Challenging 2019 increased focus on efficiency of KN operations
2019 provided plenty of challenges in the business environment, but encouraged KN to review its business processes and look for new ways to increase value of the services that it provides to its customers, the company says in its press release. According to unaudited financial statements, this generated 13.2 million euros or 14% higher adjusted net profit than in 2018, when it was 11.6 million. euros.
Adjusted KN EBITDA for 2019 respectively amounted to 26.2 million euros. In 2019 KN earned about 104 million euros or 4% more income than a year ago.
5.7 million tonnes of petroleum products in total were transshipped at KN oil terminals, that is, 14% less than in 2018. Meanwhile, the EBITDA (adjusted) of company’s oil terminals was 17.3 million euros, that is only 6.5% less than in 2018 (18.5 million euros). During 2019 KN oil terminals earned 32.1 million euros in revenue, in 2018 revenue from these activities amounted to 35.2 million euros.
“2019 was a constant period of challenges for our customers in the segment of oil business, both due to various malfunctions at plants resulting in slowed down refining of petroleum products, contaminated oil in the oil pipeline Druzhba, as well as the geopolitical factors. All this also affected the volumes of petroleum products transshipped at our terminals. Nonetheless, by being flexible, providing more and more diverse services to our clients in the oil business, and focusing on better efficiency of our operations in this segment, we have been able to maintain a similar level of revenue as in 2018. In 2019 we have also successfully extended our cooperation with our long-term partners in Belarus,” says Darius Šilenskis, CEO of KN.
For Klaipėda LNG terminal, 2019 was a year of records. The favorable situation in the international gas markets and the attraction of new commercial customers led to a 120% increase of gasification and transshipment volumes. During this entire period, 51 LNG vessel arrived at the LNG terminal and not only Lithuanian but also Estonian companies began to utilise the services of the LNG terminal. About 87 percent of all LNG delivered to the terminal in 2019 was from Norway and the US natural gas liquefaction plants. Also twice as many gas vessels arrived at the LNG distribution station than in previous year. In 2019 LNG terminal operating revenue was 71 million euros or 10%. higher than in 2018 (64.5 million euros).
“Last year for the Klaipėda LNG terminal was a double-double year - twice as many customers and twice as big volume of operations. In 2019 Klaipėda Terminal served as a regional gas import object, as evidenced by the 2.6-fold increase in gas supplied to neighbouring Latvia and Estonia. This year we will continue our efforts to strengthen the competitiveness of the LNG terminal in the region, focus on strengthening cooperation with existing and potential customers, and work with new strategic partner PGNiG to breakthrough in the small-scale LNG market in the region,” summarises D. Šilenskis.
2019 were also important for the company’s goals in the international LNG market - the company tried its hand in international tenders of LNG operator services, and in 2020 plans to continue actively seek new opportunities to engage in new LNG projects worldwide.
“We see great opportunities to export the knowledge accumulated in Klaipėda - we are ready for that. The first attempts to participate in international tenders confirm that we are well-regarded, have a strong reputation among international companies in the energy sector, and are internationally competitive,” says D. Šilenskis.
In 2020 Company will continue the ongoing infrastructure expansion and modernization projects at the Klaipėda Oil Terminal, including reconstruction of the first quay controlled by KN and the project of the railway overpass. The company also plans to implement important stages of the environmental action plan approved by the company in 2018, such as the installation of new air pollutant treatment plants to reduce VOC emissions caused by the company operations.
KN financial (accounting) results of 2019 were also significantly affected by the 16th International Financial Reporting Standard ‘Lease’, which became effective at the beginning of the year. This change has a significant impact on KN financial condition and general income reports, and, consequently, on its financial indicators. When the Standard amendments become effective, the lease is included in the accounting as an asset and a liability (the right to the leased asset and the financial lease liability).
Because the 16th Standard causes imbalance of the published financial results and does not allow for comparison between actual operational results, KN also presents a managerial (adjusted) result in its financial statements. This allows for a better understanding of the company’s performance during the reference period, eliminating the effects of factors that the company does not actually experience - such as exchange rate fluctuations - that are offset by the specifics of the regulated activity and have no real impact on the company's performance.
