LETTER FROM THE VICE CHAIRMAN AND CEO PEDRO MIRÓ VICE-CHAIRMAN AND CEO OF CEPSA
In this overview of Cepsa s results and milestones over the last year, I would like to start by acknowledging the dedicated efforts of our team of pro- fessionals, who succeeded in over- coming the difficulties and challenges of the operating environment in which they undertook their activity.
Against a backdrop of persistently low oil prices that negatively impacted our upstream businesses and invest- ments, Cepsa managed to achieve an Adjusted Net Income of 596 million in 2015, 30% higher than the figure for the previous year.
Our strong earnings performance re- flects the strengths of our integrated business model, which enabled us to capture the benefits of robust refining margins and the rebound in domestic fuel demand, and withstand the vola- tility in global commodity markets.
In our Exploration & Production busi- ness, hit hardest by the oil price co- llapse, we were able to mitigate the market downturn by reducing costs and streamlining organizations.
Despite the difficult climate, we conti- nued to make progress in our upstream activity, with a production volume of over 100,000 barrels of oil per day. As notable accomplishments in the year, we started up a new field in Algeria and successfully drilled an offshore well in Suriname.
The Refining & Marketing segment delivered solid performance, driven
by exceptional international refining margins, coupled with operational ex- cellence at our facilities and a recovery in market share.
High utilization rates at our mainland refineries and optimisation plans to improve efficiencies and conversion yields at our facilities, enabled us to benefit from the positive margin envi- ronment.
Our Marketing activities also took full advantage of the turnaround in the domestic market, increasing our re- tail sales and market share and im- plementing a dynamic strategy with innovative products and services that enhance customer experience.
Results from our Petrochemicals busi- ness, however, were hindered by low margins in two of its key products: phenol and acetone. Nonetheless, we have continued to focus our efforts on markets where we have a significant presence, and on international growth and expansion projects.
The Gas segment also posted strong earnings, supported by our gas mar- keting activities and the excellent performance of the Medgaz pipeline, in which we have a 42% stake. Con- versely, the Power segment was hurt by new legislation and low prices, al- though we continued to carry out ac- tions geared towards positioning this business to take advantage of more favourable market prospects, such as the spin-off of our combined cycle plant, Nueva Generadora del Sur.
Capital expenditures topped 1 billion, earmarking most of this figure for op- timising our industrial processes, from productivity and safety improvements to new product development, emissions reduction and energy efficiency projects at our chemicals and refining plants. As a result of these initiatives and other measures implemented in the year, the Company has cut its energy and raw materials consumption per unit of processed product and its emi- ssions in most business areas.
I would like to thank our sharehol- der IPIC and our Board of Directors, for their support and confidence in me to handle the responsibility of overseeing the Company s day-to-day operations with the help of our ma- nagement team. I would not be able to meet this challenge successfully wi- thout our outstanding group of profe- ssionals, whose daily commitment and efforts make it possible to achieve our business goals.
3ANNUAL AND CORPORATE RESPONSIBILITY REPORT 2015