MOH || BUY | CP: EUR 25.00 | TP: EUR 27.90
4Q22 results – Strong quarter, yet below our call and consensus on weaker refinery performance. MOH declared final DPS EUR 1.20 (vs. our EUR 1.10/share estimate), ex-date set on 26th June.
Facts: Motor Oil reported 4Q22 “adjusted” EBITDA of EUR 360m (+400% YoY, -29% vs. consensus, -16% vs. our estimate) and “adjusted” net profits of EUR 7m (including the EUR 358m one-off solidarity tax, vs our estimate of EUR 20m loss). Recording inventory losses of EUR 59m compared to EUR 10m profits in 4Q22, the company
reported IFRS EBITDA of EUR 301m compared to EUR 82m in 4Q21 and IFRS net losses of EUR 39m compared to net loss of EUR 3m in 3Q21. On FY22 basis, “adjusted” EBITDA and “adjusted” net income stood at EUR 1,628m (+4x YoY) and EUR 917m (+8x YoY) respectively. Recording inventory gain of EUR 65m compared to inventory gains of EUR 160m in 2021, the company reported IFRS EBITDA of EUR 1,693m compared to EUR 490m in 2021 and IFRS net income of EUR 968m compared to net profits of EUR 202m in 2021. Management will hold a conference call today at 17:30 local time (15:30 UK time).4Q/FY22 P&L Results
EUR m | 4Q21 | 4Q22 | Y-o-Y change | Optima bank | Actual vs. Optima | Consensus | Actual vs. Consensus | FY21 | FY22e | Y-o-Y change |
IFRS EBITDA | 82 | 301 | 268% | 400 | -25% | 428 | -30% | 490 | 1693 | 246% |
“Adjusted” EBITDA* | 72 | 360 | 400% | 430 | -16% | 508 | -29% | 330 | 1628 | 393% |
Refining "Adjusted EBITDA" | 50 | 262 | 424% | 364 | -28% | 208 | 1362 | 555% | ||
Marketing EBITDA" | 19 | 17 | -11% | 44 | -62% | 107 | 128 | 20% | ||
Power & Gas EBITDA | 1 | 74 | 7300% | 22 | 236% | 15 | 136 | 807% | ||
IFRS Net Income | -3 | -39 | nm | -44 | -11% | -20 | 95% | 202 | 968 | 379 |
“Adjusted” Net Income* | -11 | 7 | -164% | -20 | nm | 19 | -63% | 115 | 917 | 697% |
Source: Optima bank research, MOH. *Adjusted figures exclude inventory impact
Comment: Parent (mainly refining): Operating performance in 4Q22 was once again marked by the favorable refining environment (yet on more normalized levels compared to the previous two quarters), hence MOH’s “clean” refining margin in 4Q22 eased to USD 20.2/bbl, compared to USD 21.7/bbl in 3Q22 and 6.0/bbl USD in 4Q21, underperforming benchmark by USD 3.0/bbl (vs. outperformance of USD 1.3/bbl in 4Q21). Refining sales volume remained strong, up by 5.0% YoY to 3.6m tons, while trading sales volume bottomed to 0.104m tons (as the company during favorable periods for the refinery focuses on sale from production forecast which offer higher margins), resulting in total sales of 3.6m tons, exhibiting a 5% YoY drop. Breaking down 4Q22 sales to geographic markets, export sales contracted by 9.7% YoY to 2.75m tons, offsetting the increased by 10% and 27% domestic and bunkering/aviation demand respectively. Overall, “adjusted” EBITDA from the refinery operations stood at EUR 262m from EUR 50m in 4Q21. Finally, the refining division recorded EUR 45m inventory loss (from EUR 18m inventory gain last year).
Marketing: The strong marketing performance due to the recovery of the domestic market (+11% YoY) added another EUR 17m to group “adjusted” EBITDA vs. EUR 19m in 4Q21, while accounting for the negative impact from inventory in the retail network, segmental EBITDA shaped at EUR 3m (vs. EUR 19m in 4Q21).
Power & Gas: Driven by the strong contribution from the electricity supply business and accounting also for the contribution of EUR 44m from MORE (mainly RES), Power & Gas EBITDA jumped to EUR 74m (from EUR 1m a year ago).
Below the EBITDA line, depreciation shaped at EUR 51m (vs. EUR 54m a year ago) and net financials at EUR 46m (vs. expenses of EUR 38m last year), driven by increased debt and interest rates. Finally, the contribution from associates was increased to EUR 75m, (driven by the EUR 67m contribution from ELLAKTOR and also EUR 10m from the Korinthos Power plant), from EUR 8m in 4Q21.
FCF in FY22 turned positive to EUR 65m (from outflows of EUR 146m in 2021) due to increased opcf of EUR 11,152m, despite the adverse WC movement of EUR 489bn, which more than offset the high capex & other investments of EUR 1,087m. Consequently, after also accounting for the debt assumed following the Anemos acquisition, Group net debt in 2022 (including leasing) rose by EUR 310m ytd to EUR 1.76bn in FY22.
Conclusion: 4Q22 was again marked (following the even stronger 2Q/3Q22) by the extraordinarily strong refining environment, which coupled with the solid operation of the refinery (which once again operated on high utilization rates during the quarter, allowed MOH to reap the benefits from the favorable refining environment. Looking ahead, we expect that the extremely favorable refining environment in FY22 to persist to some extent in 2023e, driving yearly performance higher than usual levels. Having said that, remain positive for the stock, and reiterate our ‘Buy’ recommendation. We expect the management to provide during today’s Conference Call an updated guidance on the current refining environment.