Puma Energy today announced its quarterly financial results for the three-month period ended 31 March 2022. The company saw an improvement in EBITDA on a constant perimeter basis, mainly driven by increased gross profit in the retail business as a result of continued post COVID-19 recovery and the company’s investment in its downstream retail network. The reduction in fixed costs, the partial recovery of the bitumen business and an increase in supply margins also contributed to the company’s improved performance. On a constant perimeter, volumes are flat relative to the fourth quarter of 2021 but up 18 per cent versus the first quarter of 2021. Puma’s capital structure was strengthened through the launch and successful closure of its 2022 term loan and revolving credit facilities (RCF). Puma Energy continued to deliver on its strategy to evolve and strengthen the business by focusing on core downstream markets and new energy solutions.
Health and Safety
Health and safety is Puma’s first priority and the company has launched a number of initiatives to improve its HSEC performance, as well as increased collaboration with Trafigura to share best practice and drive up standards across the group. This quarter Puma has also focused on improving the quality of its reporting and for the first time the company has included contractors LTIFR in its results in order to align with industry best practice. In the quarter, Puma Energy’s Lost Time Injury Frequency Rate (LTIFR) was 0.18 including Puma employees and contractors. For Puma employees, the LTIFR was 0.43 for the quarter, this means on like-for-like basis the company saw a deterioration in performance relative to an LTIFR of 0.14 for employees in 2021. While the number of incidents is the same as last year in absolute terms, the increase in LTIFR is a result of lower working hours due to the divestment of Angola, Pakistan and Ivory Coast.
Simplifying the Business
In line with its new strategy and plans to focus on its core downstream business, on 14 March 2022 Puma Energy announced it has agreed to sell a significant part of its infrastructure and storage business to ITG Sàrl, the parent company of Impala Terminals. Subject to a number of material commercial and regulatory approvals, the process is expected to complete in Q3 2022.
2022 Term Loan and Revolving Credit Facility
Puma Energy’s 2022 term loan and RCF was launched on 15 March 2022 and successfully closed, after the end of the reporting period, on 3 May 2022. The successful outcome of the process demonstrated strong support from the company’s lending groups, both in the current underlying performance of the company and its future plans. The oversubscribed facility raised USD 695 million, the highest figure in three years and more than the initial offer of USD 600 million. Around one third of the facility comprised a two-year tenor loan, for the first time since 2018.
Focused on Core Downstream Retail, B2B Commercial and New Energies
The company’s strategy to drive growth by refreshing its offer for retail customers in core markets continued this quarter with the opening of nine new to industry sites and 10 new to Puma sites across the network. This builds on the 68 new stores opened in 2021 and 150 forecourts refurbished in 2021. On a constant perimeter, total gross margin in the retail business grew from USD 92 million in the first quarter of 2021 to USD 112 million this quarter.
In addition, the company delivered improved B2B commercial volumes, where on a constant perimeter basis gross margin grew from USD 58 million in the first quarter of 2021 to 64 million this quarter. This is a result of continuous and proactive approach to customer engagement and growth.
Puma Energy’s plans to reduce the company’s carbon footprint and develop capabilities and expertise in the renewable energy sector also accelerated. In the quarter, the company more than doubled the number of solar power projects in operation at its sites by installing and bringing online 62 new projects, taking the total number of solar installations in operation to 101, with an operational capacity of 3.1 MWp. The roll out will continue in the next quarter and we expect several larger projects to come online at our terminals in Latin America.
Quarter one 2022 financial performance at a glance
• Gross profit rose by USD 26 million from USD 245 million in quarter four 2021 to USD 271 million this quarter on a constant perimeter basis. On an unadjusted basis, this quarter’s gross profit was broadly in line with USD 270 million in quarter four 2021.
- Sales volumes were up 10% at 5,131,000m3 up from 4,662,000m3 in quarter one 2021, on an unadjusted basis but down relative to quarter four 2021, due to the divestment of Angola, Democratic Republic of Congo, Ivory Coast and Pakistan. On a constant perimeter volume rose 18% from 4,320,000m3 in quarter one 2021.
- Unit margins at USD 53 per m3 are higher than the previous quarter’s performance of USD 50 per m3.
- On a constant perimeter basis fixed costs reduced from USD154 m in quarter one 2021 to USD 145 million this quarter, a reduction of 6%.
- EBITDA rose to USD 122 million up from USD 108 million in the fourth quarter 2021, on an unadjusted basis. On a constant perimeter EBITDA is up by 24 per cent relative to quarter four 2021 and 12 per cent relative to quarter one 2021.
- Change of working capital stood at USD -121 million mainly due to a change in the payment terms for the supply of crude to the refinery in Papua New Guinea.
- Net debt stood at USD 353 million a reduction from USD 1,386 million in Q1 2021 and USD 472 million in Q4 2021 as result of an increase in the value of inventories.
- Ample liquidity to tackle volatile market conditions with undrawn RCF at the end of the quarter and USD 355 million in cash.
Commenting on the results, Carlos Pons CFO, said:
“Puma Energy delivered improved results this quarter while continuing our strategy to strengthen and evolve our business by focusing on core downstream markets and expanding our portfolio of energy solutions. Given our ongoing investment in retail sites in core markets and our efforts to expand our portfolio of commercial customers, we are particularly pleased to report the continuing increase in gross margin across our retail and commercial businesses.
“While the world continues its recovery from COVID-19, we remain vigilant to current market volatility resulting from the Ukraine-Russia war. In response, we are actively engaging with customers and stakeholders to mitigate the current market circumstances. Importantly, the security of supply afforded by our closer relationship with Trafigura means we are able to continue to navigate this volatility and deliver improved performance, with gross profit and EBITDA rising relative to Q4 2021.”