreed to the appointment of Philippe Boisseau as new CEO in place of Pedro Miró.

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