Motor oil will report its Q2/H1 results on Wednesday 26th after market hours. We expect a strong quarter following mid-distillers margin improvement in Q1 –more than doubled since Q2 2014. Despite lower distilling volumes (-2.7%) Motor oil is expected to report H1 EBITDA of€265m vs €61.5m (+331%) and net profits of €137m vs losses of 16.9m y-o-y. Q1 inventory losses (€-9m) are neutralised in H1 bringing adjusted net profits to €48.2m.
Motor oil managed to increase yields by distilling better quality crudes that gave more added value product bringing refining margin at 67$/MT vs 27.8$/MT in H1 2015. Aside strong refining margins, domestic demand was once again supportive to marketing EBITDA (32m in H1) on tourism increase and optimisation of gas station network. We note that base effect is partly justified as refining margins in 2014 Q2 had retreated to the lowest levels since 2010 (27.8$/MT) while one off tax of €4.3m included reducing accordingly bottom line. As refining conditions insist on healthy margins (record levels since 2010) we will look at the conference call for some fresh outlook and the trends that currently shape demand after capital controls in Greece.
Overall Motor Oil is heading for a record year in terms of profitability. As Q3 refining margins remain strong we see net earnings to shape at 205m and valuation is at 1bn we note the appealing earnings multiple (<5x) which leave enough room for stock appreciation even at heavy discounts related to country risk premium. Interim dividend should be in the cards this September as FCF will start to improve sharply in the following quarters on lower working capital needs related to destocking and contango trades.
The following table summarise our H1/Q2 estimates:
|EUR mn.||H1||H1 Ε||(%)||2Q||2Q Ε||(%)|
|EBITDA Mrg||1,4%||6,5%||+511 bps||1,5%||6,5%||+499 bps|
|EBITDA Mrg adj.||1,5%||6,5%||+500 bps||1,3%||6,2%||+493 bps|
|Net Mrg||-0,4%||3,3%||+371 bps||-0,4%||3,8%||+422 bps|
|Adjusted Net Income||-11,7||138,5||1281,6%||-12,4||90||826,8%|
|Net Mrg adj.||-0,3%||3,0%||+326 bps||-0,5%||3,6%||+417 bps|
|Refining Margin ($/MT)||29,40||67,00||128%||27,80||67,40||142%|
The Management of Motor oil will host a conference call to present and discuss the results next Thursday, August 27th, to present the Company’s Q2/H1:15 Financial Results at 17:30 PM (Athens) / 15:30 PM (London) / 11:30 AM (New York).
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