Heurtey Petrochem: 2017 Full-Year Results

RUEIL, France--()--Regulatory News:

Heurtey Petrochem (Paris:ALHPC) announces its consolidated results for 2017.

The Board of Directors of Heurtey Petrochem met on 13 March 2018 and approved the Group's 2017 financial statements. The consolidated financial statements have been audited.

A certification report is being prepared.

             
Audited figures, in € million

(IFRS)

  2017   2016   Change
Revenues   235.5   319.1   -26%
Cost of sales   (237.9)   (284.2)   -21%
Gross margin

% of revenues

  (2.3)

(1)%

  34.9

10.9%

   
Administrative and commercial expenses   (32.6)   (35.2)   -7%
EBITDA*   (27.6)   3.8    
Current operating income

% of revenues

  (34.9)

(14.8)%

  (0.3)

(0.1)%

   
Other operating income and expenses   (4.4)   (6.6)    
Operating income   (39.3)   (6.9)    
Share of equity-accounted companies

Financial profit

Tax

  (0.1)

(3.5)

0

  0.0

(2.2)

2.0

   
Consolidated net income   (42.9)   (7.1)    
Net income, Group share   (42.9)   (7.2)    

* EBITDA: Current operating income before amortisation, depreciation and provisions.

2017 revenues: €235,5 million

Heurtey Petrochem generated consolidated revenues of €235.5 million in 2017, down 26% compared to 2016. The Gas branch accounted for 31% of revenues, while the Furnaces branch represented 69% (31% refining, 16% petrochemicals, 22% hydrogen). The activity has been realized at 26% from the Americas, 37% from Asia/Oceania, 30% from Middle East/Africa and 7% from Europe/Russia.

A significant decrease of current operating profit in the two businesses

The Group’s gross margin, which came out at -€2,3 million, represents -1% of the Group’s revenues, with the results shown below of the two branches.

         

€ million

  Furnaces Gas processing
    2017   2016 2017   2016
Revenues   162.8   246.7 72.7   72.4
Gross margin

% of revenues

  0

0%

  32.5

13.2%

(2.3)

(3.2)%

  2.5

3.4%

Current operating income

% of revenues

  (23.4)

(14.4)%

  7.4

3.0%

(11.5)

(15.8)%

  (7.7)

(10.6)%

The Furnaces branch is strongly hit by the fall in business volume, coming from the low level of order intake over the year along with some cost overruns on contracts during construction phase and warranty. The Gas branch recorded steady revenues compared to 2016 considering the opening backlog, however the gross margin shows a significant decrease due to difficulties encountered in some projects during completion phase.

The administrative and commercial costs at €32,6 million dropped by 7% taking into account the savings made by the Group.

The Group’s current operating income came out at -€34.9 million (-14,8%) of consolidated revenues with a current operating loss of -14,4% in the Furnaces branch and -15.8% in the Gas branch.

After taking into account a non-recurring operating expense of €4.4 million, mainly stemming from €1.2 million costs of workforce reduction and €2,7 million costs related to the relocation of Prosernat and Heurtey head offices, the Group recorded an operating loss of €39.3 million.

The Group registered a financial loss of -€3.5 million, of which -€0.9 million in interest expenses, stable compared to 2016, and -€2.6 million in exchange losses.

As a precaution, the Group did not record any deferred tax asset for the fiscal losses generated over the period, therefore, the net consolidated result amounted to -€42.9 million.

Strong decrease of order intakes

In a persistently difficult market environment, the Group recorded €144 million of order intakes in 2017, 56% less than in 2016. The Furnaces segment accounted for 75% of these orders (24% in refining, 39% in hydrogen and 12% in petrochemicals), while the Gas segment represented 25%. This can be broken down as follows: 21% from the Americas, 54% from Asia/Oceania, 17% from Middle East/Africa and 8% from Europe/Russia.

Financial status

As of 31 December 2017, the Group has €26.5 million of financial debt (including €15 million overdrafts), down €13.5 million compared to 2016. Further to the repayment of its syndicated loan – mid-term debt and revolving credit – the Group is now mainly financed by Axens through current account advances. As of 31 December 2017, these advances amounted to €56 million. The marketable securities, cash and cash equivalents amounted to +€38.5 million.

The cash consumed in operating activities is €38.7 million due to operating losses over the period.

The closing net cash amount to €23.5 million compared to €13.3 million in 2016.

Outlook 2017

The backlog as of 31 December 2017 was €177 million. In 2017, the Group has decided to adjust the backlog by deducting €107 million related to the contracts signed with Venezuelans clients, on hold for several years and for which the re-start is not anticipated considering the economic and political situation of this country.

The backlog of €177 million is down compared to €304 million as at 31 December 2016 after adjustment of Venezuelan contracts.

The Gas branch accounted for 48% of backlog, and the Furnaces branch for 52% (26% refining, 15% hydrogen and 11% petrochemicals). The Americas accounted for 57% of the backlog, Asia/Oceania 21%, Middle East/Africa 18%, and Europe/Russia 4%.

The Group has now completed the merger of its commercial and operational activities of project execution in France for its Furnaces and Gas businesses in a joint management and a full merge of its technical disciplines (engineering, purchasing, inspection, documentation control) and its support services.

The Group has now, in 2018, a safer project execution base and more efficient and better-coordinated resources for the execution of its turnkey projects.

In 2018, the Group will continue the merge with its shareholder Axens with the objective of securing its recovery and implementing the commercial synergies.

For 2018, the Group is expecting the market environment to remain difficult, and has set its target revenues between €250 million and €280 million.

Next press release: Q1 2018 revenues, 17 May 2018 after market close

About Heurtey Petrochem (www.heurtey.com)

Heurtey Petrochem is a global oil and gas engineering group operating across two market segments:

  • Process furnaces for refining, petrochemicals and hydrogen production. Petrochem is one of the global leaders in this segment.
  • Natural gas processing via its Prosernat subsidiary. In this sector, the Group operates in both EPC engineering and as a technology licensor.

Heurtey Petrochem operates via a large international subsidiary network, with a presence in Brazil, China, South Korea, the United States, India, Malaysia, Romania and Russia. The group generated revenues of €235 million in 2017. Heurtey Petrochem is tracked on the Euronext Paris Alternext market. (ISIN: FR0010343186, Mnemo: ALHPC).

Forward-looking statements and information concerning the activities of Heurtey Petrochem are included in the press release above. They notably include information relative to the financial situation, results and activities of Heurtey Petrochem. They are based on the expectations and estimates of the management of Heurtey Petrochem.

These forward-looking statements and information are associated with a certain degree of risk and uncertainty and are likely to be affected by known or unknown factors which, for many of them, cannot be controlled by Heurtey Petrochem and are not easily anticipated. They may yield results that are substantially different from those expected or suggested by these statements. These risks include: uncertainty about changes in relationships with the clientele, suppliers and strategic partners; and generally any unfavourable change in the economic situation, the intensification of competition or modification of the regulatory environment which could affect the activities of Heurtey Petrochem. This list of factors should not be considered as exhaustive.

Contacts

Heurtey Petrochem
89, Boulevard Franklin Roosevelt
92 500 Rueil-Malmaison- France
Jean Sentenac, Chairman
Jacques Moulin, CEO
Gregory Matouskoff, Group CFO
+33(0)1 47 14 80 73
invest@heurtey.com

ANNEXES

Income statement (IFRS)

         
(in € thousands)   2017   2016
Revenues   235,548   319,103
Cost of sales (237,895) (284,168)
Gross margin (2,348) 34,935
Administrative and commercial expenses   (32,563)   (35,236)
Current operating income   (34,911)   (300)
Other operating income and expenses   (4,392)   (6,574)
Operating income   (39,303)   (6,874
Share of net income from equity-accounted joint ventures   (96)   (19)
Operating income including the share of net income from equity-accounted joint ventures   (39,399)   (6,893)
Income from cash and cash equivalents 543 355
Cost of gross financial debt   (1,448)   (1,206))
Cost of net financial debt   (905)   (851)
Other financial income and expenses   (2,552)   (1,363
Other financial income and expenses   (2,552)   (1,363)
         
Income before tax   (42,856)   (9,107)
Tax on income   (42)   2,039
Consolidated net income   (42,898)   (7,068)
Net income attributable to non-controlling interests (minority interests) 46 89
Net income, Group share   (42,944)   (7,157)

Balance sheet (IFRS) – Assets

         
(in € thousands)   31 December 2017   31 December 2016
   
Non-current assets
Goodwill 64,183 68,152
Intangible assets 8,791 9,883
Tangible assets 8,760 10,812
Financial assets 2,516 1,587
Other non-current assets 816 819
Interests in equity-accounted joint ventures 6 338
Derivative financial instruments 0 11
Deferred tax assets   9,079   11,090
    94,151   102,691

Current assets

Inventories 1,662 1,902
Existing construction contracts (assets) 87,793 105,193
Trade receivables and related accounts 93,234 108,294
Current taxes (assets) 9,018 5,643
Other current assets 42,022 37,284
Derivative financial instruments 147 603
Cash and cash equivalents   38,553   39,861
    272,429   298,779
TOTAL ASSETS   366,580   401,470

Balance sheet (IFRS) – Liabilities

         
(in € thousands)   31 December 2017   31 December 2016
   
Shareholders' equity and liabilities
Equity capital 16,415 16,415
Issue premiums 35,538 35,538
Consolidated reserves – Group share 31,543 38,418
Profit for the year – Group share (42,944) (7,157)
Translation reserves (553) 5,988
Shareholders' equity (Group share) 39,999 89,204
Non-controlling interests (minority interests)   380   328
Total shareholders' equity   40,379   89,532
Non-current liabilities
Financial debt 8,241 4,741
Provisions 141 500
Provisions for pension liabilities and similar 1,892 1,871
Deferred tax liabilities 4,300 5,894
Other non-current liabilities   1,644   1,866
    16,218   14,872
Current liabilities
Financial debt 18,233 35,270
Provisions 9,776 8,395
Existing construction contracts (liabilities) 45,598 38,373
Trade payables and related accounts 166,039 190,323
Current tax liabilities 2,723 3,086
Derivative financial instruments 98 432
Other current liabilities   72,515   21,186
    309,982   297,066
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   366,580   401,470

Cash flow statement (IFRS)

         
(in € thousands)   2017   2016
         
Consolidated net income   (42,898)   (7,068)
   
Elimination of net income from equity-accounted joint ventures 96 19
Elimination of amortisation, depreciation and provisions 7,352 4,091
Elimination of revaluation gains/losses (fair value) 474 (674)
Elimination of the discounting effect 24 25
Elimination of other items without cash impact
Elimination of income from transfers and dilution losses and profits (26) 122
Income and expenses in connection with share-based payments        
Self-financing capacity after the cost of net financial debt and tax (34,977) (3,485)
Elimination of tax expenses (income) 42 (2,039)
Elimination of the cost of net financial debt   905   851
Self-financing capacity before the cost of net financial debt and tax (34,030) (4,673)
Impact of changes in WCR (2,501) (10,400)
Taxes paid   (2,205)   (1,496)
Cash flow from operating activities   (38,737)   (16,569)
 
Impact of changes in scope (316) (3)
Acquisition of tangible and intangible fixed assets (1,919) (2,849)
Changes in loans and advances granted 8 (481)
Disposal of tangible and intangible fixed assets 21 (12)
Other flows from investment   14   (14)
Cash flow from investing activities   (2,192)   (3,359)
 
Capital increase - other
Loan issues 8, 102 8,571
Loan repayments (10,412) (9,990)
Shareholder transactions: partial disposals / acquisitions
Net financial interests paid (459) (706)
Dividends paid to Group shareholders
Axens current account 56,000 0
Other flows from financing operations   0   (26)
Cash flow from financing activities   53,231   (2,152)
Impact of changes in foreign exchange rates   (2,062)   1,434
Change in cash position   10,239   (20,646)
 
Opening cash position 13,327 33,973
Closing cash position   23,566   13,327
Change in cash position   10,239   (20,646)

Contacts

Heurtey Petrochem
Jean Sentenac, Chairman
Jacques Moulin, CEO
Gregory Matouskoff, Group CFO
+33(0)1 47 14 80 73
invest@heurtey.com

Contacts

Heurtey Petrochem
Jean Sentenac, Chairman
Jacques Moulin, CEO
Gregory Matouskoff, Group CFO
+33(0)1 47 14 80 73
invest@heurtey.com