- CCS EBITDA was €605m in Q1’22 versus €324m in Q1’21, driven by higher crude prices, increased Upstream production and sustained solid Chemicals results, despite high energy costs
- CCS Net Income was €58m (IFRS Net Income €265m), an improvement versus €53m in Q1’21 (IFRS Net Income €75m)
- Cash flow from operations before working capital reached €205m, below Q1’21 figure of €309m due to increased taxes in Upstream compared to tax credits in Q1’21
- Continued deleveraging, with Net Debt to EBITDA ratio decreasing to 1.5x driven by stronger EBITDA performance
- Strong liquidity position of €3.4bn, covering 4.5 years of debt maturities
- Solid results underpin the new 2030 Strategy ‘Positive Motion’ announced at the end of March to become a leader in sustainable mobility and energy in Spain and Portugal and a benchmark in the energy transition
- Cepsa signed a series of strategic alliances to decarbonize air transport on a large scale, including the Iberia Group, Binter and Air Nostrum, through the development, production, and supply of sustainable aviation biofuels (SAF)
- As of April 1, Cepsa is offering special discounts of up to €25 cts/l on top of the €20 cts/l offered by the Government of Spain, to ensure that loyal customers can fill-up their tank with fuel prices similar to those of 2021. The discounts to help mitigate the impact of current extraordinarily high energy prices will remain in force until June 30
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“This is another solid quarter for Cepsa, with good delivery across all of our financial metrics. The performance follows the announcement of our 2030 ‘Positive Motion’ Strategy, which outlines an ambitious journey for Cepsa to become a leader in green hydrogen, biofuels and e-mobility. There is no question that these are uncertain times, particularly across the energy markets, and we continue to remain flexible to react to ongoing developments as required.”
Maarten Wetselaar - Cepsa's CEO
Market Environment
Crude prices in Q1 increased significantly, averaging 101.4 $/bbl during the quarter, (60.9 $/bbl in Q1’21 and 79.7 $/bbl in Q4’21) mainly as a consequence of the tight supply situation, exacerbated by the geopolitical tensions derived from the Ukraine conflict.
Refining margins increased during the quarter, with Cepsa’s average margin at 2.5 $/bbl (1.9 $/bbl in Q1’21 and 3.8 $/bbl in Q4’21), although negatively impacted by the increase in natural gas prices caused by the Ukraine conflict, which registered an average of 95.6 €/MWh (18.5 €/MWh in Q1’21 and 92.2 €/MWh in Q4’21).
Spanish fuel demand increased vs Q1’21 by 8%, even though it declined 8% vs Q4’21, affected by a strike in the transportation sector in Spain, which translated into reduced mobility.
Volatility in electricity prices remained during the quarter. Spanish pool prices continued to increase vs Q4’21 to an average of 229 €/MWh (+9% vs Q4’21), and 4x when compared with Q1’21.
Results Breakdown
Cepsa’s three main business divisions (Energy, Chemicals and Upstream) had a positive performance during the first quarter. EBTIDA was boosted by higher crude prices, increased Upstream production and sustained solid results from Chemicals, although high natural gas prices affected refining margins. By division:
- Energy (Commercial & Clean Energies, Mobility & New Commerce, Energy Parks and Trading). CCS EBITDA for the segment during Q1 stood at €143m (€89m in Q1’21 and €108m in Q4’21), mainly as a consequence of the improvement in the Energy Parks business. Refining margins during the quarter averaged 2.5 $/bbl, impacted by higher energy costs and reduced utilization vs Q4 at 83%, due to the planned turnaround of a crude unit at the Gibraltar-San Roque Energy Park. Commercial sales decreased by 8% versus Q4’21 as a result of the transportation strike mentioned earlier. Margins remained stable.
- Chemicals. Continued to register strong results, with CCS EBITDA of €110m, (€100m in Q1’21 and €106m in Q4’21) with similar volumes and sustained robust margins, despite the high gas and power prices recorded during the quarter.
- Upstream. Material improvement in results, with CCS EBITDA of €384m (€171m in Q1’21 and €290m in Q4’21), on the back of higher crude prices (+67% vs Q1’21 and +27% vs Q4’21) and increased production of 81.5 kbopd, significantly above previous quarters (71.9 kbopd in Q1’21 and 74.2 kbopd in Q4’21) due to lower OPEC quota restrictions, production ramp-up in Abu Dhabi and operational improvements in fields to reduce their natural decline.
2030 Strategy – Cepsa ‘Positive Motion’
Cepsa presented its new 2030 Strategy, ‘Positive Motion’ on 30 March with the aim of becoming a leader in sustainable mobility and energy in Spain and Portugal, and a benchmark in the energy transition.
By 2030, Cepsa will reduce its CO2 emissions (Scope 1 and 2) by 55% compared to 2019 and become carbon neutral before 2050. As for Scope 3, the company will reduce its carbon intensity index between 15% and 20% by 2030.
Under the plan, Cepsa will invest between 7 billion and 8 billion euros this decade, of which more than 60% will be allocated to sustainable businesses as of 2023. This will translate into a greater contribution of sustainable businesses to account for more than half of EBITDA by 2030.
Major Events
Cepsa signed a series of strategic alliances during the quarter to decarbonize air transport on a large scale, including with the Iberia Group, Binter and Air Nostrum, through the development, production, and supply of sustainable aviation biofuels from circular raw materials such as used cooking oils or non-food animal fats. The agreements contemplate other alternative energy sources such as renewable hydrogen and electricity to promote sustainable mobility in aircraft and ground fleets.
The company began dismantling its refinery in Tenerife, part of a strategic commitment between Cepsa and the Government of the Canary Islands to promote sustainability and energy transition by transforming the land into green areas for the city.
As of April 1, Cepsa is offering special discounts of up to €25 cts/l on top of the €20 cts/l offered by the Government of Spain, to ensure that loyal customers can fill-up their tank with fuel prices similar to those seen in 2021. The discounts to help mitigate the impact of current extraordinarily high energy prices, will remain in force until June 30.
