Oil Refineries Announces Results for Fourth Quarter & Full Year 2011
Oil Refineries Ltd, Israel’s largest integrated refining and petrochemical group, announced today its financial results for the fourth quarter and full year ending December 31, 2011. Results are reported in US Dollars and under International Financial Reporting Standards (IFRS).
Mr. Yossi Rosen, Chairman of the Board of Oil Refineries: “2011 was a very uncharacteristic and unstable year for the Company. The range of events and challenges we faced were very irregular. Given the current circumstances, the decision undertaken by the company’s shareholders, along with the Board of Directors, becomes even more significant in directing the long-term strategic plan of creating a business environment that will reduce the Company’s exposure and make it more profitable. During 2011 Mr. Pinhas Buchris was appointed CEO and, with the backing of the board, led the implementation of a strategy to re-organize the Group by leveraging synergies, growth and efficiency. This strategy consisted of many components, among them the merger of the Groups’ companies; CAOL, Gadiv and HBO, where the emphasis is to leverage synergies between the companies and transition to production based on economic viability. We have invested in an upgrade of our equipment and are in the final phases of the Hydrocracker construction for the production of clean fuels, and its activation is expected in third quarter of this year. ORL also recently completed an organizational restructuring, which made each business segment its own profit center.
“Another important step we completed was the transition to natural gas. During the year we signed natural gas supply agreements, a step which demonstrated both economic and environmental advantages. The agreement enables us to transition to natural gas while assuring the reliability and continuity of this supply. It should yield significant savings in energy costs, starting from the second half of 2011. Due to the repeated interruption of natural gas supplies from Egypt, along with the reduction in the amount of natural gas supplied by the Tethys Sea to the Israeli economy and specifically to ORL, our estimates are not being fulfilled in their entirety and this disrupts our plans as it relates to natural gas.
“The Group, as of end 2011, invested about $144 million in Corporate Social responsibility projects, as determined by the board of directors. In addition, the Group also invested approximately $1.5 million for the promotion of education and welfare within local communities in Northern Israel. As part of this effort, thousands of volunteer hours were invested by the Company’s employees.
“I would like to thank the management team and all of ORL’s employees for their great contributions this year.”
Mr. Pinhas Buchris, CEO of Oil Refineries: “ORL finished up 2011 in what was a very challenging and eventful year in the global and domestic business environment in which it operates. Unrest in the world market, crude oil prices increases of up to $125 a barrel, and wide fluctuations and significant price levels throughout the year have impacted the Company’s financial results in 2011, and the fourth quarter in particular. Despite this being one of the most difficult business environments we have ever operated in, the Company succeeded in demonstrating relatively higher profits compared with other refineries as well as refining margins consistently better than the benchmark average. ORL generated an operating cash flow of about $117 million in 2011, compared with $6.5 million in 2010 – an accomplishment which does not reflect the bottom line. The reduction of refining margins resulting from the different global events in 2011 led to a significant erosion in profitability.
“2011 was also a year in which the Company was very active in strategic planning, continuing to build out its infrastructure in order to become more efficient, competitive and profitable. In recent months, and since I took office, we have been working vigorously to complete our strategic plans, creating changes in our organization and structure, while streamlining the work processes. These measures will enable the Company to be more efficient, resulting in synergies in many areas which will improve the results of the Company’s activities along with reducing costs. In our latest development, as we announced two weeks ago, we have restructured the Company into three units in order to focus on the business and create separate profit centers, which will reduce redundancies and create efficiencies and savings for the production and development needs of the Company, and in particular, this will maximize the value chain of the entire group
