Efficient operation and successfully managed risks determined KN high annual results

Date

2018 01 31

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KN (AB “Klaipėdos nafta”), the oil and liquefied natural gas (LNG) terminal operator, is proud of having overcome last year’s challenges and achieved high income and profitability indicators despite the tense and dynamic situation in the market. KN last year’s income amounted to EUR 106,5 million, and the company earned a net profit of EUR 17 million.

As a comparison, in 2016, the income amounted to EUR 103,8 million and the net profit amounted to EUR 13,8 million respectively. In accordance with the non-audited financial statements, the return on equity during the reference period amounts to 8.7%, EBITDA margin – 29.4%, and the net profit margin – 16.0%.

This aim was achieved through proper management of cargo flow risks, rational planning as well as flexible and time-intensive decision making.

According to KN CEO Mindaugas Jusius, last year’s financial indicators are optimistic indeed, since the company’s operations were affected by extremely unfavorable external circumstances determining a considerably lower oil product loading in the first six months of the year.

Nevertheless, the company managed to stabilize the cargo flow and ensure sound annual indicators – almost 7.2 million tonnes of oil products were reloaded to the company’s containers in Klaipėda and Subačius oil terminals.

Over 2017, the LNG terminal accepted 15 LNG carriers, which brought 839,8 thousand tonnes of LNG. The gas was supplied to Lithuania from 4 states. 6 small-scale LNG reloading operations were carried out in 2017 as well. The demand for services of the LNG terminal maintained its high level, and in certain months the terminal’s operations exceeded 90 % of its capacity.

“KN is a public liability company, therefore, one of our main goals is to ensure profitable operations and return to our shareholders, including to the state. That is why every year we pursue ambitious value enhancement goals. Last year we exceeded our goals because we put much effort and many of our internal resources to risk management, creation of competitive conditions in oil terminals and speedy implementation of technological decisions. We also gained additional profit by rendering consulting services in international markets and by realizing the oil products we have accumulated during the production process,” notes Mindaugas Jusius in his overview of the results.

The head of the company highlights that last year the company demonstrated financial growth as well as focused its human and other resources on the implementation of investment projects. Last year, the major share of the company’s investments was focused on the development of the “Klaipėda nafta” terminal, i.e. construction of new tanks for oil product storage and a LNG reloading station. In 2017, a total of EUR 32.9 million were invested, the first stage envisaged in the company’s strategy was implemented and the works of the second stage were launched.

“It is essential for any company to invest into technologies and infrastructure meeting market demands, if it seeks not only to stay competitive but also to progress further and to be the leader in its field. As we work with European Union states, Eastern states and other markets, we have to feel the pulse and to take active participation in this ever-changing process. The LNG market is the most changing market in terms of growth, therefore, we are constantly in search of possibilities for developing this field of activities so essential for the company. Last year, the LNG terminal ensured almost half of Lithuania’s gas demands, and, as of the beginning of the last year, we have been persistently making our path to small-scale LNG reloading operations thus not only ensuring energetic independence but also creating added value for the state to develop new activities,” – says Mr. Jusius.

For 2018, KN is planning a more conservative budget, yet it will pursue a profit not lower than EUR 10.2 million. The company claims that the key risks are related to the intense geopolitical situation. A one-off technical effect of regulated activities and investments into newly developed activities, which will generate profit in the future, will have direct negative influence on the results.

“In Klaipėda, we will try to ensure that the amount of the oil product reloads is not lower than the amount recorded in 2017. However, higher indeterminacy is being observed in the market, and fierce competition with terminals of other Baltic states and Ukraine will be a huge challenge on our way towards high profitability. In addition, new activities developed by the company, i.e. small-scale LNG loading operations and international projects, are at their early-life stage and require additional resources. Therefore, we are more cautious in assessing the forecasts of financial results of 2018,” Mr. Jusius highlights.

The CEO claims that the company will focus on the strengthening of its team. “I consider the KN team to be a strong team, which is ready to withstand and cope with any challenges arising on its path. However, I believe that long-term success first depends on employees’ involvement, therefore, this year, we will pay more attention to the enhancement of the organizational culture: we are introducing a project of the company’s virtues and we intend to maintain a closer relationship with companies surrounding us, to seek for solutions aimed at improving the quality of the environment."