Goldman Sachs remained cautious on the performance of Greek refineries for 2025, despite upward trends in Q4 of 2024 in the average profit cycle.
The European NW index benchmark margin rebounded from a low of $4 per barrel in Q3 to an average of $5.5 per barrel in Q4, close to the decade-long average of $6 per barrel.
Despite more robust refining margins, Goldman Sachs anticipates several headwinds for Motor Oil and Helleniq Energy including weaker petrochemical markets, seasonally lower marketing performance, and company-specific issues like the fire at Motor Oil’s Corinth refinery, which affects its crude processing mix and raw material costs. Consequently, Goldman Sachs has adjusted its EBITDA estimates downward by 3% for Q4 2024.
Goldman Sachs expects refining margins to normalize around $6 per barrel. However, demand for refined products in 2024 is projected to be lower than previously anticipated, now expected to grow by only 0.6 to 0.8 million barrels per day, down from an earlier forecast of 1.0 million barrels per day.
The US-based multinational bank maintains its cautious outlook for Greek refineries due to pressures on free cash flow (FCF) in 2025. Both Motor Oil and Helleniq Energy will see impacts from higher capital expenditures in renewable energy capacity, solidarity tax payments in Q1 2025, and a shorter working capital cycle for Motor Oil post-fire.
Price Targets Adjustments
- Motor Oil: The target price is reduced to €27 from €30, with a ‘neutral’ recommendation.
- Helleniq Energy: The target price drops to €7.1 from €7.5, with a ‘sell’ recommendation.
This analysis reflects Goldman Sachs’s nuanced view on the Greek refining sector, balancing the positive aspects of recovering margins against a backdrop of operational and market challenges.
Source: tovima.com
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