In 9m 2019, TNG recorded a decrease in vessel revenues of 7.9% YoY, an increase in EBITDA of 6.7% and an increase in net income of 5%.
As TNG published their Q3 2019 report, we are bringing you key takes from it. According to the report, Daily TCE net rates per operating vessel in first three quarters of 2019 were USD 14,490 per day on average, representing an increase of 3.1% YoY. Note that currently, 4 out of 6 vessels have secured income: Velebit (USD 14,500 per day), Dalmacija (USD 16,000 per day), Vukovar (USD 17,000 per day) and Pag (USD 17,100 per day); while 2 vessels are employed on spot market. In 9m 2019, fleet utilization remained at 100%.
TCE of TNG’s Vessels (USD per day)
*Employed at spot market
The average daily vessel operating expenses (OPEX) in the 9m of 2019 amounted to USD 6,529 per vessel, which is a decrease of 1.2% YoY.
Vessel revenues in the 9m 2019 amounted to HRK 201.2m, representing a decrease of 7.9% YoY. Meanwhile, operating expenses observed a decrease of 11.6% YoT, amounting to HRK 161.5m. The mentioned decrease came as a result of the efforts of management to optimize the operations.
Commissions and voyage associated costs amounted to HRK 44.9m, compared to HRK 71.0m in 9m 2018. This decrease is a result the change of employment strategy of Vukovar, Velebit, Pag and Dalmacija which by operating on time charter contract have lower voyage associated costs e.g. port costs, bunker, which is accountable to the charterer. Total operating costs of the fleet amounted to HRK 70.5m in the 9m 2019 and were at the same level as in the same period in 2018.
Going further down the P&L, EBITDA amounted to HRK 79.6m, which is an increase of 6.7%, while operating profit amounted to HRK 40.4m (+11% YoY). Such a result could be attributed to the stable income generated from the time charters as well as the optimization of operations.
In 9m 2019, TNG recorded a net profit of HRK 17.6m (+5% YoY), which can be attributed to the above-mentioned positive contributions from 4 time charter fixtures concluded this year.
TNG Performance (9m 2018 vs 9m 2019) (HRK m)
Turning our attention to the company’s financial position, TNG ended Q3 with a net debt of HRK 530.8m, which led to a gearing ratio of 44% (-3 p.p. YoY). The decreasing debt is in accordance with the loan repayment plans of TNG and regular decrease in indebtedness, while a further decrease in the company’s debt is expected in the future.
In the 9m 2019, INA recorded an increase in net sales revenue of 2% YoY, decrease in EBITDA of 18% and a decrease in net profit of 36%.
In the first nine months of 2019, INA recorded net sales revenue of HRK 16.55bn, representing an increase of 2% YoY. The mentioned increase came mainly due to the higher wholesale on captive market and retail volumes on domestic and Montenegro market.
Costs of raw materials and consumables amounted to HRK 5.2 bn (-38% YoY), resulting mainly from lower processing triggered by Rijeka Refinery turnaround. Meanwhile, costs of other goods sold recorded an increase of 116%, amounting to HRK 6.2bn, resulting from higher import of goods to meet market demand.
During the first nine months of 2019, oil prices followed a different path compared to the same period last year; the average oil prices decreased somewhat, therefore reported EBITDA fell sharply by HRK 477m (-18% YoY), amounting to HRK 2.2bn. Meanwhile, CCS EBITDA excluding special items amounted to HRK 2.39bn, which represents an increase of 8%. The main driver of CCS EBITDA excluding special items was better sales performance, utilizing market conditions and improved Rijeka Refinery white product yields as well as improving consumer services performance. Higher retail volumes by 3% resulted from better performance in Croatia and network expansion in Montenegro.
Going further down the P&L, net profit amounted HRK 679m, which represents a sharp decrease of 36% YoY. Such a decrease could be mostly attributed to the above-mentioned decrease in average oil prices.
INA Performance (9m 2018 vs 9m 2019) (HRK bn)
In the same period, CAPEX was mainly driven by refining investments and amounted to HRK 1,54bn (+69% YoY). Of that, domestic CAPEX accounts for 85.6%. During this period, Rijeka refinery turnaround was completed, as one of the largest ones in the company’s history. The company notes that many improvements implemented during this turnaround are already visible in the better production structure, with higher share of profitable white products.
Turning our attention to exploration and production, the increased level of Upstream activities in Egypt is starting to give results with a 23% increase of oil production in Egypt. This, together with the continuous workover activities in Croatia, currently stabilized the hydrocarbon production, which amounted to 34,507 boe/d. Meanwhile, Downstream sales stayed stable at more than 3.1m tonnes.
Sava Re issued a subordinated bond with scheduled maturity in 2039 and with a first call date on 7 November 2029.
Following up on Sava Re considering options for issuing subordinated bonds, the company published yesterday an announcement on the Ljubljana Stock Exchange stating that they have successfully issued a subordinated bond with scheduled maturity in 2039 and with a first call date on 7 November 2029.
The Group notes that they intend to use the proceeds for general corporate purposes of Sava Insurance Group and for the optimisation of its capital structure. The capital raised qualifies as Tier 2 Capital under Solvency II regulations, while the total issue size is EUR 75m.
As a reminder, as of 31 December 2018, the Group’s eligible own funds to meet the Group Solvency Capital Requirement amount to EUR 471.9m, of which the whole amount refers to Tier 1. As of 31 December 2018, Sava Re stands at solid capitalization levels, with Solvency ratio at 218% (EUR 255.2m).
Until the First Call Date, the annual interest rate will be fixed at 3.750%, with the coupon payable annually. Thereafter, unless previously redeemed, the Bonds will bear interest at a rate of 4.683% per annum above the 3-months EURIBOR, with the coupon payable quarterly.