Helleniq Energy Holdings S.a. · ATHEX:ELPE
Helleniq Energy — Hellenic Petroleum — Investor Day (November 2019)
64 slides from Helleniq Energy's investor day presentation, November 2019
Slide 1: Capital Markets Day
Capital Markets Day November 2019
Slide 2: Today's Agenda
Today’s Agenda Topic Presenter Introduction & Strategy Update Andreas Shiamishis Our Value Proposition Andreas Shiamishis Strategic Business Units – Refining, Supply & Trading Dinos Panas Strategic Business Units – Petrochemicals Dinos Panas Q&A Session #1 Strategic Business Units – Marketing Andrea
Slide 3: Introduction & Strategy Update
01 Introduction & Strategy Update
Slide 4: Hellenic Petroleum at a Glance
Hellenic Petroleum at a Glance 344kbpd 2,029 Service Stations1 Capacity1 c.60% >30% Fuels Marketing Market Wholesale Market Share in Greece2 Operations Share in Greece2 Financial 11.1% €730m €572m FY 2018 FY 2018 ROACE3 FY 2018 FCF4 Adj. EBITDA 150% €229m Last 3Y TSR1 FY 2018 Dividends Shareholder R
Slide 5: Southeast Europe's Leading Downstream Group with Presence along the Energy Value Chain
Southeast Europe’s Leading Downstream Group with Presence along the Energy Value Chain POIH1 HRADF2 Free Float 45.5% 35.5% 19.0% c. Av. 2016-9M LTM 2019 EBITDA, € M Wholesale, Refining 278 Petrochemicals 98 253 Marketing 106 New Businesses Supply & Trading 344kbpd 240kt 16.5MT Domestic Marketing Pow
Slide 6: Integrated Business Model with Trading Operations Complementing Our Refining Performance
Integrated Business Model with Trading Operations Complementing Our Refining Performance Refining Trading / Wholesale Marketing (Med Benchmark + Overperformance) (Platt’s + Sales Premia) 45% Crude Highly High Value Supply Complex Product Domestic ground fuels market Flexibility Asset Base Yield1 4.5
Slide 7: Growth Over 10 Years from Simple Refiner to Leading Regional Energy Player
Growth Over 10 Years from Simple Refiner to Leading Regional Energy Player Pre-2007 HELPE 2007-2018 Strategy 2019 HELPE Elefsina Refinery Upgrade Assets (€1.4bn Capex) 12.0 ▪ State-of-the-art, high complexity Low complexity 1.5 refining system refineries ▪ Well placed to benefit from IMO NCI¹ NCI¹ 2
Slide 8: HELPE's Vision: Operating Levers to Grow through the Energy Transition
HELPE’s Vision Operating Levers to Grow through the Energy Transition Facilitate the energy 1 transition in the Eastern Improve Core …through operational excellence, digitization Mediterranean by Business… and energy efficiency maximizing returns in our core business and 2 …benefiting from prior inv
Slide 9: Target: Evolve to a >EUR 1bn Sustainable EBITDA Business
Target: Evolve to a >EUR 1bn Sustainable EBITDA Business EBITDA Medium Term Projections, € M +€250 – 300m EBITDA ~€700m Capex >1,000 ~730 1 2 3 Average Improve Sustain Core & Improve Grow Deliver Growth DiversifyDevelop & Create Opp. Medium Term 2016-LTM 9M 2019¹ Business Core Business New Businesse
Slide 10: Strong Track Record in Reducing Environmental Footprint
Strong Track Record in Reducing Environmental Footprint, Accelerating Actions for Further Improvement Environmental Record Reducing carbon footprint and supply of low carbon energy, low emissions solutions targeting 5% reduction of CO2 emissions in the next 5 years through energy efficiency in our
Slide 11: Sustainable Development Embedded in Our Strategy through CSR and Health & Safety
Sustainable Development Is Embedded in Our Strategy through Our CSR Focus and Heath & Safety Commitment Society Health & Safety ▪ Total investments in CSR (2018): €7m ▪ 60% reduction in Lost Workday Injuries in comparison to last year ▪ Our goals: ▪ All Injury Frequency (AIF) Index: ̶ Society: suppo
Slide 12: Aligning Our Corporate Governance to Market Best Practices
Aligning Our Corporate Governance to Market Best Practices Actions To Further Align with Best Practices Our Corporate Governance Today and New Legislation Board of Directors: ▪ Alignment with new corporate law enhancing Related Party Transactions review and ▪ 13 members (2 executive and 11 non- disc
Slide 13: Organizational Structure Designed to Fit HELPE's Strategy
Organizational Structure Designed to Fit HELPE’s Strategy Organizational Structure of Hellenic Petroleum Board of Directors Audit Committee Chairman of the BoD Internal Audit Group CEO Group Corporate Functions Strategic Planning & New Supply & Trading Financial Services Activities Refining Natural
Slide 14: Distribution Policy Update
Distribution Policy Update: Consistent Cash Generation Supporting Competitive Shareholder Returns EPS and DPS 2016-2018 , €/Share Dividend Policy ▪ Target to distribute 35-50% of recurring Clean EPS Reported EPS DPS Extraordinary DPS adjusted NI in the form of dividend ▪ Delivery through two semi-an
Slide 15: Our Value Proposition
02 Our Value Proposition
Slide 16: Our Value Proposition Summarized in Key Themes
Our Value Proposition Summarized in 6 Key Themes High Complexity Refining 1 System, Well Positioned for IMO 9.3 NCI >50% 2018 Middle Distillate Yield 2020 Ability to commercialize Access to Advantaged Location for Both 2 Supply and Demand >50% of sales into international markets 20+ crude grades Lea
Slide 17: High Complexity Refining System, Well Positioned for IMO 2020
1 High Complexity Refining System, Well Positioned for IMO 2020 A Complex, Integrated and Flexible System Group Refining System Regional Refining Landscape (2017)2 Total System Complexity: NCI 9.31 / 344kbpd 12 Elefsina CCR VDU Helpe HELPE 10 Aspropyrgos System Thessaloniki Nelson Complexity Index 4
Slide 18: IMO / MARPOL Bunkering Regulation is a Key Milestone for Refining
1 High Complexity Refining System, Well Positioned for IMO 2020 IMO / MARPOL Bunkering Regulation is a Key Milestone for the Refining Industry Expected Impact on Refining Industry Estimated Bunkering Fuel Evolution (mbpd) ▪ High level of compliance anticipated 5.26 5.26 ▪ 2-3mbpd (>20% of global HSF
Slide 19: No Significant Capex and Limited Crude Diet Changes Required
1 High Complexity Refining System, Well Positioned for IMO 2020 No Significant Capex and Limited Crude Diet Changes Required Elefsina Thessaloniki2 Aspropyrgos Group Volume changes based on preliminary market expectations 16% 22% 64% 74% 100% 100% 88% 100% 100% Feed 62% 9% 21% 9% 27% 5% 3% 2018 2020
Slide 20: Advantaged Location for Both Supply and Demand: Supply Optionality
2 Advantaged Location for Both Supply and Demand Extensive Supply-Side Optionality 2018 Crude Imports into Med Region by Source, kpbd HELPE’s Refineries 140 722 Europe FSU1 445 >40 Americas Crudes tested 6 MN tons tank- farms c. 3.6 M cbm crude storage capacity 355 Black Sea 9M LTM 2019 Crude Split
Slide 21: Product Export into Distillate-Short Eastern Med Markets
2 Advantaged Location for Both Supply and Demand Product Export into Distillate-Short Eastern Med Markets 2025 Diesel/Gasoil Surplus/Deficit, kbpd Total Med Diesel/Gasoil Diesel/Gasoil Diesel/Gasoil Surplus (2025) Deficit (2025) Balance 2025: France -803kbpd Slovenia -123 Serbia1 -33 -2 -13 Croatia
Slide 22: Increasing Relevance of Export Sales over Time
2 Advantaged Location for Both Supply and Demand Increasing Relevance of Export Sales over Time HELPE Sales Volume Breakdown, Mtpa 2018A Export Sales Breakdown by Country 16.5 18% 16.1 15.6 34% 11% 14.1 13.4 9% 12.5 12.5 6% 8% +7.0 6% 8% 11.3 vs. 2011 Lebanon Gibraltar Turkey RNM 8.4 9.4 2.4 4.5 8.6
Slide 23: Leading Position in Domestic Fuels Market with Regional Footprint
3 Leading Fuels Marketing Business Leading Position in Domestic Fuels Market with Footprint across the Broader Region Geographical Footprint 2018 Domestic Sales Volumes, kt #1 in Greece with a ~30%1 MS, with strong position >30% MS across retail, commercial, aviation in the regional markets and bunk
Slide 24: Marketing Business Supported by Pipeline Connectivity and Storage Capacity
3 Leading Fuels Marketing Business Marketing Business Supported by Pipeline Connectivity and Significant Storage Capacity HELPE Storage Network Key Product Storage Capacity, M cbm Pipeline Fuel Terminals Airport Depot and 0.7 4.9 into Plane Facilities 0.4 Refinery LPG Bottling Plants 3.8 Serbia Bulg
Slide 25: Vertical Integration Supports Outperformance vs Benchmark Margins
4 Integrated and Diversified Business Model Vertical Integration Supports Outperformance vs Benchmark Margins through Cycle Refining, Wholesale and Trading Gross Realized Margin1, $/bbl Trading Overperformance HELPE system benchmark (on feed) 15 14 13 12.0 12 10.9 10.9 11 10.5 10.3 10.6 10.2 10.1 9.
Slide 26: Earnings Diversification Provides Resilience through the Cycle
4 Integrated and Diversified Business Model Earnings Diversification Provides Resilience through the Cycle 2018 Adj. EBITDA Breakdown, € M No/low dependency on benchmark refining margin Share of Total EBITDA 75% 730 182 115 -10 433 250 93 100 Fuels Petrochemicals Wholesale Others1 Non-Refining GPW B
Slide 27: Profitable, Cash-Generative and Resilient Financial Profile
5 Profitable, Cash-Generative and Resilient Financial Profile, with Commitment to Return Excess Cash Flow to Shareholders 1.33 1.11 1.11 1.15 1.18 1.13 EUR/USD 6.0 5.2 4.5 4.5 758 834 3.5 2.8 731 730 610 Adjusted 417 EBITDA (€M) 2014 2015 2016 2017 2018 LTM 9M 2019 Refining, Supply & Trading Petroch
Slide 28: Multiple Identified Levers to Enhance Competitiveness and Growth
6 Multiple Identified Levers to Enhance Competitiveness and Growth Competitiveness Improvement, IMO Driven Uplift and New Growth Platform Will Deliver EBITDA >€1.0bn from 2025 EBITDA, Capex and Cash Flow Projections, € M 10-15% 45-55% 30-40% ~700 - Growth Capex % Split >1,000 ~730 Average 1Sustain &
Slide 29: Ability to Implement Growth Capex Without Constraining Distribution Capacity
6 Multiple Identified Levers to Enhance Competitiveness and Growth Ability to Implement Growth Capex Without Constraining Distribution Capacity Short Term Free Cash Flow Estimates1, € M Range Based on Market Conditions 650-900 (130) ~730 (80-130) (80-100) ~350-600 (100-150) ~250-450 (150-200) ~50-30
Slide 30: Specific Initiatives to Deliver Our Strategic Priorities
6 Multiple Identified Levers to Enhance Competitiveness and Growth Specific Initiatives to Deliver Our Strategic Priorities… Our Business Activities Our Objectives 1 2 3 Improve Core Business Grow Core Business Develop New Businesses Increase competitiveness by operational excellence, Selective inve
Slide 31: Levers Distributed across Our Business Activities
6 Multiple Identified Levers to Enhance Competitiveness and Growth …Clearly Distributed across Our Business Activities EBITDA and Capex Projections, € M 1 Improve Core Business >60 identified initiatives in support of the strategy 2 Grow Core Business 3 Develop New >1,000 Businesses n/a Benefits Bus
Slide 32: Our Strategic Business Units
03 Our Strategic Business Units
Slide 33: HELPE Business Unit Overview
HELPE Business Unit Overview Adj. EBITDA Contribution 63% 15% 19% 3% (9M LTM 2019)1 A B C D Refining, Supply & Petrochemicals Marketing New Businesses Trading Capacity: 344kbpd Capacity (PP): 240kt Natural Gas, Domestic Marketing NCI: 9.3 Electricity and RES Total sales at 1,722 pet
Slide 34: Strategic Business Units: Refining, Supply & Trading
3.A Strategic Business Units: Refining, Supply & Trading
Slide 35: Highly Complex Refining Supply & Trading System
Highly Complex Refining Supply & Trading System Our Refining Platform Integration of Our Refining Platform ▪ Interconnected regional platform: CCR VDU – Elefsina: high complexity, with new hydrocracker and flexicoker Thessaloniki 90kbpd – Aspropyrgos: large complex site, strategically Naphtha, SRAR,
Slide 36: Capitalise on Refinery Configuration for IMO Driven Uplift
Capitalise on Refinery Configuration for IMO Driven Uplift We Have Tested the Expected Benefit from the IMO Market Conditions under 3 Scenarios Crude Slate and Product Yield Evolution Impact - + Crude Slate 12% Refineries Utilization 36% High MGO HSFO produced in Refining Margins excess with pricing
Slide 37: Competitiveness Improvement Initiatives to Sustain and Improve Refining Performance
Competitiveness Improvement Initiatives to Sustain and Improve Our Refining Performance Description EBITDA Uplift, € M Extract value / leverage refining assets, with selected investments: 70-100 ▪ Debottleneck units (e.g. Flexicoker and cogeneration for 130-175 FXK gas product) 60-75 ▪ New conversio
Slide 38: Strategic Business Units: Petrochemicals
3.B Strategic Business Units: Petrochemicals
Slide 39: Our Petrochemicals Business is Integrated and Well Positioned for Exports
Our Petrochemicals Business is Integrated and Well Positioned to Capture Export Opportunities Production and marketing of polypropylene (PP), BOPP film, polymers and solvents through the further processing of refinery production Petrochemical Value Chain Domestic and c.10% International Market 80-85
Slide 40: Incremental Investment to Expand and Further Integrate PP Capacity
Incremental Investment to Expand and Further Integrate PP Capacity for Full Value Chain Margin Capture Approach Thessaloniki PP Capacity and Feed Coverage, kmt ▪ Thessaloniki PP plant feedstock covered by a mix of integrated propylene and imports 50 100 140 - 150 ▪ Value generated through vertical 7
Slide 41: Strategic Business Units: Marketing
3.C Strategic Business Units: Marketing
Slide 42: Leading Domestic Market Position through Vertical Integration and Logistics
Leading Domestic Market Position in Refining through Vertical Integration and Competitive Logistics Assets Greek Refining Capacity: 25MT Volume sold by HELPE 16MT Other Greek Players 60-65% 30-35% 9.5MT 7.0MT 3rd party Imports Domestic market: 12.2MT Independent 0-10% 3rd Party HELPE Group HELPE Gro
Slide 43: Domestic Market Leadership with Strong Regional Footprint
Domestic Market Leadership with Strong Regional Footprint Geographical Footprint Domestic Sales Volumes, kt #1 in Greece with a ~30%1 MS #1 across all product channels 4,069 3,902 No. Stations 2 133 3,495 3,538 136 Greece 1,722 455 145 International 307 157 152 489 502 385 421 56 Total 2,029 864 723
Slide 44: Optimization of Current Business Model to Drive Profitability
Optimization of Current Business Model will Drive Profitability while Considering New Growth Opportunities Impact, € M Initiatives EBITDA Timeline • Agile, digital/automation of business processes • Lean operations, digital / automation of manual tasks, Short term Costs procurement optimization 2019
Slide 45: New Businesses: Renewables
3.D New Businesses: Renewables
Slide 46: Material Footprint in Renewables Will Create Significant Value
Material Footprint in the Renewables Space will Create Significant Value for the Group Strategic Hedge • Hedging of both short-term Financial Value (CO2 prices) and long-term • Competitive returns on (fossil fuel decline) risks an equity basis with additional benefit Return Risk Group Branding poten
Slide 47: Energy Mix Rapidly Shifting towards Renewables
The Energy Mix is Rapidly Shifting towards Renewables with HELPE Preparing to Capitalize on this Shift Installed Power Capacity Evolution, Europe, HELPE Is Developing a Strong …With Phase I Expected To Have GW Renewables Pipeline… Substantial Financial Impact 1,144 1,212 1,050 1,075 4% ~26 MW € mill
Slide 48: New Businesses: Power & Gas
3.E New Businesses: Power & Gas
Slide 49: Significant Position in Power & Gas Market through Elpedison and DEPA
HELPE has a Significant Position in the Power & Gas Market through its Two Associates: Elpedison and DEPA 50% 35% 22.6m 810MW 150m 2.7bcm € in EBITDA in 2018 of installed capacity € in EBITDA in 2018 sales in 2018 (w/o through 2 CCGT plants auctions) 3.8% c.150,000 58% c.250,000 Market share in Gree
Slide 50: ELPEDISON Plan to Take Advantage of Opportunities and Grow
On the Back of a Changing Market, ELPEDISON has a Robust Plan to Taking Advantage of Opportunities and Grow The Greek Market Is at Turning Point with Significant Potential Going Forward Elpedison Has a Strong Pipeline of Initiatives Generation ▪ Efficiency upgrade of Thessaloniki plant ▪ Revision of
Slide 51: Greek Natural Gas Market Projected to Grow; DEPA Privatization
The Greek Natural Gas Market is Projected to Grow Rapidly; Simultaneously, DEPA is Undergoing a Restructuring and Privatization Process Announced Legislation Provides for The Greek Gas Market is … And Projected to Grow Restructuring and Privatization of Significantly Underpenetrated… Rapidly in the
Slide 52: New Business: E&P
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Slide 53: Diversified E&P Offshore and Onshore Portfolio in Greece
We Hold a Diversified E&P Offshore and Onshore Portfolio in Greece with Experienced Partners Blocks Type Ownership Status Operational Footprint 1 Patraikos Gulf ▪ Offshore ▪ HELPE1 (50%) ▪ Leads and prospects mapped with 3D ▪ Lease ▪ Edison (50%) seismic ▪ One committed exploration well in 2020 2 Se
Slide 54: Financial Profile
_ HELLENIC - PETROLEUM
Slide 55: EBITDA and Free Cash Flow Evolution
EBITDA and Free Cash Flow Evolution Strong Performance Post Investment Plan and Transformation, Consistent with Industry Dynamics Adjusted EBITDA, € M FX Rate, 1.11 1.11 1.15 1.18 1.13 EUR/USD Benchmark, 6.0 4.5 5.2 4.5 3.5 USD/bbl Utilization 92% 105% 104% 110% 105% Rate1, % 14.1 15.6 15.9 16.5 15.
Slide 56: Key Drivers for Group EBITDA
Key Drivers for Group EBITDA Sensitivity on Key Group EBITDA Drivers , € M Key Comments ▪ Illustrative EBITDA impact from change in benchmark 2016-18 Adj. 760 margin, utilization or EBITDA exchange rate ▪ Based on normal operations throughput of Refining 110-120 mmbbl and 2018 -$1.0/bbl -100 100 +$1
Slide 57: 3Q19 Key Highlights
3Q19 KEY HIGHLIGHTS Improved performance and results vs 1H19 ▪ Improved environment and performance vs 1H, 3Q19 Adj. EBITDA at €201m: – Improved refining environment, albeit weaker y-o-y; stronger benchmark margins q-o-q, especially for complex refiners, crude supply normalized – Stable refineries o
Slide 58: 3Q19 Group Key Financials
3Q19 Group Key Financials Refining Sales Volumes (M MT) FY LTM 3Q 9M 2018 9M €m IFRS 2018 2019 % 2018 2019 % (1)% Income Statement 4.1 4.0 16,490 15,864 Sales Volume (MT'000) - Refining 4,087 4,037 (1)% 12,354 11,727 (5)% 4,955 4,986 Sales Volume (MT'000) - Marketing 1,478 1,445 (2)% 3,714 3,745 1
Slide 59: Refining Industry Environment
Refining Industry Environment IMO Implications on Product Cracks Become More Visible as Complex Benchmark Margins Recover vs. H1 2019 Lows Med Benchmark Margins ($/bbl) Q4 2019 10.0 120 7.0 90 4.0 1.0 60 (2.0) 30 (5.0) (8.0) 0 Jan-13 Sep-13 May-14 Jan-15 Sep-15 May-16 Jan-17 Sep-17 May-18 Jan-19 Oct
Slide 60: New Eurobond Issue
New Eurobond Issue Successful issue of 5-year 2% €500m Eurobond priced 27 September 2019; 50% related to 4,875% 2021 bonds tender offer and 50% to new money New Eurobond Demand by Geography for New Eurobond Money ▪ €500m at a yield of 2.125% priced on 27 September ▪ Improved terms & conditions vs pr
Slide 61: Credit Facilities – Liquidity
Credit Facilities – Liquidity Reduction of Finance Cost Accelerates Following the Repayment of the €325m 2019 Bond; New Issue Improves Maturity Profile and Reduces Costs Further Committed Facilities Maturity Profile1, € M 1,000 EIB Debt capital markets 800 Banks 600 400 200 0 2019 2020 2021 2022 202
Slide 62: Glossary (1/2)
Glossary (1/2) Reported EBITDA adjusted by inventory effect (impact of change of crude price on inventories and on the value of products sold during the Adjusted EBITDA related period) and other one-off non recurring items BBL Barrel BCM Billion Cubic Metres BPD Barrels per Day BOPP Biaxially Orient
Slide 63: Glossary (2/2)
Glossary (2/2) MHU Hydrogen Manufacturing Unit MOGAS Motor Gasoline MS Middle Sulfur MT Million Tonnes MW Megawatt NCI Nelson Complexity Index NOC National Oil Companies NOx Nitrogen Oxide OPEX Operating Expenses OTC Over the Counter Petchem Petrochemical PM Particulate Matter PP Polypropylene PPC P
Slide 64: Disclaimer
Disclaimer HELLENIC PETROLEUM do not in general publish forecasts regarding their future financial results. The financial forecasts contained in this document are based on a series of assumptions, which are subject to the occurrence of events that can neither be reasonably foreseen by HELLENIC PETRO