Oil Refineries Announces Results For Second Quarter 2013 Company announces improvements across all key parameters, significant improvements in the Polymers Sector, and full supply of its natural gas needs

HAIFA, Israel, Aug. 27, 2013 /PRNewswire/ -- Oil Refineries Ltd. (TASE: ORL.TA) (hereinafter "the Group," "ORL"), Israel's largest integrated refining and petrochemical group, announced today its financial results for the second quarter ending June 30, 2013.  Results are reported in US Dollars and under International Financial Reporting Standards (IFRS). 

2013 SECOND QUARTER CONSOLIDATED RESULTS

  • Revenues totaled $2.47 billion compared with $2.45 billion in the second quarter last year.
  • Adjusted operating income totaled $16 million compared with an operating loss of $29 million in the same quarter last year. 
  • Adjusted EBITDA totaled $54 million compared with negative $2 million in the same quarter last year
  • The Company reduced its adjusted second quarter 2013 net loss to $31 million compared with a net loss of $46 million in the second quarter last year. This is despite a malfunction in one of its facilities that cost the Company $15 million.
  • Cash flow from operating activities totaled $55 million.
  • Since the beginning of this year the Company paid of $158 million of its debt.

Mr. Arik Yaari, CEO of Oil Refineries:  "In the first half of 2013 the Company successfully achieved key elements of its strategic plan. The hydrocracker facility was successfully launched and began operating.  Likewise, during the second quarter of 2013 the natural gas supply met 100% of the Company's needs.  This positively impacted the Company's results while minimizing the Company's environmental footprint.  Additionally, significant advances were made in ORL's environmental initiatives. 

RESULTS ACCORDING TO SECTORS:

Refining

  • The Company continues to generate higher refining margins than the other comparable refiners in the area. The contribution of the hydrocracker since the first quarter of 2013, and the full supply of natural gas, which began at the start of the second quarter of 2013, had a positive effect on the Company's ability to demonstrate higher refining margins than the benchmark average.
  • In the second quarter of 2013, the adjusted refining margin totaled $4.2 per barrel, as compared with the average Reuter's quoted Mediterranean Ural Cracking Margin of $2.5 per barrel. In the second quarter of 2012, the adjusted refining margin totaled $6.1 per barrel as compared with the Reuter's quoted Mediterranean Ural Cracking Margin of $5.6 per barrel.
  • In the first half of 2013, the adjusted refining margin totaled $5.3 per barrel, as compared with the average Reuter's quoted Mediterranean Ural Cracking Margin of $2.6 per barrel. In the first half of 2012, the adjusted refining margin totaled $5.1 per barrel as compared with the Reuter's quoted Mediterranean Ural Cracking Margin of $4.3 per barrel.

Polymers

  • The improvement in polymers can be attributed to improved polymer spreads over Naphtha and the Company's transition to natural gas use.
  • Operating income for the second quarter totaled $14 million, compared with an operating loss of $49 million in the corresponding quarter last year.  For the first half of 2013 operating income totaled $16 million, compared with an operating loss of $53 million in the corresponding period last year.
  • EBITDA for the second quarter totaled $26 million, compare with a negative EBITDA of $40 million in the corresponding quarter last year.  EBITDA in the first half of 2013 totaled $39 million, compared with a negative EBITDA of $31 million in the corresponding period last year. 

Aromatics and Oils

  • Operating income for the second quarter totaled $2 million, compared with an operating loss of $18 million in the corresponding quarter last year.  For the first half of 2013 operating income totaled $7 million, compared with an operating loss of $7 million in the corresponding period last year.
  • EBITDA for the second quarter totaled $4 million, compare with a negative EBITDA of $16 million in the corresponding quarter last year.  EBITDA in the first half of 2013 totaled $12 million, compared with a negative EBITDA of $2 million in the corresponding period last year. 

Environmental & Social Responsibility

  • Environmental Safety and Security: ORL prioritized its adherence to compliance with applicable environmental and safety standards, keeping close contact with the relevant authorities in this area. ORL produces products according to the EURO 5 standard and thus contributes to improving the environment in Israel.
  • Since the beginning of the second quarter the Company significantly reduced its air emissions, attributable to the full supply of natural gas required by the Company's activities.  Likewise, ORL completed during the second quarter the cleaning of most of the sludge accumulated over the decades, from when the Company was still government owned.

SECOND QUARTER RESULTS 2013 ($ millions)

Adjusted Operating Income by Sector


H1 '13

H1 '12

Q2 '13

Q2 '12

Refining & Trade

43

40

3

30

Polymers

16

(53)

14

(49)

Aromatics & Lube Oils

7

(7)

2

(18)

Consolidation diff.

3

1

(3)

8

Total

69

(19)

16

(29)

EBITDA by Sector


H1 '13

H1 '12

Q2 '13

Q2 '12

Refining & Trade

89

72

27

46

Polymers

39

(31)

26

(40)

Aromatics & Lube Oils

12

(2)

4

(16)

Consolidation diff.

3

1

(3)

8

Total

143

40

54

(2)

Conference Call

The conference call will take place at 14:00 UK (9:00 ET, 16:00 Israel time). On the call, management will review and discuss the second quarter 2013 financial results and will be available to answer questions.

To participate, please call one of the following teleconferencing numbers.  Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

US Dial-in Numbers:     1-888-668-9141
UK Dial-in Number:     0-800-917-5108
Israel Dial-in Number:      03-918-0699
International Dial-in Number:     +972-3-918-0699

at: 14:00 UK Time, 9:00 ET, 6:00 PT, 16:00 Israel time.  A replay of the call will be available after the call on the Company's website at www.orl.co.il.

The conference call will be accompanied by a presentation available for download from the Company's website, www.orl.co.il, under investor relations.

Oil Refineries' earnings press release and financial statements will be available on the Company's website – www.orl.co.il for the call. 

About Oil Refineries Ltd.
Oil Refineries Ltd. (ORL), located in the bay area of the city of Haifa, operates Israel's largest integrated refining and petrochemical group. It is one of the leading refineries in the Eastern Mediterranean area and integrates, on-site, petrochemical businesses. ORL runs sophisticated and state-of-the-art industrial facilities with a refining capacity of 9.8 million tons of crude oil per year and a Nelson Complexity Index of 9, providing a variety of quality products used in industrial operation, transportation, private consumption, agriculture and infrastructure. Besides production of fuels, the company produces in its wholly owned subsidiaries Polymers (through Carmel Olefins Ltd), Aromatics (through Gadiv Petrochemical Industries Ltd), and Lube-Oils (through Haifa Basic Oils Ltd). The Company's shares are listed on the Tel Aviv Stock Exchange under the ticker ORL. For additional information please visit www.orl.co.il.

ORL is controlled by the Israel Corporation Ltd. and Israel Petrochemical Enterprises Ltd., both public companies whose shares are traded on the Tel Aviv Stock Exchange.

The above noted in this release includes forward-looking statements based on Company data, as well as Company plans and estimations based on this data. The activity, results and other data may be substantially different in reality given uncertainty and various risks, including those discussed under risk factors in the Company's financial statements and Director's report

Company Contact:
Rony Solonicof
Chief Economist and Head of Investor Relations
Tel. 972 4 878 8152
Contact IREn@orl.co.il

Investor Relations Contact:
Ehud Helft / Porat Saar
CCG Israel
Tel. (US) 1 646 233 2161 / (Int.) 972 52 776 3687
info@ccgisrael.com

 

Condensed Consolidated Interim Statement of Financial Position

USD thousands






June 30, 2013

June 30, 2012

December 31, 2012


(Unaudited)

(Audited)

Current assets




Cash and cash equivalents

119,041

205,421

256,521

Deposits

6,606

 12,550(*)

12,647

Trade receivables

721,462

724,586

721,601

Other receivables

73,456

121,927

88,727

Financial derivatives

41,412

46,504

38,670

Investments in financial assets at fair value through profit or loss

--

3,281

--

Inventory

804,083

949,138

1,049,037

Current tax assets

813

3,158

388

Total current assets

1,766,873

2,066,565

2,167,591





Non-current assets




Investments in equity-accounted investees

4,681

4,648

4,557

Investments in financial assets at fair value through other comprehensive income

2,547

5,905

5,584

Loan to Haifa Early Pensions Ltd.

66,394

63,417

68,445

Long term loans and debit balances

80,784

 52,066(*)

83,374

Financial derivatives

50,627

108,315

103,596

Employee benefit assets, net

9,577

5,920

7,374

Deferred tax assets, net

40,520

4,699

34,451

Property, plant and equipment, net

2,406,405

2,341,641

2,419,231

Intangible assets, net

45,860

58,257

51,582

Deferred expenses, net

2,362

4,137

1,861





Total non-current assets

2,709,757

2,649,005

2,780,055





Total assets

4,476,630

4,715,570

4,947,646


(*) Reclassified

The attached notes are an integral part of the condensed consolidated interim financial statements.

Condensed Consolidated Interim Statement of Financial Position


USD thousands






June 30, 2013

June 30, 2012

December 31, 2012



(Unaudited)

(Audited)

Current liabilities





Loans and borrowings


786,524

900,112

966,284

Trade payables


1,357,264

1,281,389

1,424,317

Other payables


126,398

121,463

139,703

Current tax liability


10,974

21,199

20,576

Financial derivatives


40,161

37,733

49,898

Provisions


33,187

13,981

21,214

Total current liabilities


2,354,508

2,375,877

2,621,992






Non-current liabilities





Liabilities to banks


839,154

769,272

898,678

Debentures


431,436

542,667

518,879

Liabilities for finance lease


9,619

8,891

9,282

Financial derivatives


5,309

12,134

9,578

Employee benefits, net


81,595

71,343

80,446

Deferred tax liabilities, net


--

13,000

--

Total non-current liabilities


1,367,113

1,417,307

1,516,863






Total liabilities


3,721,621

3,793,184

4,138,855






Capital





Share capital


586,390

586,390

586,390

Share premium


100,242

100,242

100,242

Reserves


79,438

108,357

93,100

Retained earnings (losses)


(11,061)

127,397

29,059

Total capital


755,009

922,386

808,791






Total liabilities and capital


4,476,630

4,715,570

4,947,646

The attached notes are an integral part of the condensed consolidated interim financial statements

Condensed Consolidated Interim Statement of Comprehensive Income

USD thousands






Six months ended

Three months ended

Year ended


June 30, 2013

June 30, 2012

June 30, 2013

June 30, 2012

December 31,
2012


(Unaudited)

(Unaudited)

(Audited)







Revenue

4,802,296

4,899,934

2,468,801

2,452,406

9,673,156







Cost of sales

4,678,508

4,877,844

2,423,226

2,517,773

9,570,259







Gross profit (loss)

123,788

22,090

45,575

(65,367)

102,897







Selling and marketing expenses

56,447

52,904

30,415

27,833

112,924

General and administrative expenses

29,325

34,604

14,874

13,861

63,310

Early retirement expenses

--

--

--

--

17,168

Operating profit (loss)

38,016

(65,418)

286

(107,061)

(90,505)







Financing income

12,996

12,170

1,041

7,189

13,317

Financing expenses

(100,338)

(78,935)

(39,164)

(32,687)

(182,184)

Financing expenses, net

(87,342)

(66,765)

(38,123)

(25,498)

(168,867)







Company's share in earnings (losses) of equity accounted investees

319

(2,546)

211

(1,544)

(4,567)







Loss before income tax

(49,007)

(134,729)

(37,626)

(134,103)

(263,939)







Tax benefit

8,887

30,005

89

35,298

65,491







Loss for the period

(40,120)

(104,724)

(37,537)

(98,805)

(198,448)







Items of other comprehensive income (loss) transferred to profit or loss












Foreign currency translation differences for foreign operations

164

213

(295)

115

(246)

Effective share of the change in fair value of cash flow hedging, net of tax

--

(104)

--

--

(104)







Other comprehensive income (loss) for the period, transferred to profit or loss, net of tax

164

109

(295)

115

(350)







Items of other comprehensive income (loss) not transferred to profit or loss












Actuarial losses from a defined benefit plan, net of tax

--

--

--

--

(4,614)

Net change in fair value of debentures at fair value through profit or loss, attributable to change in credit risk, net of tax

(11,060)

5,646

(19,378)

30,752

(9,369)

Change in fair value of financial assets at fair value through other comprehensive income, net of tax

(2,673)

391

(2,346)

(1,764)

109

Other comprehensive income (loss) for the period, not transferred to profit or loss, net of tax

(13,733)

6,037

(21,724)

28,988

(13,874)













Comprehensive loss for the period

(53,689)

(98,578)

(59,556)

(69,702)

(212,672)







Loss per share (USD)






Basic and diluted loss per 1 ordinary share

(0.016)

(0.043)

(0.015)

(0.041)

(0.082)








As from January 1, 2013, there was a change in the presentation of items of other comprehensive income - see Note 3A(5), Comparative figures will be restated accordingly.

The attached notes are an integral part of the condensed consolidated interim financial statements

Condensed Consolidated Interim Statement of Cash Flows

USD thousands






Six months ended

Three months ended

Year ended


June 30, 2013

June 30, 2012

June 30, 2013

June 30, 2012

December 31,
2012


(Unaudited)

(Unaudited)

(Audited)







Cash flows from operating activities






Loss for the period

(40,120)

(104,724)

(37,537)

(98,805)

(198,448)

Adjustments to cash flows from operating activities:






Revenue and expenses not involving cash flows (Appendix A – section A)

126,230

100,587

84,235

8,512

228,156


86,110

(4,137)

46,698

(90,293)

29,708

Changes in assets and liabilities

(Appendix A – section B)

194,691

521,998

12,665

722,819

591,408

Income tax received (paid), net

(5,522)

(216)

(4,003)

1,565

(1,555)







Net cash from operating activities

275,279

517,645

55,360

634,091

619,561







Cash flow for investment activities






Interest received

554

151

363

147

465

Decrease (increase) in deposit, net

1,857

(27,420)

242

(38,749)

(34,199)

Dividend received from investees

691

--

--

--

--

Disposal of investments in financial assets, net

--

70,088

--

70,088

71,422

Repayment of long-term loans to others, net

301

271

228

222

467

Repayment of loan from Haifa Early Pensions Ltd.

12,100

5,464

--

5,464

5,464

Purchase of property, plant and equipment

(75,422)

(156,540)

(18,391)

(49,502)

(280,635)

Purchase of intangible assets and deferred expenses

(512)

(218)

(327)

(6)

(249)







Net cash used for investment activities

(60,431)

(108,204)

(17,885)

(12,336)

(237,265)







Cash flow from financing activities






Short-term borrowing, net

(199,133)

(258,017)

96,632

(339,925)

82,079

Deposits from customers, net

(2,609)

6,578

(3,160)

545

8,067

Interest paid

(63,912)

(46,581)

(38,819)

(24,677)

(130,404)

Derivative transactions, net

67,049

2,209

31,699

(359)

41,785

Long-term bank loans

--

203,497

--

25,265

232,022

Repayment of long-term bank loans

(45,412)

(89,626)

(27,589)

(71,935)

(237,379)

Repayment of debentures

(112,874)

(36,184)

(70,887)

(7,042)

(137,893)

Costs of raising credit

--

(3,464)

--

(1,600)

(5,891)

Net cash used for financing activities

(356,891)

(221,588)

(12,124)

(419,728)

(147,614)













Net increase (decrease) in cash and cash equivalents

(142,043)

187,853

25,351

202,027

234,682

Effect of exchange rate fluctuations on cash and 
     cash equivalents

4,563

(2,897)

1,509

(2,816)

1,374

Cash and cash equivalents at the beginning of the 
     period

256,521

20,465

92,181

6,210

20,465







Cash and cash equivalents at the end of the period

119,041

205,421

119,041

205,421

256,521







The attached notes are an integral part of the condensed consolidated interim financial statements


Condensed Consolidated Interim Statement of Cash Flows (Contd.)

USD thousands


Appendix A: Adjustments required to present cash flows from operating activities








Six months ended

Three months ended

Year ended



June 30, 2013

June 30, 2012

June 30, 2013

June 30, 2012

December 31, 2012



(Unaudited)

(Unaudited)

(Audited)








A.

Income and expenses not included in cash flows














Depreciation and amortization

87,283

72,278

44,506

33,988

144,694


Financing expenses, net

52,074

60,244

35,568

14,372

146,435


Net changes in fair value of derivatives

(6,307)

514

1,405

(6,183)

10,413


Changes in fair value of the loan to Haifa Early Pensions Ltd.

(3,699)

(93)

(2,546)

2,722

(6,392)


Share in losses (profits) of equity-accounted investees, including impairment losses

(319)

2,546

(211)

1,544

4,567


Loss (profit) from deposits and investments in financial assets, net

6,178

(6,030)

6,063

(3,246)

(7,702)


Share-based payments

(93)

1,133

(461)

613

1,632


Tax benefit

(8,887)

(30,005)

(89)

(35,298)

(65,491)



126,230

100,587

84,235

8,512

228,156








B.

Changes in assets and liabilities














Decrease (increase) in trade receivables

403

(165,238)

24,569

21,576

(160,984)


Decrease (increase) in other receivables

11,721

8,133

(6,444)

10,643

32,902


Decrease in inventory

244,765

133,566

130,844

459,288

32,515


Increase (decrease) in trade payables

(55,246)

526,557

(138,954)

217,097

641,842


Increase (decrease) in other payables and provisions

(8,383)

22,542

11

17,329

46,061


Increase (decrease) in employee benefits, net

1,431

(3,562)

2,639

(3,114)

(928)



194,691

521,998

12,665

722,819

591,408








The attached notes are an integral part of the condensed consolidated interim financial statements.

SOURCE Oil Refineries Ltd.



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