2016 Results

16/03/2017

Heurtey Petrochem announces its consolidated results for 2016.
 
The Board of Directors of Heurtey Petrochem met on 16 March 2017 and approved the Group's 2016 financial statements. The consolidated financial statements have been audited.
A certification report is being prepared.

Audited figures, in € million 
(IFRS)
2016 2015 Change
Revenues 319.1 420.3 -24%
Cost of sales (284.2) (360.5) -21%
Gross margin
% of revenues
34.9
10.9%
59.8
14.2%
-42%
Administrative and commercial expenses (35.2) (43.5) -19%
EBITDA* 3.8 24.7  
Current operating income
% of revenues
(0.3)
(0.1%)
16.3
3.9%
 
Other operating income and expenses (6.6) (0.6)  
Operating income (6.9) 15.7  
Share of equity-accounted companies
Financial profit
Tax
0.0
(2.2)
2.0
0.1
0.2
(7.7)
 
Consolidated net income (7.1) 8.3  
Net income, Group share (7.2) 8.3  

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

2016 revenues: €319 million
 
Heurtey Petrochem generated consolidated revenues of €319 million in 2016, down 24% compared to 2015. The Gas segment accounted for 22% of revenues, while the Furnaces segment represented 78% (52% in refining, 15% in petrochemicals and 11% in hydrogen). The regional breakdown was 33% from the Americas, 32% from Asia-Oceania, 21% from the Middle East and Africa and 14% from Europe and Russia.
 
 
A contrasting current operating profit for our two businesses

The Group’s gross margin, which came out at +€34.9 million, represents 10.9% of the Group’s revenues, with contrasting results between the two branches.
 
Despite a fall in business volume, the Furnaces branch showed considerable resilience with a gross margin of 13.2%. However, the Gas branch recorded a significantly lower gross margin rate, due to difficulties encountered in certain projects and a considerable under-utilisation of capacity connected to the delay in order intake in the second half of the year.
 
The cost reduction plan undertaken on Group level has resulted in an €8.3 million drop in administrative and commercial expenses, from €43.5 million to €35.3 million. The Group’s current operating income came out close to breakeven (-€0.3m), with a current operating margin of 3% in the Furnaces branch and a current operating loss of -10.6% in the Gas branch.
 
After taking into account a non-recurring operating expense of €6.6 million, mainly stemming from €5.9 million non-recurring costs generated by the restructuring plan carried out in the first half, the Group recorded an operating loss of €6.9 million.
 
The Group registered a financial loss of -€2.2 million, of which -€0.8 million in interest expenses, stable compared to 2015, and -€1.4 million in exchange losses.
 
After taking into account tax income of +€2.0 million, resulting from tax losses carried forwards, the net consolidated result amounted to -€7.1 million.
 
Sound business performance
 
Despite a persistently difficult market environment, the Group recorded €330 million in orders in 2016, 15% more than in 2015. The Furnaces segment accounted for 55% of these orders (25% in refining, 22% in hydrogen and 8% in petrochemicals), while the Gas segment represented 45%. This can be broken down as follows: 41% from the Americas, 30% from Asia-Oceania, 25% from the Middle East and Africa and 4% from Europe and Russia.
 
Financial position

At 31 December 2016, the Group had €40 million in financial debt (including €26.5 million overdrafts), up €4.7 million compared to 2015. With +€39.9 million in marketable securities and cash and cash equivalents, net cash amounts +€13.3 million and shareholders’ equity amounts +€89.5 million.
 
The fall in the net cash position, from €34.0 million to €13.3 million, stems in particular from the increase (€10.6 million) in the working capital requirement related to the specific environment prevailing during the year, characterised by reduced customer advance payments due to the limited number of projects in the start-up phase and many projects nearing completion not yet invoiced at the end of the year.
 
In the first half of 2016, Heurtey Petrochem concluded a new credit facility with its pool of banks, amounting to €39 million, €9 million of which to refinance its medium-term debt and €30 million in revolving credit. At 31 December 2016, the Group breached one of its financial covenants (financial debt/EBITDA). Therefore, Heurtey Petrochem will reimburse its medium-term debt and its revolving credit with the financial resources provided by its majority shareholder, Axens.

Successful takeover bid initiated by Axens

In October 2016, Axens, jointly with IFP Investissements, filed with the French financial markets authority (Autorité des marchés financiers – AMF) a draft voluntary takeover bid for the shares of Heurtey Petrochem. Axens, a wholly-owned subsidiary of the IFP Energies Nouvelles group, is a global leader in technology and catalysts for the refining and petrochemical industry. Heurtey Petrochem’s Board of Directors recommended that the Group’s shareholders tender their shares to the offer.
 
Following the takeover bid, Axens holds, jointly with IFP Investissements, who will soon bring in its shares to Axens, a total of 4,354,286 shares and 4,428,789 voting rights of Heurtey Petrochem, representing 88.6% of the share capital and 88.3% of the voting rights. The merger of Axens and Heurtey Petrochem will thus create a prime industrial technology group, offering an extended portfolio of solutions, broader geographic coverage and heightened financial resources to develop its various business lines.  
 
Outlook 2017
 
Thanks to its strong order intake, Heurtey Petrochem has managed to maintain its order book at a stable level of €411 million[1] at 31 December 2016, compared with €400 million1 at 31 December 2015.
 
The Gas segment accounted for 63% of orders, and the Furnaces segment for 37% (17% for refining, 15% for hydrogen and 5% for petrochemicals). The Americas account for 57% of the order book, Asia/Oceania 21%, Middle East/Africa 18%, and Europe/Russia 4%.
 
For 2017, the Group is expecting the market environment to remain difficult, and has set its target revenues at between €320 million and €350 million.
 
The restructuring plan which we implemented in 2016 has allowed us to significantly streamline our cost structure and adapt the Group to the current environment of low oil and gas prices. We are therefore prepared for more difficult markets in 2017. Furthermore, we are convinced that the merger with Axens represents a key advantage in the current market environment. Our activities are complementary, we serve the same clients and, by pooling our expertise and our technologies, we will be able to provide them with an extended range of solutions across the value chain, which will constitute a major competitive advantage,” notes Dominique Henri, Chairman and CEO of Heurtey Petrochem.



[1] The order book includes €107 million worth of contracts in Venezuela for which the Group does not anticipate any significant movement in the short term.