Cepsa’s Clean CCS net income of the first nine months of the year was €424 million, down from €530 million in the same period of 2018, according to the figures presented by the company in its January-September report.
The oil company explained that this 20% drop was due to low refining margins during the first half of the year, which has now slightly recovered over 3Q, as well as weaker margins for some petrochemical products.
the EBITDA goes up
In 9M 2019, Cepsa’s EBITDA totaled €1,551 million, up by 26% from the €1,229 million recorded in 2018.
In the report, the company explained this rise is the result of the good performance in the Exploration & Production and Marketing businesses (+60% and +47% from 2018, respectively).
Applying International Financial Reporting Standards (IFRS) and calculating inventory movements at average unit cost, accumulated net income for 9M 2019 was €380 million, compared to €660 million for the same period in 2018.
Over this period, Cepsa optimized its capital structure, extending the average term of its debt to over five years. Similarly, the Company’s net debt is also 4% lower year on year.
Investments during the period amounted to €634 million. Meanwhile, free cash flow before dividend payments was €731 million.
According to Cepsa, the growth in investments is connected with the development of the Abu Dhabi fields, as well as refinery optimization projects in the Refining business unit.
January-September 2019 Results 🔽.
— Cepsa Corporate (@Cepsa) 8 de noviembre de 2019
Exploration & Production
In 9M 2019, the Clean CCS EBITDA of the Exploration & Production business unit increased by 60% compared to the same period of 2018, to €712 million. This was mainly due to the contribution of the recently acquired SARB and Umm Lulu fields (in Abu Dhabi) in 2019.
Clean CCS Net Income stood at €119 million, 38% lower year on year. This was mainly due to the decline in Clean CCS Net Income in Colombia resulting from reduced selling prices and higher amortizations and taxes and the still limited contribution of SARB and Umm Lulu (as they are still in ramp-up phase) due to high amortizations, taxes, and royalties in Abu Dhabi.
Greater earnings in refining
In 9M 2019, the EBITDA stood at €347 million, while the adjusted net income obtained totaled €101 million, compared to €163 million for the same period in 2018. The decrease is mainly attributable to lower refining margins, “hampered by low light & middle distillate cracks in the Mediterranean”. Furthermore, another relevant factor was higher supply costs because of increased sour crude premiums.
The utilization of distillation capacity of the refineries was 90%. According to Cepsa, this result is in line with that in the same period of 2018—with a production of 16.4 million tons of refined products.
Between January and September, Cepsa invested €325 million in the Refining business unit for enhancing conversion capacity and efficiency, as well as upkeep and improvement of safety.
The Marketing business registered a very strong performance in 9M 2019, achieving a Clean CCS EBITDA of €342 million, a 47% increase vs 9M 2018. This improvement is mainly attributable to “the strong performance of the network of service stations and the bioenergy business unit, as well as the higher sales and margins of the asphalts business.”
Sales of the Marketing business unit stood at 15.9 million tons, in line with the same period of the previous year.
Weaker sales in the petrochemical business
In 9M 2019, EBITDA of the Petrochemicals business unit increased by 6% compared to the same period of 2018 to €186 million. Meanwhile, the company’s Net Income stood at €70 million, 7% lower than in 2018.
The Petrochemicals business unit’s results were affected by a reduction in sales (4% lower than in the same period of the previous year); this is attributable to a global supply glut and a related decline in the global margins of some petrochemical products.
Product sales amounted to 2,157 kt. Investments in this business unit stood at €53 million, focused principally on the project to expand the capacity of the LAB plant in Puente Mayorga (Cadiz).
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