Oil and LNG Terminal Operator AB Klaipėdos nafta (KN) sales revenue for the three quarters of 2019 was EUR 77.2 million which was EUR 1.4 million higher than a year ago. In January-September 2019, the company's adjusted net profit was EUR 7.4 million (in 2018, it was EUR 11.4 million). Although the third quarter of KN was more favourable than in previous years, the overall nine-month results were affected by the decline in oil handling results over the first half of the year due to various unplanned external events.
The third quarter of this year saw a more favourable year-over-year for KN: in July-September, sales grew by 13 percent to EUR 26 million. Correspondingly, adjusted net profit amounted to EUR 3.1 million making this the most successful quarter this year.
During the nine months of this year, only 4.38 million tons of petroleum products were handled in KN oil terminals (in comparison to 5.03 million tons in 2018). The overall three-quarter handling result was largely influenced by the difficult first half of the year, when lower-than-planned oil supply was driven by a number of incidents at major customer plants and contaminated oil at the Družba pipeline.
During the third quarter of this year, the results of oil products handling operations were also influenced by planned repairs of oil refineries of major customers of the company. Nevertheless, during July – September about 1.5 million tons of oil products were handled at KN oil terminals, maintaining slightly higher volumes than in the respective period of the previous year and 5% higher volumes than in the second quarter of this year. The company views the remaining quarter of the year with moderate optimism: with the extension of the long-term cooperation agreement with BNK, more cargo volumes in Klaipėda are expected this year. The company’s efforts to diversify its portfolio of services and increase the variety of available products will also improve results. One example of a new product is ethanol imported for the first time this year through the oil terminal in Klaipėda.
“Our primary goal is still to increase the profitability of our operations through greater operational flexibility and the variety of services we offer to our customers. For some time now, oil terminals with our new tanks have shown significant increase in earned revenue by improving the handling of high volumes of oil products, and they have also been responsible for increased revenues from activities such as oil storage. We are also optimistic that the traditionally cold season is always better in terms of oil product handling,” said Darius Šilenskis, interim General Manager of KN.
In turn, LNG terminal activity in Klaipėda continues to maintain record volumes and extremely high operational efficiency. The favourable situation on the international gas markets has led to a 40 percent increase in gasification and rehandling volumes this year. LNG terminal revenue in Klaipėda during the first nine months of this year reached EUR 53.3 million and is almost 10 percent higher than in the corresponding period of the previous year. During the three quarters of the year, 31 gas carriers were accepted in Klaipėda, in comparison to the eight gas carriers accepted during the same period one year ago. During each month of the third quarter, the LNG terminal degasified a quantity significantly exceeding the total Lithuanian gas demand.
Appreciation of KN environmental focus
KN continues to focus on the environment and maintaining a sustainable neighbourhood. KN received EUR 200 thousand in support of the installation of an air pollutant treatment plant at Klaipėda oil terminal. These funds will come from the Lithuanian Environmental Investment Fund program. The company will allocate about EUR 300 thousand from its budget. The air pollutant treatment plant is part of a company-approved Environmental Action Plan. In total, by the end of 2021, KN plans to invest around EUR 8 million in environmental protection.
Another KN-coordinated project, Blue Baltics, was also acknowledged in the environmental context as it was awarded the prestigious Energy Globe Award Lithuania 2019 for its positive environmental impact. On the basis of Blue Baltics project, a liquefied natural gas (LNG) value chain in the Baltic Sea has been created and the use of clean fuels in shipping has been promoted.
Additional information on the publication of adjusted financial results
KN’s financial statements continue to be significantly affected by the International Financial Reporting Standard 16 “Leases”, which entered into force at the beginning of the year. This change has had a significant impact on the financial statements and comprehensive income of KN and, consequently, on its financial performance. When the Standard becomes effective, the lease is recognized as an asset and a liability (the right to the leased asset and the finance lease liability).
Since Standard 16 balances the published financial results and does not allow comparisons of actual results, KN also presents a managerial (adjusted) result in its financial statements. This allows for a better understanding of the entity's performance during the reporting period by eliminating the effects of factors that the entity does not actually experience, such as exchange rate changes, as these are offset due to the specifics of the regulated activity and have no real impact on the entity's performance.
