Essar Oil UK delivers robust financial performance in FY18 - Essar | Creating Value Essar Oil UK delivers robust financial performance in FY18 - Essar

Essar Oil UK delivers robust financial performance in FY18

Jul 4th, 2018

Essar Oil UK delivers robust financial performance in FY18

Essar Oil UK delivers robust financial performance in FY18 with EBITDA of US $300m and PAT of US $161m

Completion of largest ever upgrade with a capex spend of US $258m, which will further enhance reliability and profitability

FY18 highlights (reflecting a nine month period of Stanlow production pre-Turnaround)

  • Revenues at US $5.4 billion vs $4.9 billion in FY17 [+10.2%]
  • EBITDA of US $300 million for a third consecutive year
  • Profit after Tax (PAT) of US $161 million, despite Stanlow operating for only nine months in the Financial Year due to the shutdown period involving upgrade work
  • Current Price Gross Refining Margin (CP GRM) at US $9.4/bbl vs US $8.4/bbl in FY17 [+11.9%]
  • Completion of project Tiger Cub and Stanlow’s largest ever block Turnaround will deliver enhanced yields of high value products, reduce crude costs and drive revenue growth
  • US $258 million invested in capex and maintenance during the year
  • Post Tiger Cub annual throughput capacity increased from 68 million to 75 million barrels
  • Many new contracts secured for direct supply of aviation fuel to airline businesses
  • Expansion of UK retail network to over 50 stations by end of March 2018

London, July 4th, 2018: Essar Oil (UK) Limited, which owns and operates the Stanlow Refinery, today reported robust financial results for the fiscal ending March 31st 2018.

Operational and financial performance: Key Indicators (1 USD = Rs 64.394)

March ending

FY18 FY17

Change

Throughput (in MMT)

7.19

9.09

(20.9%)

Gross Revenue (in US $m)

5,427
(Rs 34,947 cr)

4,924
(Rs 32,975 cr)

+10.2%

CP GRM (US $/bbl)

9.4

8.4

+11.9%

EBITDA (in US $m)

300
(Rs 1,932 cr)

311
(Rs 2,083 cr)

(3.5%)

Profit after Tax (in US $m)

161
(Rs 1,037 cr)

168
(Rs 1,125 cr)

(4.2%)

The refinery remains a key national asset, producing over 16% of the UK’s road transport fuel demand. Throughput in FY18 was 7.19 MMT, a reduction of 20.9% on FY17 due to the major Turnaround in Q4.

Essar’s optimised reconfiguration to a single train site, material diversification of the crude slate and an ongoing focus on margin booster initiatives in recent years resulted in a delta over the benchmark margin of US $4.00/bbl, as against under US $1.00/bbl in 2012.

The refinery completed the execution of all project upgrades during the turnaround. It is expected the margin improvements will yield an incremental margin of US $75 million to US $80 million annually in the prevailing market.

Essar Oil UK Chairman, Prashant Ruia, said: “Stanlow has emerged as a top tier refinery in Europe, with 16% market share in the UK and a growing presence in the retail and aviation sectors. We will continue to make proactive investments in technology to build a sustainable business that remains competitive in the rapidly changing global energy market.”

Essar Oil UK Chief Executive Officer, S. Thangapandian, commented: “Overall, this was ultimately a robust performance following a record breaking first six months of the financial year. The major Turnaround proved a complex and challenging period and we will ensure all learnings are rigorously understood and implemented for the future. The completion of project Tiger Cub was a major positive and is already exceeding our expectations in some respects. Going forward, the focus remains on the delivery of further margin booster initiatives to improve yields and increase volumes to grow market share.”

Essar Oil UK Chief Financial Officer, Sampath P, said: “Despite the significant capex investment and planned reduction in throughput due to the Turnaround, the company still posted an EBITDA of above $300 million for the third consecutive year and a Profit after Tax (PAT) of $161 million. The major optimisation improvements implemented during the year will deliver increased margins going forward on the back of higher throughputs, reduced crude costs and enhanced higher value product yields.”

Essar continues to deliver at Stanlow
Including FY18, Essar has invested over $850 million since acquiring Stanlow in July 2011, helping to turn around the business and build a company that is both profitable and sustainable.

The Board has a strategic focus to further improve the financial performance of the company through the continued growth and development of the business in the UK and beyond.

For the first time, the company leased storage in Rotterdam, together with blending and jetty infrastructure, in order to cater to gasoline export markets directly.

A key priority is increasing share of the market for the direct supply of aviation fuel to leading carriers, with agreements now in place with airlines at a number of UK airports. Essar also remains a major player in the wholesale supply of Jet A-1 to UK airports.

The award winning Essar network has grown to over 50 stations since entering the UK retail market. The first company owned, flagship site will open opposite the Stanlow Refinery later this year.

Safety performance remains a core value and critical business objective, with continuous investment in Health, Safety and Environment (HSE) to further improve standards and reduce risk. The 2018 Turnaround was the safest delivered in the history of the site, with world class personal safety results.

Essar Oil UK has established working capital facilities and no long term debt.
Ends

About Essar Oil UK
Essar Oil (UK) Limited is a subsidiary of Essar Energy Limited, which owns and operates the Stanlow Refinery located on the south side of the Mersey Estuary near Liverpool. Stanlow produces 16% of UK road transport fuels, including 3 billion litres of petrol, 4.4 billion litres of diesel and 2.1 billion litres of jet fuel per year.

Media contact: Ian Cotton, Head of Communications, on 0151 350 4583 or 07805 854169