ProShares UltraShort Real Estate Price & Performance (SRS)

Thank you. Good afternoon, everyone. Welcome to the SaaS Group Q2 2024 Results. As a reminder to those on the phone, the slide deck and the press release are available from the Investor Relations section on our website. Today, our CEO, Rambrasam, will start with the main highlights of the quarter Thanks. I'm really sorry to interrupt Ma'am, here we are able to hear that magnetic disturbance again.

Okay, fine. Today, our CEO, Ramkodasamo, will start with the main highlights of the quarter, then Marco Slobeti, Chief Commercial Officer, will discuss the Oil Markets and Refining Marketing. Afterwards, our CFO, Fabio Berretti will provide more details on the financial and segment results. To conclude, Franco will give a guidance for the full year 2024 discussing the outlook. Conclude, we will open up to the Q and A session. I will now turn the call over to Franco. Thank you, Guillaume and you everybody for joining our our quarterly meeting. In the Q2, the group comparable EBITDA to the 9 €90,000,000 Euro compared to the €27,000,000 in the same period of last year. And you remember that activity of the refinery at that time was impacted by external events. The higher EBITDA of this quarter versus last year comes primarily from the higher production on the refinery and our power plant and also from a more favorable scenario with a stronger diesel cracker which more than offset the decrease in gasoline crack. The scenario effect is also represented in the EMC reference margin. Withstood at $4.50 per barrel in this quarter. Slightly above $4.2 reported in the Q2 of last year.

The stronger operational performance is reflected in our margin, which [indiscernible] $4 barrel in this quarter. Versus 7.9 in the same quarter of last year. With a premium in this quarter of $4.9 on DMC, which compared with the weaker premium of plus 3.7 barrel in the 2nd quarter of last year. On the renewable segment, the solar plant, Eliento, was completed in June. And they started commercial production. At this point, full year renewal production is estimated about [indiscernible] fully priced at market tariff. Net compatible results stood at €29,700,000 I noticed that was negative the previous quarter of last year by 22,000,000 This quarter, we had a higher interest rate cost and the negative effect of the change rates, the differences compared to the same period of last year. Investment CapEx in the second quarter is to that €49,000,000 mainly on refinery maintenance. Plus the remaining part of the completion of the Elian Tort plant. Looking at the financial positions, this first part of the year ended with €10,000,000 on net cash. More precisely in the 1st part of the year, operations generated a net cash flow for 200 €8,000,000 However, change in working capital was negative for 139 CapEx were €80,000,000 and we paid dividend in May for €142,000,000 but [indiscernible] I will leave the floor to the colleagues in order to analyze the market dynamics.

Good afternoon and thank you Franco for the introduction. Q2 of 2024, we had stable dated bran prices around $85 per barrel substantially in line with previous quarter. The persisting geopolitical tensions in Middle East and the interaction of novel traffic across the rest contributed to keep the market in that way they shown good spot prices exceeding $90 at the beginning of the quarter. However, prices spend in May due to the increase of inventory [indiscernible] and also after the OPEC plus meeting of of June when members announced the intention to gradually ease production cuts starting from last quarter of this year. Moving to differentials on the the chart on the right side. [indiscernible] The effect of OpEx plus Russia cuts will continue to reduce the market visibility of sauerk rates [indiscernible] and keep discounts under pressure more precisely during the Q2, Bashiramevion differentials to brand averaged minus 2.8% versus minus $3.7 per barrel in [indiscernible] but substantial in line with the Q1 of this year. Looking at the suite differentials, that's very light versus brand data stood at around $3.3 per barrel during the second quarter. It was 4.6 during the same period as year in a contest of a loan market for loss for crude oil [indiscernible] As Fabio will then comment further on the FX for these differentials.

On the P and C benchmark. Moving to cracks.

US lead crack during the 2nd quarter stood at an average of around $18 per barrel. $1 more versus the same quarter last year and down by 31% compared to the Q1 2024 as the return to operations of cellular refineries after the usual spring maintenance contributed to increase the increase in supply. This came at the time of a weaker demand in Europe with reduced [indiscernible] and structural changes in the cut fleet with a greater scale of electric vehicles and hybrids with gasoline engines at the expense of diesel power cars. [indiscernible] Moving to gasoline. We had a crack around $18.8 almost $19 per barrel during Q2. Compared to an average of 20.5 in the Q2 of 20 [indiscernible] And up 14% compared to the previous quarter. Due to the effect of the shift in specification in preparation of the driving season.

Lower production of U. S. Refineries and low inventory levels by the beginning of the period. Moving to energy cost, quickly to energy cost. Power and CO2. [indiscernible] this Italian electricity price stood at an average of around $95 per megawatt hour. Compared to an average of $115 in the same period of 2023. Price is significantly lower than same period last year due to a more stable supply for natural gas and reflected the context of some macroeconomic conditions, especially in the Europe area. Moving to CO2 quotations in Q2 20 the average stood at approximately €68 per tonne It was €87 in Q2 same period last year. Continuing the trend of the previous months as a result of the aforementioned weaker industrial activities in Europe. Finally, moving to the market outlook for 2024. Recent demand weaknesses and increase in refining capacity in operations are expected to reduce refining margins for the of the year. Even if they should remain above historical averages. Looking at all demand, [indiscernible] the IEA released in July are pointing to growth of around 1,000,000 barrels for 2023. Supported primarily by India and Brazil, while China [indiscernible] And on the other hand, OECD countries will suffer about a further slowdown in consumption due to the weaker macro conditions.

Increasing efficiency and energy saving policies and the progressive increase in electric vehicles. All the incremental incremental demand will be basically covered by incremental supply by non OPEC countries. Which will more than offset the expansion of the OpEx plus Russia production, that's plus the incremental demand from the the mentioned countries. Moving to cracks. With regard to gasoline, after a very strong first half of the year with track [indiscernible] down to $14.15 due to the effect of the addition of refining capacity reaching the market and the American driving season is slow to materialize. We are expecting gasoline cracks to remain in to current levels for the rest of the year. Middle distillates, similar trend we saw on gasoline. With the addition of refined refining capacity. Pushing values lower during the month of July in particular. Nonetheless, we expect cracks to remain historical averages due to the structural changes in the supply flows towards Europe as well as an increase of construction approaching the winter season. So now let me hand over to Fabio for the financial highlights. Thank you, Marco, and good afternoon to everybody. As Frank anticipated, our 2nd quarter result were positive and higher compared to Q1 last year, but Both for the aggregate set to TD and for an increase in refining margin.

While they were reducing compared to last quarter, mainly for the weakening of the refining margin. In the 2nd quarter, our adjusted EBITDA stood at almost $98,000,000 or our reported net results was about $31,000,000 dollars Comparable results were close to the reported 1, given the limited impact of the scenario effect on inventories evaluation. This brings our first half reported results at EBITDA of €275,000,000 and a net result of €100,000,000 with the comparable results slightly above with an EBITDA of €288,000,000 a net result of €120,000,000 [indiscernible] 1,000,000 while the reduction in the net financial position before the IFRS in effect, which on the end of the quarter stand at about 11,000,000 dollars is mainly that we would able to cash out for dividend tax and CapEx as well as an increase in the level of our inventories. That we expect to recover in the 7th part of the year. Moving now to the segment analysis starting from the Industrial and Marketing. Q2 comparable EBITDA was ARR86 1,000,000 with the marketing channel accounting software. Our results were about 60,000,000 agers and the [indiscernible] In the quarter, we had a lower level of maintenance food push resulting in higher food runs compared to the 1 of last year and in addition, we had opportunity of greater optimization in term of crude oil blade especially for light and sweet crude.

Lastly, what concerns our commercial operation it is continuing to be above historical level and slightly above the one achieved last year. Mainly for aggregates and compulsory stock sales and in the inventory hedging.

The cost was totally in line with higher variable costs mainly related to our consumption compensated by lower fixed costs, largely driven by the lighter level of maintenance activities that were carried out in this quarter compared to last year. Looking at the CapEx level, the quarter in the quarter, the stood at €45,000,000 bringing the total amount for the first half of the year at €72,000,000 This amount is a bit less than expected with some delay that we expect to recover in the 2nd part of the year. For what concerns our industrial and marketing margin in the 4th quarter, it was 9 point $4 per barrel compared to $12.1 per barrel of the previous quarter. The reduction of $2.7 between the 2 core quarters is due to the reduction of the margin available in the market. That, as it's shown by the EMC reference margin, dropped by $3.7 going down from $8.2 to 4.5 what concerns our premium over D and C reference margin, in the 2nd quarter, it was $4.9 bringing the overall premium on the first half of the year at $4.5 per barrel at the upper end of our guidance. The aggregate premium is mainly due to the better than expected performances and notwithstanding the average level of good differential is still a premium compared to the brand, that, as you know, is the reference crude for our benchmark margin.

In the Renewables segment, in line with our target, Elias [indiscernible] June and contributed for 2 Pivotal to the total production of Q2 EBITDA was approximately 5,000,000 dollars 2,000,000 above the results of the same quarter of last year And increase in the EBITDA was driven by an increase in the electricity production partially offset by the effect of lower electricity tariffs. The production was 21 gigawatt hourages than last year, mainly thanks to stronger wind condition and other mechanical availability. For this quarter was €81 per megawatt hour down from €87 per megawatt hour in Q2 of last year. It's worth remembering that in this quarter, we are entirely selling our electricity at market value, while less year we had the impact of the price cap. Both at €61 per megawatt hour and at €118 per megawatt tower. In addition, it's worth to mention that in 2024, on 13% of our production, we received an incentive equal to €42 per megawatt hour.

Finally, in the quarter, we invested about $4,000,000 and these are entirely related to the activity for the development of the El Llanto plant. Looking at the evolution of our net financial position in this quarter, we see that it is Our fund operation in the quarter was positive for 81,000,000 dollars and additional cash was generated by the reduction of our working capital, which was mainly due to the rebalancing of our commercial credit. At a level closer to the one that we were earning at the beginning of the year. The cash generation was more than compensated by the 142,000,000 of dividend payment the €50,000,000 for capital expenditure and finally, the agreement of tax [indiscernible] euros [indiscernible] Mr. Oscar, I will conclude our presentation with our outlook for the year. And we start from the our operation activity. And indeed after the turnaround in the first half of the year of the activation plant the distillation unit, LT2 and the VARCO V1 unit. And also with the slowdown of the power plant. In the next quarter, we will have some maintenance activity on our fossil recovery plant. While in the last quarter, plan and maintenance with related cleaning of the top Intuit and the vast [indiscernible] As well other minor maintenance works on the power plant.

Overall, the crude oil rents are expected to be between $97,000,000 $99,000,000 [indiscernible] And 7,000,000 [indiscernible] with respect also to reach [indiscernible] [indiscernible] [indiscernible] In terms of fixed cost, we confirm our guidance at €380,000,000 €400,000,000 that is below The level of last year, thanks to the optimization initiative started [indiscernible] are offsetting inflation impact. CapEx, we confirm the guide ARM at the level of €80,000,000 with the aim also to implement some additional technical upgrades in order to improve energy efficiency. Plant in fully operational and in a competitive stand up. I will say that in term of refining margins, Sharas premium over the EMC of IFRS margin is confirmed in the of the $3.54 ball dollar barrel guidance range. As we have seen in the previous speech due to the softer forecast for gas truck spread that Munich is shall remain above historical leverage. And the persistent squeeze of the discount on the sour grade. As far as the renewal business concern, the activity will be focused to the completion of the El Llanto plant And for the investment, we now depend on the authorizations that will be obtained for the construction on new farm in our pipeline.

Due to the [indiscernible] [indiscernible] is we're not expecting additional investment. As far as net financial position is concerned, we shall retain the existing robust financial structures and the positive positions at the end of the year. [indiscernible] available to Thank you.

This is the Chorus Call conference operator. We will now begin the question and answer session. [indiscernible] We kindly ask to pick up your phone when asking questions. Anyone who has a question? We will pause for a moment as the call has joined the queue. The first question is from Alessandro Pozzi from Mediobanca. Please go ahead.

Good afternoon.

Thank you for taking my question. I have 2. The first one is more on the, let's say, on the second half of the year, OpEx is likely to increase production and I was wondering how you are preparing for it and do you envisage a potential change in your in the crude slate when you will have more volumes let's say, from potentially even from the Middle East. The second question is that refining margins have been coming down since the start of the year. And I know that you've part of your sales are in Italy, but you also are very much exposed to international markets. And I was wondering where do you see pockets of strength in demand or how you see demand for oil products based on your on your sales? And maybe the final one on net cash by year end, if you can give us an update on where you see net cash by year end?

I'll take the first one on OPEC. So as it's difficult to forecast what OpEx is going to do, They promised to release a little bit more crude towards the end of the year, but given the actual prices of Brent below $80 maybe they will change their mind. And in any case, with the end of the year, beginning of 2020 5. So it's too early now to to forecast a sensible change in the crude slate and potential benefits to be honest. And is more or less our view. [indiscernible] Franco mentioned before, the [indiscernible] at a level closer to the one we have today It's worth to remember that in the 2nd part of the year, we will have some cash out related to tax and the anticipation of the excess duty. Which would be relevant in the Q4. And the capital expenditure that we expect to be in the range of $100,000,000 So all in all, we expect to have a stable cash position. Then of course, as you know, it's always depend from the scenario and the performance, but this is the expectation.

Thank you. And then maybe if you can elaborate on how you see demand based on your product sales? Internationally?

As we mentioned, the global oil demand is still growing, 1,000,000 more or less all the agencies are pointing to an additional of 1,000,000 barrels per day of growth. As usual, as we commented in the previous calls, All these incremental demand is basically concentrated in [indiscernible] Far Middle East, maybe North Africa, instead Europe OECD is decreasing. So in any case, Oil demand is still growing for this year and also marginally lower for coming years after 2024.

Thank you.

The next question is from Massimo Bonisoli from Equita. Please go ahead. Good afternoon. Thank you for the presentation I have 2 questions. The first question concern the relationship with your new owner. Do you already have an idea of the potential synergies with Vital on the supply of different qualities of of crudes and distribution of refined products.

And the second question, if you can give us an indication on the contribution of El Llanto to 3rd quarter EBITDA at around this level of electricity prices of mark to market, let's say? Thank you.

Okay. Thank you, Marcinolf, for for your questions. [indiscernible] has been very declared by Vital in their strategy, all the companies purchase are operating as separate [indiscernible] what Midland intends to do is to work with us with the other company in order to develop the business. And also to help us in better understanding the commodities market. To create some new idea in order to manage inventories and to exploit all the potential opportunity that could arise from from this market. Having said that, Sharas is a complex refinery and what we are expecting that the contribution of Vitol can big opportunity for us in order to exploit all our capability in In the commodity market, that is the retail core business. And in addition of this, of course, we can add to our traditional commercial activity the dimension of the international trading. Having said that, Vito Group acquired the stake a few weeks ago So it's very difficult to say any potential synergy in term of quantity or in term of new opportunities. In term of Elianco, the contributions for the next month the next 6 months We can tell you later on is what [indiscernible] 5,000,000 translates in that region. €5,000,000 for the second half, you mean?

Yes, correct.

Thank you. The next question is from the line of Kamath Ramachandra from Barclays. Please go ahead. Hello.

Thanks for taking my questions.

Sorry to interrupt. Mr. Ramachandran, you're sounding a lot muffled. If you're using the speakerphone, maybe request to use the handset mode, please.

Sorry, from here it's very difficult to have a comprehension of what you are saying.

Thank you, So Mr. Ramachandra, possible, you can, disconnect and please reconnect to have a better reception. And So now as a reminder, a few wish to register for a question, your telephone. For any further questions, [indiscernible] If there are no other questions? We can wait in case Ram is able to reconnect.

Yes, sir. There are no questions at this moment.

Okay. Thank you very much and I hope to talk to you in the next quarterly meeting.

Okay.

Bye.

Bye. Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

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