H1 2020 group turnover amounted to €926.7 mln vs €990.8 mln in H1 2019 and dropped by 6.5% as a result of weak pricing environment in the metallurgy sector and the electricity sector. H1 2020 group ebitda amounted to €145.1 mln vs €175.3 mln in H1 2019 and decreased by 17.2%. However, H1 group ebitda increased by 5.2% compared to H2 2019 (€137.9 mln). Earnings after tax and minority rights amounted to €69.3 mln vs.€81.6 mln in H1 2019.
|(amounts in € 000,000)||H1 2020||H1 2019||Change%|
|EBITDA Margin||15,7%||17,7%||+476 bps|
Net debt decreased to €477 mln. resulting to a net debt/ebitda ratio lower than 2x (1.69x) for the last 12 trailing months. Despite the recent (June 2020) early redemption of the total amount of €300 mln. of the corporate bond, group cash position was standing at €606 mln on 30.6.20.
No major liability expires until the end of 2024, giving ample room for profitable use of available funds.
Overall, during 1H 2020, the Company fully capitalized on its comparative advantages and the synergies between the Business Units, intensified the cost optimization actions aiming at a total recurring benefit of €70 mln. and having as a key driver the Electric Power & Natural Gas Trading Business Unit, has managed to respond effectively to the pandemic.
Power & Gas business unit (47% of total turnover)
During 1H 2020, the Power & Gas Business Unit, benefiting from the competitive portfolio of MYTILINEOS Natural Gas, earned a considerable market share while posting a significant profitability increase. In particular, turnover stood at €443.9 mln corresponding to 47.9% of the total turnover, vs. €460.6 mln in the respective period of 2019. The Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in the 1H 2020 stood at €71.0 mln from €50.3 mln during the same period of the previous year, an increase of 41.3%. Said performance is mainly attributed to the increased clean spark spread (+36.5% compared to the respective period in 2019) of the thermal power plants, despite the very low System Marginal Price in the wholesale market; while it also benefited by the strong contribution of the Electricity Supply activity. The transition towards a new electricity generation mix, in which Natural Gas is the main fuel, strengthened in 1H as the lignite-fired electricity generation decreased by 47.8%. RES contribution was also significantly bolstered and for the first time rose to 27% of the total power production.
Protergia increased its market share to 7.7% in June 2020, steadily strengthening its position with a customer basis exceeding currently 250,000 customers. This activity posted a high operating profitability as EBITDA in the 1H 2020 stood at €19.4 mln vs €10.2 mln the same period of 2019.
Metallurgy Business Unit (26% of total turnover)
This business unit posted a satisfactory H1 2020, taking into account the negative impact of the pandemic on the prices of metals. In specific, the average price of Alumina (API index) declined by c. 30.0% to $265 per ton, compared to the respective period of 2019, whereas the average LME Aluminum price was reduced by 12.5% to $1,620 per ton. Finally, the premia for Aluminium end products decreased by more than 30%. Despite the weak pricing environment, the Metallurgy Business Unit displayed strong resilience, benefiting from the continued initiatives for cost optimization, resulting to a production cost decrease of approximately 25% in Alumina and about 20% in the primary Aluminium compared to the same period in 2019. At the same time, the production of secondary Aluminium, which consumes a lower amount of energy with limited environmental impact, is being reinforced.
Renewables & Energy Storage Development Business Unit (19% of total turnover)
In 1H 2020, this business unit posted a turnover of €179.1 mln, corresponding to 19.3% of the total turnover, vs. €72.4 mln of the respective period of 2019. The EBITDA in the 1H 2020 amounted to €12.5 mln vs. €2.7 mln in the same period of the previous year, as it benefited by the sale of the 47 MW solar parks portfolio in Northern and Central Greece, for a total consideration of €45.8 mln. This transaction is the first out of a total pipeline of 600MW in Solar projects to be developed, constructed and disposed within the next 18-24 months.
The total agreed and contacted amount of projects of the RSD Business Unit stands at €110 mln. with projects currently underway in countries such as Spain, United Kingdom, Chile and Kazakhstan, while an additional €243 mln. of projects value being very close to be finalized.
Sustainable Engineering Solutions Business Unit (7% of total turnover)
It is the previous EPC business unit (ex-METKA). In H1 2020, turnover stood at €62.4 mln., corresponding to 6.7% of the total turnover, vs. €163.3 mn. in the corresponding period of 2019. The weak performance in 1H 2020 is mainly due to the effects of Covid-19 pandemic that caused delays in the execution of existing projects while also postponing the singing of new ones. The renewed SES Business Unit is expected to yield positive results soon, probably as early as of 2H 2020, aiming to add new projects in its backlog within 2020 while focusing on the successful execution of existing contracts, but also targeting to undertake new projects supported by the European Recovery Fund
Interesting info after the conference call…
Some additional info following the company’s conference call and the corresponding Q&As are as follows:
Profit after tax and dividend per share are expected to amount at the same level as fiscal 2019 excluding any negative surprise on the domestic or the global economy. We recall that full year 2019 profit after tax and minorities rights amounted to €145 mln. and dividend per share amounted to €0.36. The group cash position is strong easily financing investments for the next year as well as share buybacks (restarted on 9.9.20 after one-month lockup period).
Protergia targets a 10% retail sector market share within the next 2 years. No consolidation is expected in the domestic retail energy providers for the next 12-18 months.
Metallurgy has a permanent issue regarding the annual contract for high-voltage electricity provision between Aluminium of Greece and Public Power Corporation (PPC). Negotiations are expected to start soon.
In the Renewables & Energy Storage Development Business Unit, 200MW are expected to be available until the end of 2021.
Finally, regarding the hedging strategy on the EUR/USD expected prices as well as on the aluminium ask price the company’s chairman said that all positions are squared today and no new positions are expected until the end of 2020 while it is still early to build new positions for 2021.
We present in the following weekly chart the stock’s fluctuations during the last years. During the weeks of the pandemic the stock fluctuated with high volatility, diving from 9.5 euros to the level of 5.0 euros. Following the initial rebound from the pandemic lows, we detected a longer term diamond formation named ABCD.We expect this formation to act as a consolidation one after the bullish leg that started at 1.3 euros in May 2012. If the price drops below 7 euros the formation will be cancelled and the stock will drift lower. An upward breakout from the formation above the 9.25 – 9.75 euros range will be considered positive and sign that new bullish players are entering in the stock. A longer term support line named ABC is detected, starting at th eprevious mentioned lows of May 2012. Additional support is offered from the 200 week exponential moving average (green line).