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NIS.EU
NIS GROUP’S PERFORMANCE PRESENTATIONfor 6M of 2019
29th July, 2019Anton CherepanovFinance, Economics, Planning and Accounting Function
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NIS in Q2 2019
2
Exploration and production Block
• 23 development wells and 3 exploratory wells were drilled in Serbia
• In Serbia, 654 km2 of 3D seismics performed at the exploratory area of Ada
• Drilling of two wells completed in Romania
• Construction of the compound from oil and gas preparation for trial testing isunderway on Teremia North and Jimbolia fields, beginning of which is planned forthe third quarter of 2019.
Division Downstream
Refinery
• Implementation of capital overhaul in Pančevo Oil Refinery• Staff training to operate DCU complex• Realization of projects of digital transformation• Performance testing following the completed project IM1 (in Atmospheric
Distillation Unit)
1 Investment maintance
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3
Capital overhaul of Pancevo Oil Refinery
During the planned suspension of POR operation, the following activities have been completed:
• Capital workover of “Gasoline pool“
• Workover activities of “Diesel pool“
• Activities related to ’’Bottom of the Barrel Project“ – Reconstruction of MHC/DHТ hydrocracking unit. Connections in other facilities and in handling unit
• This has been the biggest capital workover in Refinery so far judging by the scope of works executed. Works have been completed on 14 ovens, 13 reactors, 53 columns, 51 containers, 210 exchangers, 209 coolers, 40 elements of rotary equipment, 195 electric engines, 6,010 pieces of instrumental equipment. The previous overhaul took place in 2016
• For the purpose of increasing the reliability and efficiency of the unit’s operation, 13 investment projects and 31 projects of investment maintenance have been realized
Execution of all additional works thatderived from the completed check anddetermined state of equipment, resultedin increased reliability of the equipmentand reduced possibility of equipmentsuspension.
The plants were shut down for overhaul activities as of 23rdFebruary, while the overhaul itself commenced on 28thFebruary.The plants overhaul succession was being carried out in theperiod between 22nd March and 30th March.The commercial operation commenced also in a succession in theperiod between 19th April and 5th May, once the reconstructionS-4300 was complete.
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NIS in Q2 2019
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Division Downstream
Sales• After major reconstruction works had been finished, PS “Velika Plana”, Autoput
Desna, was introduced to exploitation as the first PS in the form M-highway inSerbia (Gazprom brand)
• Major reconstruction of PS “Stari Banovci” (Gazprom brand) is under way• Introduction of a new service to PS’s: GIFT CARDS available at specific NIS Petrol
and Gazprom PS’s for the purchase of fuel and all other products (card value of1,000 RSD, 3,000 RSD and 5,000 RSD).
EnergyCCPP Pančevo
• Completed works regarding construction of the foundation of the GT unit facility. Ongoing construction of the foundation of the administration building, thermal and compressor station, boilers, and chimneys. Initiated construction of the foundation of the ST facility and control room. Initiated construction and installation of the GT facility steel construction.
• Completed PCP and tender documentation for the procurement of equipment and works for a 220kV distribution station.
• The МЕТ Renewables Company and NIS have commenced a joint delivery of the wind farm project in Serbia
• Negotiations with EPC contractors are drawing to a close
Project windpark Plandište
GT – gas turbine unit; ST – steam turbine unit; PCP – project for construction permit
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5
Velika Plana BS
• Customers can always enjoy fast and efficient service, diverse culinary delights and a carefully selected range of non-fuel products available in the Drive Café restaurant.
• New features of our network include a specially developed smoking space and a unique sound-proof garden with an electric awning.
• The standard offer of high-quality fuels has been expanded to include a premium range of G-Drive petroleum products, as well as enhanced OPTI LPG from the Pančevo Oil Refinery.
• Velika Plana BS is the first petrol station in both Gazprom and NIS Petrol with an electric vehicle (EV) charging point.
• All designs and construction works are fully in compliance with the legislation of the Republic of Serbia within the construction industry and environmental protection.
• Built in line with the latest technological, safety and environmental standards, the newly-opened petrol station boasts modern equipment and double-sided multiplex fuel dispensers.
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6
Project status:
Key Project parameters:
Bottom of the Barrel Project
236 mn EUR invested in the project
The Detailed Design completed and all permits obtained
99.8% of equipment and material delivered
Completed installation of: foundations, basic steel structure of the complex, oversized equipment, coke oven, silos and coke conveyor belt. Pre-startup activities in the complex initiated. Construction and installation works related to construction of the complex completed 81.1%
3,640,814 man/hours to date, 13 contractor companies in the field, 850 field workers per day on average
Pre-startup activities are completed on 10 sistems of 148
Current contractor structure
Indicator Value
Investment, mn EUR 300
Capacity, ton/day 2 000
Unit start-up date Q4 2019
20%
80%
Foreign contractors
Serbian contractors
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7
Bottom of the Barrel Project
Installed silos and coke conveyor system Insulation works at the coke oven
Construction and installation works at the spherical tank farm
Installation of measurement and control equipment and pipeline connection
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8
Bottom of the Barrel project
Installation of the steel structure and pipeline in the coke pit zone
Electrical and instrumentation works
Laying of cables in the pipe rack
Insulation works at the columns
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Macroeconomic IndicatorsWeakening of the dinar compared the dollar, oil price drop
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USD/RSD rate +7% Brent crude price, $/bbl
-6%
90
100
110
I II III IV V VI
2018. Average 2018.
2019. Average 2019.
55
60
65
70
75
80
I II III IV V VI
2018. Average 2018.
2019. Average 2019.
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HSE Indicators
10
Increasing transparency
LTIF RAR
Majorevents
Medium events
Minorevents
HIPO
2.32
1.76
6M 2018 6M 2019
6M 2019
6M 2018
0.32
0.21
6M 2018 6M 2019
6M 2019
6M 2018
6M 2018 6M 2019
31,290 34,610
553 713
42 32
4 0 24%
34%
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Key IndicatorsNIS Group
11
Q22019
Q2 2018
∆ Key indicators UoM 6M2019
6M2018
∆
68.82 74.35 -7% Brent Dtd $/bbl 66.01 70.55 -6%
63.9 68.0 -6% Sales revenues bn RSD 117.4 120.4 -2%
9.6 15.0 -36% EBITDA bn RSD 15.9 24.0 -34%
3.1 7.8 -61% Net income bn RSD 3.2 11.5 -72%
4.7 4.8 -3% OCF bn RSD 16.0 9.4 +70%
3.-8 47.8 -17% Accrued liabilities based on public revenues bn RSD 79.8 90.95 -12%
320 332 -4% Oil and gas output thou. TOE 641 661 -3%
604 909 -34% Crude oil and semi-finished products output thou. tons 1,204 1,696 -29%
793 900 -12% Total petroleum products sales volumes thou. tons 1,519 1,665 -9%
10.1 9.4 +7% CAPEX bn RSD 18.4 17.2 +7%
592 536 +10%Total debt to banks(total debt to banks + letters of credits)
mn USD 592 536 +10%
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12
Motor Fuel Market Trends6M 2019/2018
Motor fuel consumption in the region is on the rise: positive macroeconomic trends rise in the number of diesel-powered
vehicles rise in transit traffic rise in agriculture and infrastructure works
Serbia
• Main generators of consumptions in Serbia arethe growth of diesel and coke consumption.While in the first quarter, works on infrastructurewere main cause of increased consumption, inthe second quarter it was civil engineering andgrowth of transport, as well as intensivebeginning of agricultural works.
Slovenia
2.0%
Croatia
3.6%
Bosnia and Herzegovina
1.2%Bulgaria
1.4%
Romania
2.3%
Hungary
5.2%
Serbia4.3%
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Market Share – SerbiaPetroleum Products Market
13
Petroleum productsmarket volumes, thou. tons
0.1%
• Total consumption of petroleum products isalmost at the same level:
• The main consumption generators are:
- Rise in diesel and coke consumption
- Infrastructure works, agriculture, transport
• The negative consumption trend was recordedwith primary petrol (Petrohemija’s overhaul)and heavy fuel oil.
NIS market share was slightly lower in the first half ofthe year, as a result of a significant rise in coke import(not in the NIS product range) and reducedconsumption of primary petrol and heavy fuel oil,where NIS’ share is traditionally very high.
476(28%)
493(29%)
1,243(72%)
1,228(71%)
1,719 1,721
6M 2018 6M 2019
NIS
Others
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Market Share – SerbiaMotor Fuel Retail Market
14
NIS’ sales is growing in the segment of diesel andpetrol, while in the LPG segment, it falls, in linewith the market trend. Modernised stations,improved fuel product range and numerousmarketing projects make a significantcontribution to the share preservation.
• Rise in retail market by 4.5%
• The most important growth factor is the rise in consumption in the diesel fuel segment, primarily generated by the growing number of diesel-powered vehicles.
• The downward trend in LPG consumption continues, primarily due to a reduced number of LPG-powered vehicles, but also relatively high prices due to high charges.
Retail market, thou. tons+4.5%
455(57%)
473(57%)
343(43%)
361(43%)
798 834
6M 2018 6M 2019
NIS
Others
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15
Market Share – RegionQ1 2019/2018
Bosnia and Herzegovina
No. of PSs : 37% total market: 17.9%% retail market: 9.7%
Romania
No. of PSs: 18% total market: 0.9%% retail market: 1.3%
Bulgaria
No. of PSs: 35% total market: 5.0%% retail market: 4.4%
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Operating IndicatorsExploration and Production
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• The planned production scope for hydrocarbons in first six months was +1.5%
• 20 wells were put into operation
Oil and gas output,thou. TOE -3.1%
438 429
208 195
16 16
661 641
6M 2018 6M 2019
Foreignprojects
Domesticgas
Domesticoil
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Operating IndicatorsRefining
17
Refining of oil and semi-finished products, thou. tons
-29%
432 342
1,113
767
151
94
1,696
1,204
6M 2018 6M 2019
Semifinishedproducts
Import oil
Domestic oil
• The production of petroleum productsdecreased by -29% due to capital overhaul inPančevo Oil Refinery.
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Operating Indicators Sales and Distribution
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• Retail in Serbia – increase 5%
• Wholesale in Serbia – decrease -11%
• Export – decrease -34%
• Foreign assets – increase 9%
Sales volumes*, thou. tons -9%
342 360
162 177
916 819
246163
1,6651,519
6M 2018 6M 2019
Export
Wholesale -Serbia
Foreign assets
Retail - Serbia
*Without internal sales
• Capital overhaul in Pancevo Oil Refinery
• Total volume of sales for 6M 2019 is higher than refining volume (in the same period of the previous year volume of sales and refining volume are at the same level)
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Financial IndicatorsEBITDA
19
-34%EBITDA, bn RSD
24.0
15.9
6M 2018 6M2019
• Lower refining volume due to capitaloverhaul in Pancevo Oil Refinery
• The fall of oil prices on the world market
• The fall of oil production
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Financial IndicatorsNet Income
20
Net income, bn RSD -72%
11.5
3.2
6M 2018 6M 2019
• Lower EBITDA
• Greater amortization
• Negative exchange differences
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Financial IndicatorsOCF
21
• Lower liabilities for the import of crude oil
• Lower liabilities towards the state
• Higher customs duties
• Higher derivatives duties
OCF, bn RSD+70%
9.4
16.0
6M 2018 6M 2019
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Financial IndicatorsCAPEX
22
CAPEX, bn RSD +7%
17.2 18.4
6M 2018 6M 2019
CAPEX by segments
51%
34%
9%5%
0% 1%Exploration and productionBlock
Bottom of barrel Project
DWS Refining
DWS Sales and distribution
The rest of the Downstreamdivision
Corporate Centre
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Operational Efficiency Improvement MeasuresEffect on EBITDA, bn RSD
23
1.7
0.5
0.3
0.4
0.50.01 0.1
0.7
2.4
0.9
Exploration andproduction
Services Refining Sales anddistribution
Technicalservices
Corporatecentre
NIS 2019 Perventeddamage
Total NIS 2019 Total NIS 6M2019
Measures Pervented damage
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162
25
10
11
25
23
11
3
3
2
2
2
552
459
345
306
330
492
607
628
549
575
573
590
714
484
355
316
355
515
618
631
553
577
575
592
31.12.'09
31.12.'10
31.12.'11
31.12.'12
31.12.'13
31.12.'14
31.12.'15
31.12.'16
31.12.'17
31.12.'18
31.03.'19
30.06.'19
Letter of credit
Debt to banks
24
Debt to BanksMaturity and Currency Structure of Credit Portfolio
Debt to banks, mn EUR
+3%
Bank indebtedness, mn EUR
Debt structure:USD 0.5% EUR 99.1% Other 0.4%
193
207
22
36
197
75
140
176
33
36
359
252
323
270
133
417
467
453
547
572
570
584
553
459
345
305
330
492
607
629
549
575
573
590
31.12.'09
31.12.'10
31.12.'11
31.12.'12
31.12.'13
31.12.'14
31.12.'15
31.12.'16
30.12.'17
31.12.'18
31.03.'19
30.06.'19
up to 1 year
over 1 year
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Comparative analyses
25
EBITDA margin (%) EBITDA/FTE (thou. USD)* Daily volume (t/day)
Share of light products (%) UPS OPEX ($/boe)
37.8
24.4
13.5
12.6
11.8
20.0
74.1
38.2
19.5
10.1
7.2
29.88.7
7.8
6.9
6.2
6.1
5.0
6.8
11.7
8.5
6.8
5.8
Н/Д
8.2
Data obtained from 3m 2019 reports, except for NIS (6M 2019)*All data for 3M 2019
83.4
80.6
77.6
76.9
75.5
81.5
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Conclusion
26
Deacreased refining volume due to capital overhaul
The fall of oil price comparing to the firstsix months of 2018
Growth of Operating cash flow
Improvement of HSE indicators
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NIS.EU
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Disclaimer
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Information in this presentation contains a statements on uncertain future events. The statements about uncertain future events include statements that are not historical facts.statements in connection with the intent of the Company and NIS Group. beliefs or current expectations in connection with. among other things. performance results of the NISGroup. the financial situation and their liquidity management. prospects. growth. strategies and industrial branches in which the NIS Group operates. For the reasons which arerelated to the events and depend on circumstances that may but are not certain to take place in the future. the statements about uncertain future events by their nature involve risksand uncertainty. including but not limited to the risks and uncertainties that the Company and NIS Group have identified in other publicly available documents. The Company warnsthat there is no guarantee that the statements on uncertain future events will come true in the future and that the actual business results. the financial situation and the liquidity. aswell as the development of the industrial branch in which the Company and NIS Group operate. may significantly differ from those presented or reckoned by the statements aboutuncertain future events which are contained in this presentation. Additionally. and if the results of the business of the NIS Group. its financial condition and liquidity. as well as thedevelopment of industrial branch in which the Company and NIS Group operate are in accordance with the statements herein contained about uncertain future events. such resultsand the development are not indicative of the results and the development in the coming periods. The information contained in this presentation is given on the date of thispresentation and their changes are possible without prior notice.
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