Rubis (RUI) Earnings Call Transcript & Summary

Welcome to the Rubis Q1 2025 Trading Update Conference Call. My name is Ellen, and I'll be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] I will now hand you over to your host, Marc Jacquot, CFO, to begin today's conference. Thank you.

Good evening, ladies and gentlemen. Thank you for joining us today for Rubis' Q1 2025 Trading Update. Today, we're glad to round out the call with Clemence Mignot-Dupeyrot, our Head of Investor Relations. I'm now on Slide 2. So this quarter was another one of good operating performance. The energy distribution business saw strong growth, both on volumes and margins in all geographies. Volumes were up 4% with overall unit margins stable. So 3 important elements to highlight this quarter regarding volumes and margins. Europe, Kenya and Bitumen. First, Europe. Europe LPG was quite resilient again with good sales and gain of market shares in France. Second, Kenya. Kenya retail is catching up, both in volume and margin. Important to note that the first step toward full adjustment of the pricing formula happened in March 2025. It does not amount yet to the level we have been asking for, but we remain positive about the fact that this sign of goodwill will lead to a situation which will be satisfactory. Third, Bitumen. Bitumen volume was up 35% year-on-year. This increase is explained by Nigeria, where demand was strong this quarter compared to a low Q1 '24 in an [indiscernible] context. Togo, South Africa showed strong dynamics with volume and margin increasing. Cameroon, Senegal and Nigeria are also on an upward trend. Gross margin decreased by 6% year-on-year, partially penalized by the comparable base in 2024 for Nigeria, while FX rate stood at a much higher level. In the renewable electricity production, our development is rolling in line with plan with an increase of the sector portfolio of 5% versus December 2024 and 22% over the year, which is encouraging for the rest of the year. We commissioned the first tranche of the [indiscernible] project, representing 11 megawatts in Q1. One other important fact to underline is that none of our businesses is directly concerned by the trade tariff war ongoing. We are not present in the U.S. nor in China, and we do not depend of U.S.-based or China-based suppliers in the energy distribution business. I remind you as well that a low oil price environment is usually favorable for our distribution activity. All those elements make us confident about 2025, and we reaffirm our guidance. And now handing the floor to Clemence to go in further details on the activity.

Thanks, Marc, and good evening, ladies and gentlemen. You are now familiar with this Slide #3 with the split of our different energy distribution businesses. If you want to start with retail and marketing, you can see that volume increased by 4% and gross margin as well. The different underlying items of this performance are: number one, in our LPG distribution businesses, which is up 1% in volume and stable with gross margin, activity was overall balanced, and very strong in the bulk segment, especially in France with several commercial wins with B2B customers. Spain was also very dynamic. Autogas continued to grow in Europe, especially in France and Portugal. On the other hand, Morocco faced supply issues over this quarter as difficult weather conditions kept the vessels from unloading their products. These vessels are not Rubis vessels. Fuel, #2 driver. Fuel is up 2% in volume and 10% in gross margin. The retail business continued to be very dynamic with ongoing strong performance in Jamaica and Barbados. Marc already mentioned Kenya, and I would like to mention Madagascar, where retail performance was very strong, both on volume and margins. Service stations, they are improving their standards. We have gained important fuel card customers, taxis, for example, and we have benefited from the decreasing oil price. In the C&I segment, volume is up 2%, underpinned mainly by Guyana and Suriname in the Caribbean and Zambia and Kenya in Africa. The Aviation segment now saw volume increasing by 2% -- decreasing, sorry. Margins increasing by 6%. The key reason behind is that in Kenya, where local management has decided to stop bidding on some airline tenders because they were not profitable enough. The Eastern Caribbean region performed particularly well in Trinidad and Antigua, where demand was really important, and we benefited from decreasing oil prices. The Bitumen business was strongly up 35% and margins down 6%. Marc already mentioned the reasons behind. In the Support and Services business, revenue was up 2% to EUR 266 million. Q1 '25 saw 1 delivery to our SARA refinery, which was not the case in Q1 '24 when SARA was in a temporary maintenance and imported only refined product. Apart from this, margin is down 4%, reflecting lower bitumen trading activity as a result of higher in-house bitumen deliveries and shorter, but more numerous routes for the trading activity. Let's now turn to the next slide, which focuses on Photosol. Not much to say about Photosol this quarter, apart from the fact that the secured portfolio reached 1.1 gigawatts, up 5% versus the end of last year and 22% versus the end of Q1 '24. Revenue was up 28%, reaching EUR 11 million, which is higher in percentage than the evolution of assets in operation. And 2 items explain this effect. First, the increase in the assets in operation, which were 450 megawatts last year versus 535 this year and a higher load factor this year with better weather conditions. I will now hand back to Marc, who will conclude this presentation.

As a conclusion, Q1 was consistent with the outlook we provided during full year results and illustrated once again the relevance of our multi-country and multiproduct strategy. In operations, in Europe, we still expect moderate growth in LPG and the continued acceleration of Photosol development with rising development costs in 2025. In Africa, we will start seeing the progressive recovery we were anticipating in unit margins for the service station network in Kenya. As was mentioned before, the pricing formula adjustment in Kenya are started, but is not yet at the level we were asking for. We are optimistic about it reaching full speed in the coming months. Bitumen volumes continue to develop. Angola is now consolidated through global integration following the acquisition of a 60% stake in Soida, which is an Angola company, leading to a 95% ownership. In the Caribbean, activity remains at a high level as we anticipated. At group level, we monitor exchange rate closely in this volatile environment. Note, we did not face any significant FX losses in Q1. EBITDA will be between EUR 710 million to EUR 760 million. Thank you for your attention, and we are now ready to answer your questions.

[Operator Instructions] We will take our first question from Jean-Luc Romain, CIC Market Solutions.

I have 2 questions. The first one is about volumes and margins in the Caribbean. Is there an explanation of a slight decline in margin there? Second question is regards actually an acquisition which was acquired today. Parkland is, I think one of your competitors in some countries is being acquired by Sunoco. What do the multiples of the transaction inspire you?

Thank you, for this question. Parkland and Sunoco, this is a bit early because the information is quite recent. It seems the multiple of acquisition is 5x EBITDA, which is the kind of multiples we look at when we want to buy a new business. So those kind of multiples makes sense for us, I would say.

Now I will take your question regarding the margins in the Caribbean. So overall, margins in the Caribbean grew by 7% and volume by 2%, switching from a gross margin of EUR 80 million last year over Q1 to EUR 85 million this year. The main drivers in the Caribbean remain Guyana and Suriname and Jamaica is also a very strong performer. I'm not sure you have something specific in mind with the Caribbean?

Okay. That's all.

I will now read one question which is online regarding [indiscernible] the unit margin in bitumen. So what happened -- it's a bit technical, but what happened in 2024 was that over Q1, there was a strong devaluation of the Nigerian naira, which explains most of the losses we incurred -- the FX losses we incurred in 2024. Part of these losses were reflected inside the margin we invoice to customers, which made this look like the margin -- the unit margin was higher in bitumen, but it included a part of the FX devaluation. In 2025, the Nigerian naira was overall very stable over Q1, which explains the level of the margin in Q1 2025, which is much more normalized and does not include an FX component. The other question from [indiscernible] was about the guidance.