In the first nine months of 2019, NIS recorded a decrease in sales of 5.1% YoY, a decrease in EBITDA of 26% and a decrease in net profit of 50.7%.
As Naftna Industrija Srbije (NIS) published their 9M 2019 results, we are bringing you key takes from it. According to the report, oil and gas production in the first nine months of 2019 amounted to 0.97m tonnes of oil and gas equivalent. In the same period, the total output was 2.3m tonnes of crude oil and semi-finished products, while the total volume of sales was 2.6m tonnes.
After a poor performance in the H1, the third quarter showed a significant improvement of the Group’s financial results compared to the two previous quarters of this year. To put things into a perspective, the Group recorded a net profit of RSD 7.5bn in Q3 solely, while in the first six months of 2019, they recorded a net profit of RSD 3.2bn. However, it is noteworthy that when comparing solely Q3 and 9M YoY, both of the company’s results are lagging compared to their Q3 2018 and 9M 2018 results.
Such an outcome is a consequence of macroeconomic developments and NIS’ planned activities. First of all, the average price of oil on the world market in the 9M 2019 was USD 64.7 per barrel, which is 10% less YoY. On the other hand, in March and April, a planned capital workover was carried out in Pančevo Oil Refinery, which reflected on the total volume of oil refining and financial results.
When observing the 9M 2019 P&L, one can notice that sales revenue amounted to RSD 196.2bn, which is a 5.1% decrease YoY. Of that, upstream accounts for RSD 36.5bn, downstream accounts for 196.2bn, while eliminations account for RSD -36.56bn. Meanwhile, when looking at solely Q3, sales revenue observed a decrease of 9% YoY, amounting to RSD 78.7bn. Operating expenses amounted to RSD 180.6bn, showing a slight increase of 0.8%, which mostly came on the back of an increase in purchases of oil, gas and petroleum products.
As a result of all of the above-mentioned, EBITDA witnessed a 26% decrease, amounting to 31.2bn. Such a result, puts the EBITDA margin at 15.9% (-4.4 p.p. YoY). Operating profit amounted to 15.4bn, showing a sharp decrease of 43.8%.
As above mentioned, in the first nine months of 2019, the Group witnessed a net profit of RSD 10.71bn, representing a decrease of 50.7% YoY. Such a result puts the profit margin at 5.5% (-5 p.p. YoY).
Turning our attention to CAPEX, in 9M 2019, NIS implemented investment program of RSD 29bn, which is 6% increase YoY. The main investments were oriented towards the implementation of projects in the production of oil and gas, as well as the project for improving the refining depth. In addition, during the 9M of 2019, NIS invested in sales and distribution, energy, and service projects, as well as a number of projects in the corporate center.