Posted at 2/27/20, 6:23 PM Press releases

Record operational results for Rompetrol Rafinare, in 2019

Rompetrol Rafinare, part of the KMG International Group, managed in 2019 to maintain a positive trend in terms of operational results, with record values for processed raw materials, fuel production and sales on the domestic market.

Consolidated indicators*		2019	2018	%
Gross turnover	USD	5,186,124,223	5,259,166,505	-1%
EBITDA	USD	131,130,649	148,349,935	-12%
Net result	USD	(48,977,553)	(27,675,188)	77%

_{Note: The consolidated financial statement of Rompetrol Rafinare include the results of Rompetrol Rafinare S.A. and those of the subsidiaries Rompetrol Quality Control S.R.L., Rom Oil S.A., Rompetrol Downstream S.R.L., Rompetrol Logistics S.R.L. Rompetrol Gas S.R.L and Rompetrol Petrochemicals S.R.L.}

In 2019, the two refineries owned by the Group registered a 7% increase in the total volumes of raw materials processed. For the first time in its 40-year history, the Petromidia refinery has exceeded the threshold of 6 million tons - 6.33 million tons, a historical record. Also, the Vega Ploieşti refinery recorded record numbers - 436 kt, compared to the 406 kt processed in 2018.

Due to the volumes of raw material processed, the distribution segment registered significant increases in terms of fuel marketing. Thus, in 2019, total fuel sales increased by 5%, from 2.38 million tons in 2018, to 2.5 million tons, last year.

In 2019, Rompetrol Rafinare recorded a consolidated gross turnover of approximately 5.2 billion dollars, close to that achieved in 2018. Operational profit (EBITDA) decreased by 12%, to 131 million dollars, and the net consolidated result was a negative one, over 48 million dollars.

The declining financial indicators were mainly influenced by the fluctuations of the refining margin (39.5 USD / t in 2019, compared to 45.9 USD / t in 2018) and the macroeconomic factors in Romania (7.5% depreciation of the RON / USD exchange rate, inflation of 4% in 2019). Also, to these results were added the volatility of quotations on the international market of raw materials and finished petroleum products.

Rompetrol Rafinare is Romania's largest exporter of petroleum products, quantities delivered to KMG International subsidiaries in Bulgaria, Republic of Moldova and Georgia and to partners in the Black Sea region, amounting to 2.63 million tons of petroleum products - near the level of 2018.

The company is still one of the most important contributors to the state budget of Romania, the total amount paid last year being increased by 6% over that of 2018, up to about 1.6 billion dollars.

Rompetrol Rafinare is mainly owned by KMG International (54.63%; directly and indirectly) and the Romanian State through the Ministry of Economy, Energy and Business Environment (44.69%).

Refining segment*

Financial indicator		2019	2018	%
Gross turnover	USD	4,417,308,906	4,446,012,518	-1%
EBITDA	USD	108,211,674	127,945,445	-15%
Net result	USD	(16,882,860)	(1,154,989)	N/A
Operational indicator
Raw materials processed - Petromidia	kt	6,331	5,925	7%
Raw materials processed - Vega	kt	436	406	7%
Internal fuel sales	kt	2,557	2,215	15%
Fuel sales for export	kt	2,169	2,229	-3%

_{Note: The refining segment includes the results of Rompetrol Rafinare SA referring to the activities of refineries Petromidia and Vega}

The Petromidia Năvodari refinery continued its production optimization programs and managed, in 2019, to complete a series of new investments, meant to bring more value to the operational processes (new system for liquefied petroleum gas recovery, modernized in-line blending units or digitizing processes by implementing Advanced Process Control). The programs initiated in 2014 aim, among other things, to increase the yield of white products, to reduce the technological loss or to optimize the operational costs.

The high volume of raw materials processed has determined, at the level of the Petromidia refinery, a total production of 1.37 million tons of gasoline and 2.93 million tons of diesel (up 5% compared to 2018). Also, the company managed to obtain 406 kt of Jet A1 aviation fuel, record level, with almost 30% over the quantities realized in 2018, as a result of optimizing the production recipes, but also to ensure the increasing market demand.

At the same time, Petromidia achieved a yield of 86.2 in white products (gasoline and diesel), a technological loss of only 0.8% wt and an energy consumption of 2.9 GJ / mt.

The largest and most complex refinery in Romania is considered to be one of the best performing units in Europe, Africa and the Middle East, according to a study made by a leading company specialized in comparative analysis in the energy sector. Petromidia has reached a complexity index of 11.4, which places it in the top of the refineries in the region.

Petromidia produces exclusively high quality Euro5 fuels (10 parts of sulfur per million), from the Efix and EfixS ranges, which can be found on the domestic market, but also in the Rompetrol fuel stations from the Republic of Moldova, Georgia and Bulgaria.

In 2019, the Vega Ploieşti refinery - the longest-standing unit in Romania and the only domestic producer of bitumen and hexane - recorded operational records for bitumen production (120 kt) and hexane production (92 kt).

Vega works in perfect synergy with the Petromidia - Năvodari refinery, the largest in Romania and one of the most modern in the Black Sea region. Thus, Petromidia supplies the full quantity of raw materials / semi-finished products to the Ploiesti refinery, needed to obtain special products with high added value.

In 2019, the gross turnover of the refining segment exceeded 4.4 billion dollars and stood at a level similar to that of 2018. Operational profit (EBITDA) was 108 million USD, down 15% from the one recorded in 2018, and the net result registered a loss of 16.8 million dollars.

The financial results were affected by the evolution of international quotations on raw materials and finished products, market conditions and refining margins.

Petrochemical segment*

Financial indicator		2019	2018	%
Gross turnover	USD	173,446,415	202,703,696	-14%
EBITDA	USD	(29,149,694)	(17,952,893)	62%
Net result	USD	(48,355,331)	(37,441,593)	29%
Operational indicator
Processed propylene	kt	153	143	6%
Processed ethylene	kt	38	60	-36%
Total sales from own production	kt	162	161	1%

_{Note: the petrochemicals segment includes the petrochemicals activity of Rompetrol Rafinare SA and Rompetrol Petrochemicals SRL}

The Petrochemicals segment continued in 2019 to be affected by the pressure of the market margins, which last year reached the lowest levels in the last decade: 398 USD / t for polypropylene, 158 USD / t for low density polyethylene (LDPE), respectively 157 USD / t for high density polyethylene (HDPE).

Considering that the raw material for polyethylene installations is assured from import (ethylene), and the evolution and fluctuation of the quotation for this raw material in 2019 was a high one, the company decided to keep the LDPE installation in operation at a low flow rate and at the conservation of the HDPE unit.

The Petrochemical Division operated by Rompetrol Rafinare is the only one in the country, implicitly, the only domestic producer of polypropylene and polyethylene. The dynamic development of this segment has ensured the company a competitive position in the regional market (Black Sea, Mediterranean, Central and Eastern Europe), and the objective is to maintain the operational advantage once the market has stabilized.

Distribution segment*

Financial indicator		2019	2018	%
Gross turnover	USD	3,078,017,249	3,087,416,280	0%
EBITDA	USD	51,571,501	37,721,397	37%
Net result	USD	18,662,421	11,343,003	65%
Operational indicator
Fuel quantities - retail	kt	789	714	11%
Fuel quantities - wholesale	kt	1,296	1,248	4%
LPG quantities sold	kt	417	424	-2%

_{Note: The distribution segment includes the results of subsidiaries Rom Oil, Rompetrol Downstream, Rompetrol Quality Control, Rompetrol Logistics and Rompetrol Gas}

The distribution segment recorded a gross turnover of 3.07 billion USD, similar to the level reached in 2018.

In 2019, the operational profit (EBITDA) increased by 37% and reached 51.5 million dollars, up almost 14 million from the previous year. Also, the net profit was over 18.6 million USD, an evolution with 65% over the indicator of 2018.

The positive financial results were supported by the increase in fuel sales, the adaptation to the domestic demand, which is why 54% of the products obtained at the refinery were marketed domestically, but also because of the opening of 46 new fuel sales points.

In 2019, retail fuel sales increased from 714 kt in 2018 to 789 kt in 2019, and wholesale volumes increased by 4%, from 1.25 million tons, to almost 1.3 million tons.

Last year, the international quotations for fuels depreciated by 10.2% in the case of Euro5 gasoline, respectively 8.2% in the case of Euro5 diesel. In addition, the 7.5% depreciation of the national currency against the dollar led to a drop of one liter of gasoline by 3.5% and one liter of diesel by 1.3%.

Rompetrol Downstream continued last year the expansion program of the fuel distribution network and also of the rebranding program of the petrol stations. Thus, at the end of 2019 it reached a network of 964 units, compared to 918 points, in 2018 (the network of own stations, partner stations, mobile stations: express, internal bases of 9 and 20 cubic meters).

*The consolidated financial statements of Rompetrol Rafinare include the results of Rompetrol Rafinare S.A. and those of the subsidiaries Rompetrol Quality Control S.R.L., Rom Oil S.A., Rompetrol Downstream S.R.L., Rompetrol Logistics S.R.L. Rompetrol Gas S.R.L. and Rompetrol Petrochemicals S.R.L.

*The consolidated results presented are preliminary and unaudited, and the reporting was performed in compliance with the International Financial Reporting Standards (IFRS).

*The information contained herein are provided as at the date of the report and may be subject to updates, revision, amendment or change without prior notice. The analysis of how the economic operations of the company related to the financial year 2019 were transposed into the financial statements will continue until the completion and auditing of the financial statements, which is why the information disclosed may be subject to changes in terms of both value and disclosure and categorisation.

Communication and Public Relations Department

KMG International