Motor oil will announce Q3:19 results today after market hours. A conference call will follow tomorrow at 17:30 GR-Time. Motor oil is expected to announce a sequentially improved quarter in terms of profitability as refining margins bounced from 5-year low levels. However, a scheduled maintenance trimmed refinery performance as the company proceeded to FCC maintenance in September. In more details:
§ Trading assisted in higher volumes offsetting refinery shutdown in September and slower operating activity. Recall that in Q2 CC management guided for a maintenance plan for the FCC, which would start at the beginning of September and finish at the beginning of October.
- MOH said that this would have been a proper planned maintenance shutdown of the FCC. Management also said that along with the FCC maintenance MOH is planning to increase the capacity adding volume and quality improvement in the upcoming quarters. On Q3 sales this translated to €1.95bn (-14.5% vs Q3:19) and 3,680 thousand MT in refining production.
§ Refining margin is forecasted at €111,0 (-29.4% y-o-y) while marketing is seen up 8.6% y-o-y at €32.7m. On adjusted basis EBITDA is expected at 146.5m (-22.9% y-o-y)
§ Further down accounting for €2m losses from associates, €33m depreciation charges, €9m FX costs and 28% tax rate we expect adjusted net earnings in the tune of €73.8m 34.2% down vs Q3:19.
§ Inventory losses in the quarter are estimated at €21m (vs zero inventory gains last year) bringing reported EBITDA at €146.5m and reported net income at €58.7m.
§ Note that BOD decided on the distribution of a gross interim FY’19 dividend of €0.35/share. Dividend ex-date is set on Tuesday December 10th while payment to be concluded on December 17th.
§ Focus in the conference call in refinery environment outlook after the implementation of IMO 2020 and potentially some color for the intentions about the 5-year Eurobond expiring in 2022. Motor oil trades at 9x 2019 earnings and 5.1x EV/EBITDA with a dividend yield of 6%.
The following table summarize our estimates:
Motor oil | 2018 | 2019 | Y-o-Y | 2018 | 2019 | Y-o-Y |
EUR mn. | 9M | 9M Est. | (%) | Q3 | Q3 Est. | (%) |
Volumes (MTx1000) | 10,530 | 10,552 | 0.2% | 3,545 | 3,680 | 3.8% |
Sales | 6,936.9 | 6,937 | 0.0% | 2,280.0 | 1,950.0 | -14.5% |
EBITDA | 476.9 | 417.2 | -12.5% | 189.9 | 125.5 | -33.9% |
Adjusted EBITDA | 455.9 | 377.2 | -17.3% | 189.9 | 146.5 | -22.9% |
of Which Refining | 378.9 | 286.3 | -24.4% | 157.2 | 111.0 | -29.4% |
of which Marketing & other | 77.0 | 90.9 | 18.1% | 32.7 | 35.5 | 8.6% |
Net Income | 260.8 | 207.2 | -20.6% | 112.1 | 58.7 | -47.7% |
Adjusted Net Income | 246.0 | 178.9 | -27.3% | 112.2 | 73.8 | -34.2% |