First Quarter 2020 Results for Romania’s Energy Sector in Full Pandemic
In full pandemic, the companies in the energy sector in Romania present their financial results related to the first quarter of this year. As expected, expenses for products necessary to comply with protection measures against the new coronavirus have influenced these results, but the largest impact was seen by the oil industry, pulled down by the low demand and free-fall prices.
Conpet increased its profit by 13%
In the first quarter of this year, the operator of the national system for oil, NGL, gasoline and ethane transport through pipelines – Conpet Ploiesti – reported a net profit of RON 16.3mln, up by almost 13% compared to the similar period of last year. The operating income of the company increased by 7.3%, to RON 113.69mln, while expenses went up only 6.7%, to RON 96.6mln. The transported quantities increased by 11%, to RON 1.838 million tons, and the transported oil quantities from domestic production increased only marginally, by 0.5%, to 874,000 tons, those coming from import increasing by almost 23%, to 964,000 tons.
5% more for Transgaz’s gross profit
In Q1/2020, Transgaz’s operating revenue before the balancing and construction activity according to IFRIC12 climbed by 8% compared to achievements in Q1/2019, recording an increase by RON 39,821 thousand. Operating expenses increased by 6% compared to Q1/2019, their level being by RON 16,596 thousand higher. Compared to achievements in the first quarter of 2019, the gross profit posted in Q1/2020 is by 6% higher, i.e. by RON 13,337 thousand. Transgaz’s net profit increased by 5% in the first quarter of this year, reaching RON 201.8mln, the reduction of revenues from international transmission following the suspension of Russian gas transit through the Trans-Balkan corridor by RON 56.7mln being offset by an increase in revenues obtained from capacity booking for domestic transmission by RON 125.5mln. As of January 1, as a result of moving Russian gas transit to Turkey, Bulgaria, Greece and Macedonia on the newly built TurkStream pipeline, Romania was no longer transited by any cubic meter of gas. However, having concluded with Gazprom a ‘ship-or-pay’ contract for line 3 of Isaccea-Negru Voda until 2022, Transgaz reported revenues of RON 29.5mln from the international transmission activity, down by about two thirds compared to the similar period of last year (RON 86.2mln). Revenues from domestic transmission increased by one fourth or almost RON 100mln, from RON 374mln in the first three months of the year last year to RON 474mln.
Electrica, back in black
The electricity supply and distribution operator Electrica, having the Romanian state as the largest shareholder, through the Ministry of Economy (a 48% stake), returned to profit in the first quarter of 2020, with a positive net result of over RON 80mln, from the loss of RON 40.9mln in the similar period of the previous year. The company’s revenues rose by 4.7%, to RON 1.657bn, while the main expenses, those with the purchase of electricity, fell by 8.6%, to RON 1.037bn.
“The cost of the electricity purchased for supply (including transmission and system services) decreased by RON 118.4mln, or 15.4%, to RON 649.3mln in Q1 2020, from RON 767.7mln recorded in the same period of 2019, being mainly the impact of the reduction in the electricity purchase price on the regulated segment, following the recovery in 2020, in the form of positive corrections, of the purchase losses from the previous years,” reads the company’s quarterly report.
Following the onset of the COVID-19 pandemic, the companies in the Electrica Group have implemented specific organizational measure plans, absolutely necessary to carry out the activity and ensure continuity in electricity supply, and have incurred additional costs as compared to those included in the budgets initially approved for the year 2020, for the purchase of protective equipment, materials, sanitation services and other special endowment.
“The distribution companies have approached ANRE for the recognition of these extraordinary expenses in the category of uncontrollable expenses, in addition to the values previously approved by the regulator for 2020,” Electrica mentions.
In the three-month period ended March 31, 2020, Electrica’s revenues in the electricity supply segment increased by RON 67.8mln, or 5.4%, to RON 1.3291mln, from RON 1.2612mln in the same period of the previous year, mainly as a result of the increase in sales prices on the retail market by 4%, but also thanks to a slight increase in the energy quantity supplied on the retail market, by 2%. At the end of Q1 2020, the three distribution companies of Electrica group realized and commissioned investments amounting to RON 60.6mln, representing 10% of the commissioning program value planned for 2020 (i.e. RON 606.6mln, of which RON 594mln related to the 2020 plan and RON 12.7mln for values carried forward related to 2019; RON 59.5mln in the first category and RON 1.1mln were related to 2019).
Declining profit at OMV Petrom
At the end of the first quarter of this year, the consolidated sales revenues of OMV Petrom increased by 12% compared to the similar period of 2019, supported by higher sales volumes of natural gas, partially compensated by lower commodity prices and lower sales volumes of electricity.
Downstream Oil represented 63% of total consolidated sales, while Downstream Gas accounted for 35% and Upstream for 1% (sales in Upstream being largely intra-group sales rather than third-party sales). Clean CCS Operating Result decreased in Q1/20 by 21% to RON 975mln, mainly due to negative evolution in Upstream, triggered by lower crude oil prices, partly compensated by higher positive contribution from Downstream, mainly as a result of higher refining margins, better sales performance and positive impact from hedges and forward contracts.
The Clean CCS net income attributable to stockholders was RON 760mln, falling compared to RON 1,056mln in the similar period of the previous year. Inventory holding losses amounted to RON 239mln in Q1/20, mainly as a result of a steep decline in crude oil prices. Reported Operating Result for Q1/20 decreased to RON 830mln, compared to RON 1,288mln last year, driven mainly by the unfavourable market environment, as the lower prices and the start of the COVID-19 crisis had a negative impact on group performance.
Net financial result was a loss of RON 50mln in Q1/20, compared with a gain of RON 24mln in Q1/19, mainly due to higher interest expenses in relation to the discounting of receivables and lower interest income, as Q1/19 included a positive impact in relation to the clarification of a tax related topic. As a result, the profit before tax for Q1/20 was RON 780mln, lower compared to RON 1,313mln in Q1/19.
