04 Aug 2017
Adjusted net profit rose to €466 million
Higher refining margins and crude prices, as well as increased sales, improved Cepsa’s earnings
Lost Workday Injury Frequency (LWIF) was 0.67, 47% lower than in the same period a year ago
Cepsa’s adjusted net profit for the first half of 2017, excluding non-recurring items and calculating inventory changes at replacement cost (clean CCS), was €466 million, a figure significantly higher than the earnings in the same period a year ago.
Applying International Financial Reporting Standards (IFRS), which means calculating changes inventories at average unit cost, the cumulative net profit for the period was €412 million, 18% higher than in the same period last year.
Cepsa's integrated business model, present throughout the industry’s value chain, the recovery of crude prices which were exceptionally low in the first half of 2016, strong refining margins, economic growth combined with a once-again booming demand for fuel, and a robust performance of the petrochemical industry were key to the increase in Cepsa’s earnings.
In the area of safety, constant attention to operating in a safer working environment enabled us to reduce the accident rate to 0.67 days per million hours worked as measured by LWIF, 47% less than in Q1 2016.
Results per business area
|MILLIONS OF EUROS||2017||2016||Δ%|
|Exploration & Production||83||(19)||n.a|
|Refining & Marketing||321||196||64%|
|Gas and Electricity||21||22||-5%|
|Net profit on CCS basis*||466||230||103%|
|Inventory Valuation Adjustment||18||97||-81%|
|Net Profit IFRS||412||350||18%|
During the first half of the year, international benchmark Brent crude prices were $51.8/b vs. the $39.7/b of the previous year's first half, an increase of 30%.
Crude production amounted to 90,800 barrels a day, slightly lower than in the same period a year ago, with a total of 7.2 million barrels sold in the six months. Refining margins were healthy, mainly thanks to fuels and petrochemical products, with Cepsa’s refining margin indicator at US$7.20 a barrel, compared with US$5.50 a barrel the year before.
Over the six months 73.6 million barrels of crude oil were processed with a distillation- capacity utilization rate of 87% and the production of 10.3 million metric tons of petroleum derivatives.
During the first half we carried out planned stoppages for maintenance work on several units at the La Rábida, Gibraltar San Roque, and Asesa refineries (Asesa is an asphalt refinery owned with Repsol, 50%-50%). Thanks to the investments in energy efficiency, we continued to reduce CO2 emission rates in line with the annual reduction targets set by the company.
The company’s petrochemicals business recorded €60 million in profits after taxes with good sales performance from both LAB (linear alkyl benzene, a raw material used in the manufacture of biodegradable detergents), in which Cepsa is the world leader, and phenol/acetone (raw materials used in next-generation plastics).
Significant events in the second quarter:
- Annual production capacity of the Group’s Brazilian LAB plant was increased to 260,000 tons, strengthening our position as world leader in LAB production.
- Acquisition of 23 service stations, 20 of which are in the Madrid region. The acquired stations are large and located on main thoroughfares in the capital with access to major residential areas and national highways.
- Cepsa is celebrating its 30th anniversary in Algeria, a key country in the development of the company's crude oil and natural gas exploration & production activities as well as for gas transportation using the underwater Medgaz gas pipeline.
- After the high voltage power line was rebuilt, the Puente Mayorga Generación combined-cycle gas turbine station in San Roque started supplying the Spanish grid with electricity again
Cepsa is an energy group fully owned by the Mubadala Investment Company that employs close to 10,000 people and operates at every stage of the hydrocarbon value chain: exploration and production of oil and gas, refining, distribution and marketing of crude oil and natural gas derivatives, biofuels, co-generation and electricity sales.
Cepsa has developed an important chemicals division that is closely integrated with the refining business, and that produces and markets the raw materials for high value-added products, principally used to make next generation plastics and biodegradable detergents. Cepsa has a leading position in Spain and, through the progressive international expansion of its business, also operates in several continents and markets its products across the world.