Statoil Fuel & Retail

Transcription

1 Statoil Fuel & Retail 4Q reporting - update Upside from lower level Recommendation: Buy Target: NOK 50 (55) 7 ruary Analyst: Ivar Andreas Lemmechen Gjul, This report was prepared by an analyst employed by Fondsfinans ASA, the Norwegian affiliate of Fondsfinans Inc., who is not registered as a research analyst with FINRA or subject to FINRA rules governing research. See the last page of this report for Important Disclosure Information. 1

2 4Q UPDATE Upside from lower level Underlying performance weak as expected Yield the big dissapointment -> Weak cash flow and debt ratio explains Downtick in fuel margins as expected We believe CEE margin has reached bottom Fuel volumes weak Scandinavia: Underlying not as bad as it looks Convenience was positive Estimates come down -> Target at NOK 50 (55) and Buy 2

3 GROUP Weak performance as expected, but the real disappointment was the yield EBITDA (NOKm) , Adjusted for the NOK 55 in inventory write-down for Scandinavia EBITDA was in line with our estimate Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Dividend (NOK per share) Q411E Yield was the biggest disappointment compared to our preview E 3

4 DIVIDEND Weak cash flow limits dividend From SFR's presentation Actual 2.57 Debt target outside range Increase in net pension liabilities of NOK 500 million Increase in working capital with NOK 120 from 3Q, higher than expected Increase in capex with NOK 303m YoY, higher than expected Short term debt up by NOK 400m, still 2.8bn to draw Source: SFR. 1) Total debt including NPV of operational leases (NOK ~1.67bn). 2) Adjusted EBITDA (12 months rolling) adjusted for implicit interest expense. 3) Adjusted for upcoming reduction to pension liabilities of NOK 300m Range defines credit rating, refinancing coming up in

5 DIVIDEND If debt level comes down as our estimates show there is upside to future yield level Total debt / adjusted EBITDA E 2012E 2013E Current estimate Level if NOK 3 was pais as dividend * Assumes delta dividend leads to debt increase We now estimate yield at 50% of EPS for 2012 = NOK 1.94 per share We estimate Net Debt / Adj. EBITDA to 2.26 at 4Q12 with 50% pay-out ratio If a dividend of NOK 3 was paid Net debt / Adj. EBITDA would increase to 2.37 by the end of

6 POLAND We believe CEE margin now has reached bottom Significant improvement in uary in Poland Pump Price* (PLN) Pump Price* (NOK) Pump Price and Brent Crude** (index NOK) PLN/NOK exchange rate Pump Price (index = 100) Brent crude (index = 100) Source: Bloomberg * Price included taxes for Euro-Super 95 Gasoline ** Does not reflect changes to refinery margins

7 FUEL VOLUMES Underlying decline in fuel volume in Scandinavia not as bad as it looks Scandinavia: Fuel volume (mill. liters) CEE: Fuel volume (mill. liters) 1,500 1,634 1,692 1,635 1,494 1,632 1,679 1,584 1, Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q411E Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q411E Road transportation fuel sold as heating oil in 4Q10 contributed to unusual high volumes Adjusted for sales as heating oil, underlying reduction moves from 2.4% to 1.3% Dependent on economic outlook in Europe B2B segment ok, cautious outlook for B2C segment 7

8 FUEL MARGINS We believe now upside to CEE margin Scandinavia: Fuel margin (NOK/l) CEE: Fuel margin (NOK/l) Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q411E Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q411E Underlying fuel margin Inventory write-down Inventory write-down reduced margin by NOK 0.04 "Intensified competition", at same level in 1Q12 Downtick as expected, much due to continued weakness in Poland Distribution costs were lower than expected (not included in margin) 8

9 CONVENIENCE Convenience is brightspot Scandinavia: Convenience gross pr. (NOK) CEE: Convenience gross profit (NOK) Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q411E Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q411E Strong car wash sales important Increasing sales revenue for the first time in several quarters Underlying up 3.8% Reported drop driven by negative FX conversion effect Increasing sales revenues 9

10 SPECIAL PRODUCTS Overall weak, says improvement in 1H12 Aviation fuel unit margin and volumes Higher than expected margin more than offset by volume decline Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q411E Aviation fuel volume (mill. liters) Aviation fuel unit margin (NOK/l) Lubricants unit margin and volumes Increased competition in CEE 19 Q Q Q Q Q Q211 Q311 Q411 Q411E 23 Unit margin negatively impacted by geographical mix and raw material prices Lubricants volume (mill. liters) Lubricants unit margin (NOK/l) 10

11 FEE & SERVICES AND OTHER PRODUCTS At normalized levels Fees & Services* gross profit (NOKm) Higher than expected Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q411E Other products** gross profit (NOKm) Now at normalized levels Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q411E 11 * Figures for Scandinvavia, CEE and Special Products combined ** Figures for Scandinvavia and CEE combined

12 Segmental deviations Q411 change on: Q410 Q311 Q411 Q411E Q411E Q410 Revenues 17,372 19,078 18,603 18,464 1 % 7 % Gross profit 2,721 2,586 2,386 2,563-7 % -12 % EBITDA % -18 % Operating profit % -29 % Pre-tax profit % -39 % EPS adjusted % -38 % EBITDA per segm ent Scandinavia % -14 % CEE % -53 % Special products % -63 % Corporate % -103 % Eliminations % 0 % Gross margin per segment Road transportation fuel 1,303 1,380 1,165 1, % -11 % Convenience % 4 % Other products % -31 % Fees and services % -19 % Aviation fuel % -8 % Lubricants % -35 % Other % -3 % Eliminations % 34 12%

13 ESTIMATE CHANGES Estimates come slightly down ESTIM ATE 2011E 2012E Change % CHANGES Current Previous Current Previous Revenues 73,690 73,551 73,200 74,235 0 % -1 % Gross profit 10,033 10,210 10,260 10,478-2 % -2 % EBITDA 3,037 3,084 3,146 3,224-2 % -2 % EPS adjusted % -4 % Dividend per share % -35 % Gross profit per segment Scandinavia 7,683 7,780 7,661 7,752-1 % -1 % CEE 1,532 1,551 1,648 1,732-1 % -5 % Special products ,005 1,036-7 % -3 % Other % -1 % Eliminations ,022-1,022-1 % 0 % EBITDA per segment Scandinavia 2,749 2,818 2,697 2,751-2 % -2 % CEE % 0 % Special products % -10 % Other % -1 % Eliminations % 0 % Gross profit per product Road transportation fuel 5,103 5,248 5,143 5,348-3 % -4 % Convenience 2,816 2,811 2,919 2,916 0 % 0 % Other products % -2 % Fees and services % 5 % Aviation fuel % -2 % Lubricants % -4 % Other % -1 % Eliminations ,022-1,022-1 % 0 % 13

14 Attachments kets Valuation 14

15 SWEDEN New fuel tax contributes to higher pump price Pump Price* (SEK) Pump Price* (NOK) Pump Price and Brent Crude** (index NOK) 120 SEK/NOK exchange rate Pump price (index = 100) Brent crude (index = 100) Source: Bloomberg * Price included taxes for Euro-Super 95 Gasoline ** Does not reflect changes to refinery margins 15

16 DENMARK Looks better Pump Price* (DKK) Pump Price* (NOK) Pump Price and Brent Crude** (index NOK) DKK/NOK exchange rate Pump price (index = 100) Brent crude (index = 100) 1.01 Source: Bloomberg * Price included taxes for Euro-Super 95 Gasoline ** Does not reflect changes to refinery margins 16

17 NORWAY Still margin pressure Pump Price* (NOK) Pump Price and Brent Crude** (index NOK) Pump price (index = 100) Brent crude (index 100) Source: Bloomberg * Price included taxes for weighted diesel and gasoline 95 ** Does not reflect changes to refinery margins 17

18 POLAND Appreciating zloty important sign Pump Price* (PLN) Pump Price* (NOK) Pump Price and Brent Crude** (index NOK) PLN/NOK exchange rate Pump Price (index = 100) Brent crude (index = 100) Source: Bloomberg * Price included taxes for Euro-Super 95 Gasoline ** Does not reflect changes to refinery margins

19 ESTONIA Recovering from price war Pump Price* (SEK) Pump Price* (NOK) Pump Price and Brent Crude** (index NOK) SEK/NOK exchange rate Pump Price (index = 100) Brent crude (index = 100) Source: Bloomberg * Price included taxes for Euro-Super 95 Gasoline ** Does not reflect changes to refinery margins

20 LITHUANIA More positive outlook Pump Price* (LTL) Pump Price* (NOK) Pump Price and Brent Crude** (index NOK) LTL/NOK exchange rate Pump Price (index = 100) Brent crude (index = 100) Source: Bloomberg * Price included taxes for Euro-Super 95 Gasoline ** Does not reflect changes to refinery margins 20

21 LATVIA Also looks better Pump Price* (SEK) Pump Price* (NOK) Pump Price and Brent Crude** (index NOK) Pump price (index = 100) Brent crude (index = 100) Source: Bloomberg * Price included taxes for Euro-Super 95 Gasoline ** Does not reflect changes to refinery margins SEK/NOK exchange rate

22 Attachments kets Valuation 22

23 VALUATION We adjust target to NOK 50 (55) Valuation ranges DCF 50 Target changed to reflect estimate adjustments Fuel retail peers 52 Fuel retailers now prices SFR higher than food retailers Foods retail peers NOK per share Valuation range Valuation 23

24 VALUATION DCF valuation at NOK 50 DCF valuation PV CF PV CF DCF Per Implicit EV/EBITDA PV distributed TV value share 2,010 2, E 2013E Scandinavia 807 5,037 8,830 14, Central & Eastern Europe 183 1,660 3,501 5, Special Products , Other Eliminations Es t. EV 1,003 6,973 12,847 20, Net interestbearing debt 5, Property and other assets Value equity 15, NPV today 15,

25 VALUATION DCF assumptions Beta 1.2 ket risk premium 5.0 % Risk free rate 4.00 % Tax 0.0 % Debt risk premium 2.0 % Equity ratio 75.0 % Return on equity 10.0 % Return on debt (pre-tax) 6.0 % WACC 9.0 % WC/Sales -3.0 % Capex/Sales -2.6 % Sensitivity % add-on in WACC 0 % TV grow th rate 2.3 % DCF Analysis Figures in MNOK 2, E 2012E 2013E 2014E 2015E 2017E 2018E 2019E 2020E TV Operating revenues Scandinavia 45,115 50,548 49,426 49,971 50,571 51,178 52,414 53,043 53,679 54,323 Scandinavia growth (%) % 12.0 % -2.2 % 1.1 % 1.2 % 1.2 % 1.2 % 1.2 % 1.2 % 1.2 % Central & Eastern Europe 13,006 14,044 14,496 16,406 17,554 18,783 21,806 23,332 24,966 26,713 Central & Eastern Europe growth (%) % 8.0 % 3.2 % 13.2 % 7.0 % 7.0 % 7.0 % 7.0 % 7.0 % 7.0 % Special Products 7,773 9,536 9,722 9,930 10,178 10,433 10,961 11,235 11,516 11,804 Special products growth (%) % 22.7 % 1.9 % 2.1 % 2.5 % 2.5 % 2.5 % 2.5 % 2.5 % 2.5 % Other ,012 1,043 1,059 1,075 1,091 Other growth (%) % 13.4 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % Eliminations ,392-1,413-1,434-1,456-1,477-1,522-1,545-1,568-1,592 Elimibnations growth (%) % 53.6 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % Total 65,829 73,690 73,200 75,856 77,845 79,929 84,701 87,124 89,667 92,339 EBITDA Scandinavia 2,765 2,749 2,697 2,734 2,832 2,866 2,935 2,970 3,006 3,042 Scandinavia margin (%) 6.1 % 5.4 % 5.5 % 5.5 % 5.6 % 5.6 % 5.6 % 5.6 % 5.6 % 5.6 % Central & Eastern Europe ,050 1,123 1,202 Central & Eastern Europe margin (%) 4.1 % 2.0 % 2.6 % 3.8 % 4.3 % 4.5 % 4.5 % 4.5 % 4.5 % 4.5 % Special Products Special products margin (%) 2.3 % 0.9 % 2.1 % 1.7 % 2.7 % 2.7 % 2.7 % 2.7 % 2.7 % 2.7 % Other EBITDA 3,479 3,038 3,146 3,397 3,733 3,862 4,078 4,187 4,302 4,422 EBITDA-margin (%) 5.3 % 4.1 % 4.3 % 4.5 % 4.8 % 4.8 % 4.8 % 4.8 % 4.8 % 4.8 % + Calculated tax ,019-1,047-1,075-1,106 2,609 2,278 2,360 2,547 2,800 2,897 3,058 3,140 3,226 3,317 NOPLAT + Net investments w orking capital 2,365-1, Net investments assets ,439-1,300-1,320-1,290-1,305-1,337-1,353-1,369-1,385 Net cash flow 4, ,015 1,213 1,450 1,529 1,653 1,715 1,781 1,851 27,631 25

26 VALUATION Fuel retailer based peer valuation at NOK 52 Fuel retailer peers FUNDAMENTALS EV/EBITDA EV/EBIT P/E adj. Company Ticker Crncy M. cap. EV Price E 2013E E 2013E E 2013E Polski Koncern Naftowy Orlen PKN PW NOK 30,546 52, Neste Oil Oyj NES1V FH NOK 18,858 35, Motor Oil (Hellas) Sa MOH GA NOK 4,746 14, Erg Spa ERG IM NOK 9,711 19, neg. neg Casey'S General Stores Inc CASY US NOK 11,645 14, Pantry Inc PTRY US NOK 1,701 7, Susser Holdings Corp SUSS US NOK 2,910 5, Omv Petrol Ofisi As-A Sh PTOFS TI NOK 9,057 20, n.a n.a. n.a. n.a n.a. n.a. n.a. Average Median Peer based valuation Fuel retailers 2, E 2012E 2013E 2012 x EBITDA EV Value per Share Scandinavia 2,765 2,749 2,697 2, , Central & Eastern Europe , Special Products ,284 4 Other Eliminations Enterprise Value 3,646 3,038 3,145 3, , Net interest bearing debt 5, Other adjustments 0 0 Equity value 15, Number of shares outstanding 300 SUM OF THE PARTS 52 26

27 VALUATION Food retailer based peer valuation at NOK 48 Food retailer peers FUNDAMENTALS EV/EBITDA EV/EBIT P/E adj. Company Ticker Crncy M. cap. EV Price E 2013E E 2013E E 2013E Axfood Ab AXFO SS NOK 11,052 11, Kesko Oyj-B Shs KESBV FH NOK 18,213 19, Tesco Plc TSCO LN NOK 242, , Sainsbury (J) Plc SBRY LN NOK 50,684 70, Wm Morrison Supermarkets MRW LN NOK 67,792 77, Colruyt Sa COLR BB NOK 38,344 36, Casino Guichard Perrachon CO FP NOK 58, , Average Median Peer based valuation Food retailers 2, E 2012E 2013E 2012 x EBITDA EV Value per Share Scandinavia 2,765 2,749 2,697 2, , Central & Eastern Europe ,379 8 Special Products ,284 4 Other Eliminations Enterprise Value 3,646 3,038 3,145 3, , Net interest bearing debt 5, Other adjustments 0 0 Equity value 14, Number of shares outstanding 300 SUM OF THE PARTS 48 27

28 FORECAST Fuel margins will be stock triggers in the short term Key figures (NOKm) E 2012E 2013E Q410 Q411 Revenues 65,829 73,690 73,200 75,856 17,372 18,603 Gross profit 10,530 10,033 10,260 10,678 2,721 2,386 EBITDA 3,644 3,037 3,146 3, Operating profit 2,341 1,864 1,952 2, Pre-tax profit 1,923 1,496 1,570 1, EPS, adj CFPS, adjusted Dividend per share Dividend yield 6.1 % 4.7 % 5.1 % 5.9 % EV/EBITDA EV/EBIT P/E, adj P/B ROE 17.5 % 13.9 % 15.2 % 16.2 % ROCE 10.2 % 10.6 % 11.2 % 11.9 % Trading at EV/EBITDA 2012E at 5.4x Peers trading at 6.4x Risk is down Indicates good entry point 28

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