Upbeat 2017-20 outlook
27 Feb 17
The Q4 16 comparable EBITDA was €148m (vs. €130m in Q4 15), slightly above consensus estimates. By division: 1) Refining comparable EBITDA was €91m (+20% yoy). The EMC benchmark margin was at $3.5/bbl (vs. $3.1/bbl in Q4 15 and $2.0/bbl in Q3 16). The refinery run was 23.9mbbl (vs. 25.3mbbl in Q4 15) due the unplanned maintenance at the catalytic reforming unit in December. Saras’ additional margin was $4.0/bbl (vs. $3.5/bbl in Q4 15 and $2.5/bbl in Q3 16); 2) Marketing contributed €2m (vs. nil in Q4 15), with a decline in volume in Italy (-15% yoy) and a jump in Spain (+41% yoy), capturing the strong wholesale margins there; 3) Power Generation: EBITDA at €45m (-4% yoy); the power plant run at full capacity (1.24TWh vs. 1.04TWh in Q4 15). Guidance on 2017 EBITDA was for around €480m (vs. €507m in 2016), broadly in line with consensus but above our estimate: - Refining: reference margin at $2.0-2.5/bbl, premium at $3.5/bbl (increasing to c. $4/bbl in 2020); - Power generation at c. €200m; - Marketing at c. €10m; - Wind at €20-25m in 2017 (€5-10m during 2018-2020). The adjusted net income came in at €53m (vs. €30m in Q4 15), in line with expectations.
Q4 reference refining margin probably similar to Q3 levels
08 Nov 16
Q3 16 comparable EBITDA was €101m (vs. €215m in Q3 15), below consensus expectations (but €30m is postponed to Q4 due to contango transactions). By division: 1) Refining comparable EBITDA was €40m (-75% yoy). The EMC benchmark margin was at $2.0/bbl (vs. $4.8/bbl in Q3 15 and $2.6/bbl in Q2 16). The refinery run at 26.3mbbl (vs. 26.8mbbl in Q3 15). Saras’ additional margin was $2.5/bbl (vs. $3.8/bbl in Q3 15 and $4.6/bbl in Q2 16); 2) Marketing was in positive territory, benefiting from typical seasonality, with comparable EBITDA at €5m (vs. €6.1m in Q3 15); 3) Power Generation: EBITDA at €53m (-2% yoy), with the IGCC plant running at full capacity (1,239TWh vs. 1,150TWh in Q3 15). The adj. net income came in at €26m (vs. €110m in Q3 15).
Crack spreads to stay under pressure in H2 16
01 Aug 16
Q2 16 comparable EBITDA came in at €134m (-14% yoy), in line with consensus expectations. By division: 1) Refining comparable EBITDA was €78m (-60% yoy). The EMC benchmark margin was $2.6/bbl (vs. $4.1/bbl in Q2 15 and $3.6/bbl in Q1 16). The refinery ran at 23.4mbbl (vs. 27.1 mbbl in Q2 15) due to maintenance on the distillation units (which were absent in Q2 15). Saras’ additional margin stood at $4.6/bbl (vs. $6.4/bbl in Q2 15 and $4.0/bbl in Q1 16); 2) Marketing showed a small loss at the comparable EBITDA level (-€0.5m, vs. -€3.2m in Q2 15); 3) Power Generation: EBITDA was €52m (-7% yoy), largely due to the lower CIP6/92 tariff. The IGCC plant’s output was a smooth 1.241TWh (as in Q2 15). Adjusted net income was €50m (-62% yoy), slightly above estimates.
Iranian crudes rejoining the feedstock pool
13 May 16
Q1 16 comparable EBITDA was at €124m (-14% yoy), above expectations. By division: 1) Refining comparable EBITDA came in at €72m (-14% yoy). The EMC benchmark margin was at $3.6/bbl (vs. $4.0/bbl in Q1 15 and $3.1/bbl in Q4 15). The refinery ran at 21.0mbbl (vs. 27.0mbbl in Q1 15). Saras’ additional margin stood at $4.0/bbl (vs. $2.0/bbl in Q1 15 and $5.5/bbl in Q4 15); 2) Marketing gave a negative contribution to the comparable EBITDA (-€3m, vs. -€1m in Q1 15); 3) Power Generation: EBITDA at €46m (-14% yoy). The IGCC plant’s output was 0.863TWh (-15% yoy) due to the scheduled maintenance. The adj. net income was €40m (-26% yoy), above estimates. The reference margin (EMC) is $4.1/bbl qtd.
Guidance for 2016: group EBITDA in line with business plan
29 Feb 16
Q4 15 results: comp. EBITDA was €130m (+23% yoy), slightly below consensus expectations. By division: 1) Refining comparable EBITDA came in at €76m (vs. €11m in Q4 14). The EMC benchmark margin was $3.1/bbl (vs. $0.9/bbl in Q4 14 and $4.8/bbl in the strong Q3 15). The refinery ran at 25.3mbbl (+10% yoy). Saras’ additional margin was $3.5/bbl (vs. $2.0/bbl in Q4 14 and $3.8/bbl in Q3 15); 2) Marketing: contribution to the comparable EBITDA was nil (vs. €2m in Q4 14). During 2015, demand grew by 3.6% in Italy and was flattish in Spain (-0.3%); 3) Power Generation: EBITDA at €47m (-46% yoy). The IGCC plant’s output was 1.042TWh (-2% yoy), and the power tariff declined by 47% due to the equalisation process. The adjusted net income was at €30m (+19% yoy, consensus at €48m). +Outlook 2016+ Group EBITDA in line with the business plan (€680m): - availability of cheap crude oils should increase; - global demand growth expected to continue in 2016 (IEA forecast: +1.2 mbpd), driven by gasoline, where demand for high-octane should pick up in spring; - maintenance (mostly done in Q1, with some to come in Q2 and Q4) should have a €52-65m impact on refining's 2016 EBITDA. Production at 107-109mbbl. Additional margin at $4/bbl on average; - capex at €155m. The reference margin (EMC) is $4.1/bbl qtd.
Q3 refining beats consensus again; outlook confirmed
09 Nov 15
Q3 results: revenues were €2.0bn (-20% yoy), comparable EBITDA was €215m (€19m in Q3 14), above consensus of €203m. By division: 1) Refining's comparable EBITDA was €155m (vs. -€43m in Q3 14), above consensus of €142m. The EMC benchmark margin was $4.8/bbl (vs. $0.3/bbl in Q3 14 and $4.1/bbl in Q2 15). The refinery run rate was 26.8mbbl (+28% yoy) in the quarter. Saras’ additional margin was $3.8/bbl (vs. $0.2/bbl in Q3 14 and $6.4/bbl in Q2 15); 2) Marketing comparable EBITDA came in at €6m (-29% yoy); 3) Power Generation: EBITDA at €52m (+2% yoy). The IGCC plant produced 1.150TWh (+6% yoy), largely offset by a 5% decline in the power tariff. The adj. net income was €110m (a €30m loss in Q3 14, consensus was €91m).
Rosneft sells 9% of Saras
20 Oct 15
Rosneft has just announced an operation of accelerated book building to sell 9% of Saras's equity. Rosneft will keep 12% of the capital and remain on the board. The transaction price to institutional investors, according to Reuters, is €1.9 per share: a 3% discount to the one-month average and a 10% discount to the previous closing. Rosneft agreed with UBS (which is arranging the operation) that it will not sell any more of Saras's shares for the next six months.
Capital Markets Day and new business plan 2016-19
16 Oct 15
Saras held its Capital Markets Day at its Sarroch refinery (Sardinia). Business plan and guidance Saras has launched its trading office in Geneva: 1) Its main purpose is supply chain integration (maximising its end-to-end chain profit) with, marginally, third party trading (“a nice addition”). 2) Guidance on the EBITDA contribution from supply chain integration is nil in 2016, c. €65m in 2017 and growing to €130m in 2019 (third party trading should reach €9m in 2019). 3) This would be embedded into Saras’s additional margin (trading and refining are seen as one book). The business plan takes market consensus assumptions (FOB MED): 1) Gasoline crack spread at $11.9/bbl in 2015, $10/bbl in 2016 and around $8.4/bbl over 2017-19. 2) Diesel crack spread at $15.6/bbl in 2015, and in a $15-16/bbl range over 2016-19. Fixed costs: c. 2% CAGR, from €330-345m in 2015 (o/w €240-250m in refining, €90-95m in power generation). New guidance in the "inertial" scenario (before trading and optimisation initiatives): average EBITDA 2016-19 should be €570m (on a downward trend from €680m in 2016 to €510m in 2019), which compares with €173m over 2010-14 and €740-760m in 2015. The guidance including the trading/supply impact (€130m in 2019) and optimisation initiatives (€90m in 2019), gets close to €700m on average over 2016-19 (€730m in 2019). Capex: in 2018, Saras will need to decide whether to invest in revamping the visbreaking (€170m) and invest in the bitumen facilities (€60m). Guidance 2016-19: €160m on average (back to 2006-09 levels after €105m over 2010-15). Saras aims at generating €1.1bn of cash over 2016-19. Refining margins outlook JBC’s Johannes Benigni gave his view on the oil and refining markets. He expects weaker (vs. exceptional 2015 ytd) refining margins from December 2015 to April 2016, followed by an improvement. No hard landing, as going forward there should be little capacity addition and demand is expected to stay solid (even without sparkling growth): 1) Crude supply: 1-1.5mbpd excess supply in H1 16. Much of the market weakness is reflected in West African crudes. The heavy-light spread is expected to widen again, which is positive for refiners running heavy crudes. The Med has lost more than 1.75mbpd in supply, which has been primarily replaced by West African and Iraqi Basrah crudes. 2) Oil product demand: gasoline has been the key driver. Usually gasoline reacts to price, while diesel responds to economic developments (although also diesel demand has risen). 2016: no big surprises expected on the demand side. 3) Global refining: more maintenance expected in 2016 (c. 400kbpd crude runs), which should help to balance the market (after interventions were delayed in 2015). Nominal excess capacity is at 17mbpd globally (o/w 3mbpd in Europe), or 20%; however, according to JBC, the available spare capacity is around 2mbpd (o/w 0.8mbpd in Europe), or c.4%. There is no further investment upcoming in the Middle East at the moment (apart from those already planned). As IOCs need to fund their upstream investments, they may sell refineries on the cheap. Corrado Costanzo stepped down as the group’s CFO (retirement, 62). Franco Balsamo, formerly Acea’s CFO, will take the role.
Refining well above expectations in Q2
07 Aug 15
Q2 results: revenues were €2.7bn (-2% yoy), comp. EBITDA at €252m (€6m in Q2 14), above consensus at €200m. By division: 1) Refining comparable EBITDA was €196m (vs. -€58m in Q2 14), beating consensus at €138m (the highest estimate was €161m). The strong performance reflects the EMC Benchmark margin at $4.1/bbl (vs. -$1.5/bbl in Q2 14 and $4.0/bbl in Q1 15), with the plant running at maximum capacity (27.1 mbbl for the quarter, +19% yoy). Saras’ additional margin was $6.4/bbl (vs. $0.4/bbl in Q2 14 and $2.0/bbl in Q1 15); 2) Marketing comparable EBITDA came in at -€3.2m (€5.4m in Q2 14); 3) Power Generation: EBITDA at €56m (+6% yoy). The IGCC plant produced 1.241TWh (+11% yoy). The adj. net income was €133m (a €39m loss in Q2 14, consensus at €90m). Outlook: management believes that the favourable conditions are sustainable in the long term. It noted a strong demand for products, globally and in Europe, and diesel consumption +6% in Italy.