Cepsa reports Clean CCS EBITDA of €633 million in the first half of 2020

30 Jul 2020

      • Cepsa posted Clean CCS EBITDA of €633 million for the first half of 2020, down 37% YoY mainly as a result of the impact of Covid-19 on markets and demand, affecting the Upstream, Refining and Marketing businesses, especially during the second quarter, offset by strong performance in Petrochemicals and cost savings.
      • Cash flow from operations1 for the first half of 2020 was €439 million, slipping 46% YoY, with all four businesses generating positive cash flow during the period.
      • Clean CCS Net Income was negative €8 million for the six-month period ended June 30, 2020. The sharp decrease in crude oil prices caused by the Covid-19 pandemic has impacted the company’s inventory valuation, resulting in a non-cash effect of negative €464 million. In addition, Cepsa revised its long-term price forecasts, which triggered non-cash asset impairments of upstream assets of €331 million. As a result, IFRS Net Income for the first half of 2020 stood at negative €841 million compared to €273 during the same period of 2019.
      • Following the onset of the Covid-19 pandemic, the priority of the company has been to protect the health and safety of all of its employees, customers and suppliers and to continue with its operations as an essential energy provider, ensuring the supply of energy products and services to its customers and society at large.
      • In response to the decline in crude oil prices and outbreak of the Covid-19 pandemic, the company launched a Contingency Plan comprising a number of initiatives to preserve cash flow generation, initially expected to deliver savings of €310 million. These savings have now been revised upwards to €500 million and include €120 million in operating cost reductions and €380 million in capex cuts. As of June, €275 million in savings have been captured. In addition, the company will continue optimizing its working capital
      • The company’s balance sheet remains robust, with liquidity2 of €4.5 billion3 covering 4.5 years of debt maturities and a Net Debt to LTM EBITDA ratio of 2.0x4. So far this year, the company extended the average maturity of its debt by tapping debt capital markets twice, with two €500 million bond issues, which achieved large oversubscriptions. In addition, all three rating agencies affirmed Cepsa’s investment grade ratings in 2Q 2020
      • With its new organisational structure in place, Cepsa is currently redefining its strategy to meet the challenges of the energy transition and has created a new ESG cross-functional division reporting directly to the company’s CEO, which is already working to define specific short and long-term targets in this field

1. Before working capital.
2. Defined as cash on balance sheet plus available committed credit facilities.
3. Pro-forma for the €500 million bond issued in July 2020.
4. Excludes the impact of IFRS16.

Philippe Boisseau, Cepsa CEO:

Cepsa’s half year 2020 results have been affected by the significant drop in crude oil prices, the low refining margin environment and the decrease in oil product demand as a result of the Covid-19 pandemic and lockdown measures imposed in Spain and Portugal.

To address this challenging market environment, we implemented a Contingency Plan which comprises a broad range of initiatives aimed at preserving the solidity of the business and the company’s cash flow generation. Our integrated business model, which has proven to be strongly resilient in these unprecedented circumstances, provides us with considerable flexibility to implement a number of operating cost and capex reduction initiatives, which add up to more than €500 million in savings across all our different business units and functional areas, in order to adapt to a constantly changing market landscape. As we move into the second half of the year, we will continue to work hard to achieve these savings and rigorously manage and optimize the company's working capital.

As of June1st, we have a new organisational structure in place with three newly hired Executive VPs and a restructured Executive Committee poised to meet the challenges of the energy transition, drive Cepsa's international growth, and expand each of our businesses as well as develop new ones. To achieve these goals, we will optimize our integrated business model, enhance our competitiveness and continue to pursue operational excellence”.



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