Petroplus announces a net loss of EUR 0.9 million from normal operations over the first quarter 2004

5/18/2004, 8:15 AM (Source: GlobeNewswire)
Including non-recurring items, the first quarter net profit amounts EUR 47.7 million Petroplus International NV ("Petroplus") today announces its first quarter 2004 results. Petroplus reported a net profit of EUR 47.7 million compared to a net profit of EUR 8.2 million in the first quarter of 2003. Excluding non-recurring items, the first quarter 2004 showed a net loss of EUR 0.9 million.

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EUR (000)
Q1 2004 Q1 2003 % Petroplus 2003
unaudited audited
1 332 290 1 690 911 -21% Net Sales 6 112 653

51 866 61 149 -15% Gross Profit 197 692
49 622 61 149 -19% Adjusted GP* 204 804

62 967 23 945 163% EBITDA 28 677
Adjusted EBITDA
14 380 23 945 -40% * 46 205

Net Operating
54 708 16 231 237% Income ( 32 619)
6 121 16 231 -62% Adjusted NOI * 12 721

47 675 8 194 482% Net Income ( 64 208)
Adjusted Net
( 912) 8 194 -111% Income* ( 17 257)

Earnings per (€
€ 1.54 € 0.28 452% share 2.09)
(€
(€ 0.03) € 0.28 -111% Adjusted EPS * 0.56)
* Adjusted = excludes non-recurring items
Note: Gross Profit and EBITDA are not stated in the audited account.
See end notes of press release for definitions


Petroplus' 2004 first quarter earnings from normal operations reflect
a quarter with below midcycle refining margins, a weak US dollar and
losses from the Antwerp refinery. Two non-recurring items, the sales
proceeds from Tango of EUR 46.3 million and the partial release of a
provision related to the Dubai Supply & Trading office of EUR 2.2
million, resulted in a very substantial profit over the first
quarter. The marketing division had a reasonable quarter while tank
storage activities (logistics division) continued to be impacted by
backwardation in the market. Continued progress is made on the Dragon
LNG project while the near term outlook is brighter with above
midcycle refining margins in during April and the first half of May.

Key Petroplus Market Indicators

Q1 2004 Q1 2003
min average max min average max
Petroplus
Theoretical
Refining Margin USD/bbl 0.30 1.57 2.61 0.31 3.67 7.83
10ppm ULSD
premium vs GO
fob USD/MT 12.75 27.13 90.00 5.25 17.13 95.75
10ppm ULSD
premium vs GO
cif USD/MT 2.50 18.86 75.50 (13.50) 9.20 68.00
Rhine Freight
Premium CHF/MT 10.75 19.73 30.50 11.50 16.72 22.00
Dated Brent
Crude USD/bbl 28.85 31.70 34.42 24.96 31.14 34.25
EUR-USD exchange
rage 1.21 1.25 1.28 1.04 1.07 1.11
Contango
(Backwardation)
for Brent USD/MT (0.41) (0.32) (0.23) (0.75) (0.67) (0.62)
Contango
(Backwardation)
for GO USD/MT (7.46) (5.39) (2.72) (15.88) (11.95) (7.43)

See endnotes for precise definition of indicators


Refining

EUR (000)
Q1 2004 Q1 2003 % Refining 2003
unaudited Audited
- - n.a. Net Sales -
17 372 34 354 -49% Gross Profit 101 422
997 17 297 -94% EBITDA 17 906
997 17 297 -94% Adjusted EBITDA * 28 322
( 4 405) 12 533 -135% Net Operating Income ( 27 925)
( 4 405) 12 533 -135% Adjusted NOI * 6 203
* Adjusted = excludes non-recurring items


Q1 2004 vs Q1 2003
The gross profit of EUR 17.4 million over the first quarter 2004 was
down 49% relative to last year (Q1 2003: EUR 34.4 million). This
decrease is partly explained by the decrease in processed crude as a
consequence of the closure of Antwerp crude unit, but more notably by
the high refining margins early 2003. The realised Petroplus gross
refining margin in Teesside and Cressier in the quarter was USD 1.61
per bbl relative a 10 year midcycle margin of USD 1.93 per bbl.

Operational developments
The Antwerp refinery is currently in the midst of the implementation
of the reorganisation. After having reached an agreement with the
workers council and labour unions in December 2003, the refinery is
currently in the process of streamlining the hydrodesulphurisation
activities (ULSD production) and setting up the tank storage
activities.
The Antwerp 10 ppm ULSD premium relative to the cost of the feedstock
(gasoil CIF NWE) was on average USD 18.9 per MT in the first quarter
(Q1 2003: USD 9.2 per MT). Preparations are underway for the
commercial development of the Antwerp tank farm. Operations are
expected to commence in the second half of 2004.
The Antwerp bitumen plant operated smoothly at a reduced rate in the
first quarter. The reduced run rate reflects the seasonal demand for
bitumen.

The Teesside refinery margins were weak in the first quarter with
high crude prices and a weak US dollar. The plant availability was
good and the total number of barrels crude processed was 90.4% of the
nameplate capacity (Q1 2003: 86.7%). The Teesside refinery will have
a planned maintenance shutdown in the second or third quarter of
2004. During the 4 week shutdown, general maintenance will be
conducted in addition to adding a new catalyst for the production of
10ppm ULSD. As of September 2004, there will be a tax incentive in
the United Kingdom (UK) for 10ppm ULSD over 50ppm ULSD.

The Cressier refining margin was slightly below average. Rhine
freight tariffs were down in the first quarter relative to the end of
2003. The average freight tariff in the first quarter was CHF 19.7
per MT (Q1 2003: CHF 16.7 per MT). The plant availability was good
and the total number of barrels crude processed was 89.0% of the
nameplate capacity (Q1 2003: 84.5%).

Marketing

EUR (000)
Q1 2004 Q1 2003 % Marketing 2003
unaudited Audited
1 290 775 1 647 554 -22% Net Sales 5 959 109
24 870 15 647 59% Gross Profit 56 744
22 626 15 647 45% Adjusted GP* 63 856
13 538 2 688 404% EBITDA 4 464
11 294 2 688 320% Adjusted EBITDA * 11 576
12 141 1 213 901% Net Operating Income ( 2 446)
9 897 1 213 716% Adjusted NOI * 4 666
* Adjusted = excludes non-recurring items


Q1 2004 vs Q1 2003
The first quarter 2004 Gross Profit was EUR 24.9 million, an increase
of 59% relative to last year (Q1 2003: EUR 15.7 million). The 2004
result includes a EUR 2.2 million partial release of a provision made
in the fourth quarter of 2003 in connection with a non-performing
counterpart in the Dubai Supply & Trading office. Adjusted for this
non-recurring item, the Gross Profit is up 44%. The adjusted net
operating income was EUR 9.9 million compared to EUR 1.2 million in
2003.

Operational developments
Supply & Trading
The performance of the Dubai Supply & Trading office has stabilised
following the poor performance in the latter half of 2003. The
transfer of the financial management to Petroplus' European Supply &
Trading head office in Zug has proven effective. Following a
provision of EUR 7.1 million made in the 2003 accounts to cover a
claim its Dubai office had against a non-performing counterpart,
Petroplus has successfully reached an out of court settlement. Under
the agreement, EUR 2.2 million of the provision was released in the
first quarter. Petroplus expects that a large share of the provision
will be released in instalments in the course of 2004.
In February 2004, Petroplus opened a Supply & Trading office in
Moscow, with the objective of sourcing product for its existing
European refining and marketing activities.
Wholesale
The wholesale activities had a reasonable first quarter showing an
improvement compared to the opening quarter of 2003. The German
wholesale activities have been stabilised and had a slightly negative
first quarter.
In the United Kingdom (UK), margins were down although the growth of
BioPlus (bio diesel) is strong. Total sales volumes of BioPlus in the
first quarter amounted to approximately 42,000 MT. As announced
earlier, Petroplus has reduced the number of distribution terminals
it utilises for its UK wholesale activities. This has resulted in
savings in working capital and a more effective distribution network.
The Swiss marketing activities had a good first quarter with strong
sales volumes.
Bunkering
Frisol had a good first quarter and has continued to grow its trading
volume. NSP also had a good start of the year despite lower trading
volumes compared to Q1 2003. Both companies are impacted by the
strong Euro against the US dollar, resulting in depressed net margins
in the ARA region (Amsterdam, Rotterdam, Antwerp).
Retail (Tango)
Following the previously announced sale of Tango to Kuwait Petroleum,
the activities were transferred to the buyer on 29 February 2004. The
profitability over the first two months of the quarter was good. At
the end of February, Tango had 73 stations of which 7 were under
construction; 68 of which 6 under construction in The Netherlands, 4
in Belgium and 1 under construction in Spain.

Logistics

EUR (000)
Q1 2004 Q1 2003 % Logistics 2003
unaudited audited
6 227 7 195 -13% Net Sales 26 014
7 550 8 587 -12% Gross Profit 32 004
2 583 3 699 -30% EBITDA 13 407
1 634 2 768 -41% Net Operating Income 9 410



Q1 2004 vs Q1 2003
The Gross Profit in the first quarter 2004 was EUR 7.6 million, down
12% relative to the same period last year (Q1 2003: EUR 8.6 million).
Net operating income decreased by 41% to EUR 1.6 million (Q1 2003:
EUR 2.8 million). The decreased earnings reflect the ongoing strong
backwardation in the crude and products market.

Operational developments
There were no significant events or developments within the tank
storage activities of the logistics division in the first quarter.
Dragon LNG
Petroplus continues to make good progress together with its partners
in the development of the Liquefied Natural Gas (LNG) project in
Milford Haven, Wales. As announced on 5 March 2004, Petroplus, BG
Energy Holdings Limited ("BG") and Petroliam Nasional Berhad
("Petronas") signed a tripartite agreement which will ultimately lead
to the signing of amongst others, a shareholders agreement. Key
milestones in the coming months include signing of a shareholders
agreement, obtaining regulatory exemption for the operating of the
terminal, selecting an engineering contractor and arranging the
financing of the project. Dragon has received bids for the
engineering contract that are in line with previous estimates made
during the negotiations with BG and Petronas. Petroplus anticipates
to realise a book profit which is significantly higher than EUR 50
million at financial close later this year. The facility is due to
become operational in the fourth quarter of 2007.

Other Businesses & Central Overheads

EUR (000)
Q1 2004 Q1 2003 % Other Businesses 2003
unaudited audited
35 288 36 162 -2% Net Sales 127 530
2 074 2 561 -19% Gross Profit 7 522
45 849 261 n.a. EBITDA ( 7 101)
( 494) 261 -289% Adjusted EBITDA * ( 7 101)
45 338 ( 283) n.a. Net Operating Income ( 11 657)
( 1 005) ( 283) n.a. Adjusted NOI * ( 7 557)
* Adjusted = excludes non-recurring items


Q1 2004 vs Q1 2003
The Gross Profit over the first quarter was EUR 2.1 million, a 19%
decrease relative to 2003 (Q1 2003: EUR 2.5 million). The adjusted
Net operating income was minus EUR 1.0 million (Q1 2003: minus EUR
0.3 million).
The profit on the sale of Tango amounting to EUR 46.3 million is
included as a non-recurring item in the results of the Holding. The
downward correction from the previously mentioned EUR 52 million was
due to unforeseen influences from working capital movements on the
ultimate purchase price for the shares.

Operational developments
Both Qlear and Oxyde Chemicals had a good first quarter. There were
no other significant developments within the Other Businesses group
in the first quarter.

Recent Developments
Credit Rating Agencies
As previously announced, the credit rating agency Standard & Poor's
(S&P) placed the Petroplus rating on CreditWatch with negative
outlook on 11 February 2004. On 8 April 2004, S&P resolved the
CreditWatch and reaffirmed both the ratings maintaining a negative
outlook. Petroplus' current S&P corporate credit rating is B+ while
the debt rating on the senior unsecured bonds is B-.

On 27 April 2004, the credit rating agency Moodys placed the
Petroplus rating on negative outlook, stating concerns on the
extension of the Syndicated Working Capital Facility due for renewal
in July. Petroplus' current Moodys corporate credit rating is B1
while the debt rating on the senior unsecured bonds is B3.

Syndicated Working Capital Facility
Within the current syndicated working capital facility, two financial
covenants are included: a minimum Consolidated Tangible Net Worth and
a minimum interest coverage ratio.
On 31 December 2003, Petroplus did not meet the required Consolidated
Tangible Net Worth covenant. The banks provided Petroplus with a
waiver for this covenant breach on 26 March 2004. As a result of the
sale of the Tango activities, this breach was repaired in the first
quarter 2004.
On 31 March 2004, Petroplus did not meet the required interest
coverage ratio. Petroplus has obtained a waiver from its banks for
this covenant breach.
Petroplus has also started negotiations with its relationship banks
on the extension of the working capital facility due for renewal in
July 2004.

Outlook
Petroplus faces a number of important developments in 2004:
finalisation of the restructuring of the Antwerp refinery;
realisation of a number of important milestones for Dragon LNG
project ultimately leading to financial close in the latter half of
the year and streamlining the German wholesale activities.

Petroplus has been very cautious over the last 20 months in making
forward looking statements. Even though refining margins have
improved in the first half of the second quarter, Petroplus is also
wary of the extremely high crude prices and weak US dollar. With
continued uncertainty surrounding economic recovery and the above
mentioned developments, Petroplus will maintain its cautious position
and refrain from providing an outlook for 2004.

Public Offer
In addition, as explained in detail in a press release also issued
today, the expectation is justified that agreement can be reached
between Petroplus and a consortium of a private equity firm together
with the two Board Members and founders of Petroplus in connection
with an intended public offer for all outstanding Petroplus shares.
The share offer, when made, will be preceded by a consent
solicitation from the holders of a majority of the 10.5% Senior Notes
and a public offer for the Senior Notes. Please see that press
release for exact details.

Dividend Proposal
The Executive Board of Petroplus International NV proposes that in
view of the total net loss of EUR 64.2 million over 2003, that the
shareholders forfeit their dividend rights and that no bonus shares
be issued. The Supervisory Board has approved this proposal. This
proposal will be submitted to the Annual General Shareholder Meeting
to be held on 19 May 2004 in the Westin hotel in Rotterdam.


2004 non recurring items

EUR `000 Division Q1

Partial Release of claim
provision by Dubai office Marketing 2 244
Gross Profit 2 244

Other Businesses (Petroplus
Book Profit from Tango Sale International) 46 343
EBITDA impact 48 587


Net Operating Income impact 48 587



Net Income impact 48 587



Definitions of Key Petroplus Market Indicators and Financial Terms
Petroplus Theoretical Refining Margin
Definition: The Petroplus theoretical margin is based
upon Cressier and Teesside only (Antwerp has been excluded while it
is in reorganisation mode). The theoretical margin assumes both
refineries are fully operational and producing products in line with
their published yield and is exclusive fixed & variable costs.
Time frame: Maximum, minimum and average margin per
financial quarter

10 ppm ULSD premium vs GO fob:
Definition: The difference (premium) between 10 ppm ULSD
barges FOB Rotterdam and Gas oil 0.2 barges FOB Rotterdam (source:
Platts)
Time frame: Maximum, minimum and average premium on a
daily basis

10 ppm ULSD premium vs GO cif:
Definition: The difference (premium) between 10 ppm ULSD
barges FOB Rotterdam and Gas oil 0.2 cargoes CIF NWE (source: Platts)
Time frame: Maximum, minimum and average premium on a
daily basis

Rhine Freight Tariff:
Definition: The published Rhine freight tariff for Gas
oil Rotterdam to Basel (source: Reuters)
Time frame: Maximum, minimum and average tariff on a daily
basis

Dated Brent Crude:
Definition: The published Dated Brent price (source:
Platts)
Time frame: Maximum, minimum and average premium on a
daily basis

USD/EUR exchange rage:
Definition: Exchange rate (source: www.oanda.com)
Time frame: Maximum, minimum and average rate on a daily
basis

Contango (Backwardation) for GO & Brent:
Definition: The difference between the first and second
month futures price of GO and Brent respectively. If the first month
is higher than the second month, the difference is negative
(backwardated market). If the first month is lower than the second
month, the difference is positive (market in contango). (source:
Platts)
Time frame: Maximum, minimum and average premium on a
daily basis

Gross Profit (as used in the financial statements):
Definition: Net Sales proceeds minus Cost of Sales,
defined as direct operating costs including the purchase of raw
materials, refinery production costs and other costs of goods sold.

>>>> to view full press release including financials, click on link
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Note to editors

Profile of Petroplus International NV
Petroplus International NV ("Petroplus") was established 10 years ago
and has since developed into a leading player in the European
midstream oil market. The midstream sector encompasses refining,
marketing and logistics (predominantly tank storage).

Petroplus is the owner of refineries in Antwerp (Belgium), Cressier
(Switzerland) and Teesside (United Kingdom) with a total capacity of
240,000 barrels per day including the Antwerp desulphurisation
capacity. Petroplus has a sales volume in excess of 23 million tonnes
a year of oil products and a storage capacity of almost 5 million m³
throughout Western Europe.

Petroplus, with its head office in Rotterdam and regional head
offices in Zug and Hamburg, has branch offices in more than 20
countries and employs approx. 1000 employees. Petroplus International
NV has been listed on the Official Market of Euronext Amsterdam since
14 July 1998.

Reuters: PPV.AS
Bloomberg: PETR NA

For further information, please contact:
Petroplus International NV:
Marcel van Poecke, Willem Willemstein
Executive Board

Martijn Schuttevâer, Investor Relations Manager
tel: +31 10 242 5900

www.petroplusinternational.com
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