| Preview of Income Statement, 4th quarter of 1995 |
1. INTRODUCTIONRepsol's net income for the third quarter of 1995 was 29,986 million pesetas, 51.9 % higher than that for the same period in 1994. Accumulated net income for the first three quarters was thus 92,149 million pesetas, as compared with 69,422 million pesetas last year. Operating income amounted to 57,109 million pesetas for the quarter and was 45.8% more than in 1994, with accumulative income for the nine-month period at 168,489 million pesetas, showing a rise of 32.1%. In LIFO terms, operating income improved by 35.1%, reaching 170,398 million pesetas. Net cash flow for the three month period was 64,110 million pesetas and the accumulated figure was 188,998 million pesetas, that is 30.5% and 20.8% respectively higher than 1994. 51,333 million pesetas were invested over the third quarter of 1995 and the cumulative total was 129,503 million pesetas as opposed to 134,628 million pesetas for the same term last year. Higher cash-flow and restricted investment lowered the company's debt level to 199,193 million pesetas at the end of the third quarter, thus registering a fall of 54,387 million pesetas over the figure at the same date last year. The following circumstances have affected our activities over the third quarter:
Other outstanding events of the quarter were as follows:
The next part of our report gives greater detail of the company's performance by activities during the term. 2. ANALYSIS OF RESULTS BY ACTIVITIES2.1. Exploration and productionOperating income for this activity reached 6,577 million pesetas during the third quarter of 1995, 48.8% higher than the same period of 1994. This figure included 2,800 million pesetas for capital gains on the sale of assets in Angola. The lower price of crude oils during this term and the stronger parity of the peseta with respect to the dollar (an average of 122.8 pts per dollar over the third quarter of 1995, as opposed to 129.3 pts per dollar in 1994) restrained these results. For the first nine-months of the year, operating income amounted to 16,436 million pesetas, showing a rise of 39.5% compared to last year. Operating cash-flow amounted to 34,846 million pesetas as opposed to 31,628 million pesetas from January to September of 1994. At 189,600 barrels of oil equivalent per day (boepd), oil and gas production was 10.6% lower than in 1994. This was due to the end of gas production at Gaviota and a lower output from Dubai. Third quarter investments amounted to 10,110 million pesetas compared to 7,981 million pesetas last year. Development of a small discovery, Rodaballo I, made last July in the Spanish Mediterranean, will begin shortly, thus prolonging the productive life-span of the Casablanca field. The Harding field is expected to go into production at the beginning of next year. Production at another development project, the Murzuk field in Libya, is due to start up at the end of 1996. Here, basic engineering and alloting of the first part of the pipeline has already been completed. 2.2. Refining and Marketing Operating income for the third quarter was 24,630 million pesetas which signifies a rise of 2.3% over figures registered for the same period in 1994, and is 86.4% greater than that registered for the second quarter of this year. Accumulated operating income for the first three quarters was 54,268 million pesetas in comparison to 72,323 million pesetas for the same nine months of 1994. This lower result, as we have already explained in earlier reports, reflects a fall in refining margins and the pricing policy for automotive gasoil. Third quarter results, apart from suffering the effects of weak international refining margins, reflected a series of positive factors:
With regard to international activity, the company began operating in Ecuador, where it has acquired a small service station network. It also signed a contract in Peru for the purchase of a company owning another small network of service stations. These transactions have allowed Repsol to set up activities in two Latin American countries whose oil sectors are undergoing deep changes and can, therefore, offer the company good prospects. Investments of 61,948 million pesetas were made in this area for the first nine months of 1995, as opposed to 57,540 million pesetas the previous year. A great part of this outlay was to link up service stations. In fact, 142 service stations were linked up, with a rise of 54% over the whole of 1994. Consequently, 72% of Repsol's service stations are now owned by the company. 2.3 Chemicals Operating income for the third quarter of 1995 was three times that for the same period last year, at 16,605 million pesetas. Figures for the first three quarters of the year reached 57,942 million pesetas as opposed to 10,730 million pesetas in 1994. However, these good results do not reflect the changing trend in margins that took place during this last quarter. In fact, China has decreased its imports of plastics and this has changed the trade flows from traditionally exporting zones to that market, considerably affecting European markets. Together with the policy to lower their stock-piles being followed by the main European consumers, this circumstance has led to a fall in margins on the main types of plastic and, towards the end of the third quarter, on intermediate products (basically styrene). The company's sales of petrochemical products during this quarter fell by 13% in comparison to 1994. However, accumulated data to September showed performance to be 1.2% better than in 1994. Investments in chemicals for the three-quarter period, mainly to increase capacity as explained in previous reports, were 5,217 million pesetas, in comparison to the 2,495 million pesetas spent over the term last year. 2.4 Gas Quarterly operating income for the activity was 34% up on 1994, at 9,376 million pesetas. Accumulated figures for the nine months reached 42,204 million pesetas as opposed to the year earlier 33,328 million pesetas. Both LPG and natural gas activities contributed to these improved results. Third quarter income in LPG was 3,943 million pesetas and registered an 8.3% increase over 1994, showing the benefit of cost-cutting efforts and the positive effect of time lag applied by the formula for setting price ceilings on feedstocks. Bottled LPG sales for the term dropped by 4%, whereas demand for the "Tailor-Made Plan" and piped gas continued to grow. Customers for the "Tailor-Made Plan" and piped gas increased by 15,000 over the third quarter, reaching a 19% accumulative rise over the first three quarters of 1995. As for natural gas, operating income jumped by 61.8 % over 1994 figures to 5,432 million pesetas. It should be noted that the third quarter of last year was the first to include Enagas results, which means that a direct comparison may be drawn on equal terms and this rise may be attributed to the expansion of industrial and residential-commercial activity. Indeed, industrial markets showed a 15% growth in the third quarter, registering a demand for 14,918 million thermies. For its part, residential commercial customers rose by over 46,000 in the third quarter of this year, showing a growth of 7 % over those at the end of 1994. Investment in LPG for the first nine months of this year amounted to 5,786 million pesetas and rose by 8.6% over the previous year. Apart from spending to develop new markets, considerable amounts were dedicated to the rationalizing of costs. In natural gas, 28,832 million pesetas were invested in comparison to 42,504 million pesetas for the same nine-month period a year earlier, which included the investment in Enagas (23,193 million pesetas). During this last quarter, Gas Natural SDG raised its stake in Gas Natural BAN to 47.7%. 2.5 Adjustments and OthersA balance of 2,361 million pesetas was reported under this heading for the first nine months of 1995, in contrast with 589 million a year earlier. The reason for this rise was the provision of 1,750 million pesetas set aside as a dotation for the Repsol Foundation, approved at the last Annual General Meeting. 3. FINANCIAL RESULTSNet financial expenses for the third quarter fell to less than half those reported for the same period of last year and amounted to 2,295 million pesetas, mostly as a consequence of lower debt and better performance by our financial investment portfolio. 4. GOODWILL AMORTIZATIONThis caption showed a figure of 2,598 million pesetas for the term. During this period, the company decided to pay off a very considerable portion of its goodwill, as part of its conservative policy in tending to keep charges against future results to a minimum. In fact, goodwill amortization in coming financial years will be limited to 500 million pesetas per annum. 5. EXTRAORDINARY ITEMSAn extraordinary loss of 1,282 million pesetas was reported for the third quarter of 1995, mainly because of up-dating provisions to cover tax contingencies. 6. INCOME TAXOutlay to cover income tax was estimated at September 30th, 1995, as 49,358 million pesetas, which represents an effective tax rate of 33%. This has been raised from the figure of 32% calculated in the second quarter almost entirely because of the extraordinary amortization of the items explained above, which are not deductible on company income tax. If these factors had not existed, the effective tax rate would have been nearer normal levels for the Group, at around 31%. REPSOL SUMMARISED INCOME STATEMENT(Million pesetas)- NON -AUDITED FIGURES-
_________________________________________ ANALYSIS OF REPSOL OPERATING INCOME BY ACTIVITY(Million pesetas)- NON -AUDITED FIGURES-
_________________________________________ ANALYSIS OF REPSOL OPERATING REVENUES BY ACTIVITY(Million pesetas)- NON -AUDITED FIGURES-
_________________________________________ REPSOL'S INVESTMENTS BY ACTIVITIES(Million pesetas) - NON -AUDITED FIGURES-
_________________________________________ REPSOL COMPARATIVE BALANCE SHEET(Million pesetas)- NON -AUDITED FIGURES-
REPSOL CONSOLIDATED STATEMENTS OF CASH FLOWS THIRD QUARTER 1995(Million Pesetas) - NON -AUDITED FIGURES-
OPERATING HIGHLIGHTS- NON -AUDITED FIGURES-
___________________________________________________ Madrid, November 14th, 1995 |
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