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The Italian refiner reported weaker-than-expected results due to the refining environment in the quarter, rising prices for heavier and sour crude grades, and maintenance-related issues. The adjusted EBITDA was 50% below the consensus while the premium over the benchmark margin was $3.7/bbl, considerably below the company’s guidance of $5-6/bbl. Despite the weak results, Saras maintained its margin guidance for the FY23 average as the margins in the Q3 are holding up well.
Saras SARAS S.p.A. - Raffinerie Sarde
The solid beat for the consensus (+14%) was unsurprisingly driven by strong margins across the sector. Yet margins have substantially softened in Q2, denting the quarterly profits. H2 looks better as gasoline demand is robust and crack spreads are now above diesel margins. Saras is also expanding the renewable business with €750m allocated for capex and a target to reach 1 GW in installed capacity.
Unprecedented as it was, FY22 enjoyed substantial revenues and operating income thanks to elevated margins. The outlook suggests that margins are unlikely to repeat their FY22 levels but will still remain strong in FY23. The unexpected news of CEO Matteo Codazzi’s resignation (having taken office in only November 2022) and the appointment of Massimo Moratti has, however, raised governance concern about this family-run business.
The news that, in the aftermath of the Q3 release, the Saras Board of Directors has parted ways with CEO Dario Scaffardi by mutual agreement and appointed Matteo Codazzi was unexpected. The change in CEO should not overshadow the positive outlook as the strategy is not expected to change given the company’s governance structure. The results were lower than in the Q2 2022, but further improvements could be seen in the Q4.
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