Ina: Revenues of 11 billion kuna, net profit excluding one-off items of 457 million kuna

The oil company Ina achieved a net sales revenue of 11 billion kuna in the first nine months of this year, which is 26 percent less than in the same period last year, while the net profit excluding one-off items was 457 million kuna, which is one million kuna more than last year, according to the financial report published on Friday.

At the same time, the net profit attributable to the owner of the capital amounted to 324 million kuna, or 10 percent less than in the first nine months of 2015.

The 26 percent decline in net sales revenue is attributed, as stated in the report, to “lower Brent prices, an unfavorable refining environment, and lower production in the Exploration and Production and Refining and Marketing segments.”

“Ina’s results continue to grow quarter by quarter throughout 2016, although they are still lower than in the same period last year. However, considering that the achieved hydrocarbon price decreased by 27 percent compared to the first nine months of 2015, the 10 percent reduction in net profit represents a stable result given the current environment,” the company assesses.

In the first nine months of 2016, the EBITDA of the Ina Group excluding one-off items amounted to 1.57 billion kuna.

The overall result was influenced by one-off items related to severance payments, amounting to 281 million kuna (at the EBITDA level), primarily caused by the new operational retail model.

Additionally, the level of profit from core operations was negatively impacted by 133 million kuna in impairment of the Zagreb-1 drilling facility.

“Despite 26 percent lower revenues, the financial position of the company remains stable, with net debt and the debt-to-equity ratio during the first nine months of 2016 amounting to 3.1 billion kuna or 22.4 percent. This was achieved through savings in all segments amounting to about 1 billion kuna, which will successfully mitigate adverse external impacts by the end of the year,” the statement notes.

Capital investments of Ina reached 968 million kuna and are at the same level as last year. In addition to regular business projects, Ina invested in acquiring a stake in Energopetrol, now holding managerial control in the company, thereby adding value to the retail business, Ina notes.

“In the first nine months of this year, net profit excluding one-off items amounted to 457 million kuna, which is at the level of the same period last year. Our savings initiative began in the first quarter of 2016 and has ensured a stable financial position with a debt-to-equity ratio of 22 percent and enabled capital investments of nearly one billion kuna, at last year’s level,” emphasizes the CEO of Ina, Zoltan Aldott, in a comment on the nine-month results.

He adds that domestic oil production continues to grow, by 15 percent compared to the same period last year. Sales of derivatives are at last year’s level, and in some regional markets, growth is recorded. The acquisition of an additional ownership stake in Energopetrol has added value to the retail business, Aldott says.

“In a weak oil and gas environment with modest refining margins, a cautious approach to new investments and operational costs remains imperative. Although the financial position has significantly improved compared to previous years, it still requires management’s attention. Nevertheless, we continue preparations and investments necessary for the heavy residue processing facility at the Rijeka Oil Refinery, the largest single domestic investment by Ina ever, as well as one of the largest ever in Croatia,” concludes Aldott.

As noted in the report, the production segment of Exploration and Production remains the main cash generator, with total oil production increasing by 11 percent, compensating for the natural decline in gas production, mainly in the Adriatic.

In the first nine months of this year, the EBITDA of the Exploration and Production segment excluding one-off items reached 1.6 billion kuna, a decrease of 36 percent compared to the same period last year, mainly due to lower Brent prices and natural gas prices.

The report also states that the Refining and Marketing segment continues to operate in a somewhat less favorable environment, with the average refining margin nearly halved compared to the same period last year. However, the CCS operational result of the Refining and Marketing segment (including retail) has significantly improved, recording a loss of 37 million kuna, after last year’s loss of 207 million.