A moment after the annual reports and before the first quarter reports, the picture regarding the BZN’s operating environment in the quarter becomes clearer. Real investment in raw materials is high, and although the increase in the price of the barrel is rolled over to customers through the margin, the absolute cost will lead to an increase in the working capital needs of the company. The efficiency rate of the refining facilities is expected to improve to levels of over 90% in the first quarter, when distillery margins also recorded an increase – the diesel margin was $ 21.5 per barrel and the gasoline margin was an average level of $ 11 per barrel.
Given the margin environment described (in the Azeri Bloomberg graph in green and the Ural Bloomberg in white), we estimate that in the first quarter of 2022 the refinery segment is expected to generate EBITDA of $ 150-160 million.
In the polymer segment, polyethylene and polypropylene margins continued to shrink to levels of $ 992 and $ 1,132 per tonne, resulting in a quarterly EBITDA rate of approximately $ 40 million in the first quarter. However, it will be recalled that during the quarter, CAO facilities were shut down for treatment for a period of about 45 days, and BZN sold produce from the inventory produced during the 4th quarter of last year in preparation for shutdown. About half of the damage as a result of the shutdown ($ 41 million) was already recognized in the fourth quarter results of last year and we estimate that the balance of the damage in the first quarter will be about $ 35 million which will bring the EBITDA of the polymer sector to $ 5-10 million.
Another point worth noting in the context of BZN’s expected cash flow is that before the crisis, the company identified and took advantage of market opportunities and entered into future transactions to determine refining margins for 2023-2022. Hence the transactions and hence in view of the oil prices and refining margins, an increase in the Group’s net financial debt is expected in relation to its level at the end of 2021, in return for ensuring an average refining margin that the company estimates is opportunity.
It is possible to produce a rough forecast for the results of the first quarter coming out of the margin environment on which there are already indications:
Azri Bloomberg | Ural Bloomberg | gasoline | Diesel | Polypropylene | Polyethylene | |
Average Interval Quarter 1 2022 | 11 | 9.9 | 11 | 21.5 | 992 | 1,132 |
Average Interval Quarter 4 2021 | 7.9 | 6.8 | 11.4 | 12.9 | 1,110 | 1,288 |
According to our estimates, ZEN is expected to present a neutralized EBITDA for the first quarter of 2022 in the range of $ 160-180 million.