Consolidated LIFO-based EBITDA, normalised to remove one-off items, reached almost PLN 2.6bn in 2016, 20% up on 2015. Consolidated LIFO-based EBIT soared 175% year on year, to PLN 1.9bn. Consolidated net profit for the year exceeded PLN 1bn, the best ever result delivered by the Group. To compare, in 2015 LOTOS reported a net loss of PLN 0.3bn.
In 2016, LOTOS processed a record high volume of almost 10.4 million tonnes of crude oil, with the refinery’s capacity utilisation rate of 99%. The average daily output from the fields in Norway, Poland, and Lithuania was more than 26.6 thousand boe.
LOTOS posted its record high results despite the challenging macroeconomic conditions. The average price of Brent oil in 2016 fell by 17% year on year, to USD 43.58/bbl. An even steeper decline was recorded in the average annual price of gas, which fell by as much as 29% (at the National Balancing Point), to USD 25.84/boe.
Cash flows up, debt down
In 2016, LOTOS generated operating cash flows in excess of PLN 2.7bn (compared with just under PLN 1.5bn in 2015), which is the best proof of the Company’s improving financial health.
Net debt as at the end of 2016 was PLN 4.8bn, down PLN 0.9bn year on year. Net debt to normalised LIFO-based EBITDA was 1.8x (vs 2.6x in 2015).
Higher reserves in Norway
In 2016, 2P recoverable reserves attributable to LOTOS increased to 72.7 million boe (+9% year on year), following a major increase (by 8.5 million boe year on year) of the hydrocarbon potential in Norway due to reclassification of the Utgard field’s reserves. LOTOS Petrobaltic’s total daily output in Norway, Poland, and Lithuania averaged above 26.6 thousand boe. The upstream segment’s normalised EBITDA doubled to almost PLN 0.7bn, compared with approximately PLN 0.3bn in 2015.
Record throughput, rising sales
In 2016, the LOTOS refinery processed record volumes of almost 10.4 million tonnes of crude (2015: 10.2 million tonnes). The refinery’s annualised capacity utilisation rate was 99%. In the reporting period, LOTOS sold in aggregate over 11 million tonnes of oil products, merchandise and materials. Sales on the domestic market were up 5% year on year. Production and sales rose on strong refining margins throughout most of 2016, and the initial success of legislative efforts to curb the grey fuel market in Poland (the ‘First Fuel Package’ legislation).
Retail chain expansion and improved performance
Following addition of 11 new sites, at the end of 2016 the LOTOS retail chain comprised 487 stations. In 2016, LOTOS maintained the runner-up position in the segment of Motorway Service Areas (MSA). At year end, LOTOS had 20 MSA stations, situated by the A1, A2, A4 and A6 motorways, and by the S3 and S7 expressways. The financial performance of the LOTOS retail chain improved on the back of successful optimisation efforts. Normalised EBITDA in 2016 amounted to PLN 156m, compared with PLN 112m in 2015, and PLN 95m in 2014.
- Normalised LIFO-based EBITDA: 2,589m (+20% year on year)
- Operating cash flows: PLN 2,654m (+78% year on year)
- Oil and gas production volume: 26.65 thousand boe/d (+124% year on year)
- Oil volumes processed: 10.4 million tonnes (+2% year on year)
- Number of service stations: 487 (+11 sites year on year)