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Edited Transcript of MOH.AT earnings conference call or presentation 27-Nov-19 3:30pm GMT

Q3 2019 Motor Oil Hellas Corinth Refineries SA Earnings Call

Dec 17, 2019 (Thomson StreetEvents) -- Edited Transcript of Motor Oil Hellas Corinth Refineries SA earnings conference call or presentation Wednesday, November 27, 2019 at 3:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Petros Tz. Tzannetakis

Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director

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Conference Call Participants

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* Ekaterina Smyk

BofA Merrill Lynch, Research Division - Analyst

* George Grigoriou

Pantelakis Securities S.A., Research Division - Analyst

* Georgii Gorbatov

Goldman Sachs Group Inc., Research Division - Research Analyst

* Henri Jerome Dieudonne Marie Patricot

UBS Investment Bank, Research Division - Associate Director and Equity Research Analyst

* Jonathan David Lamb

Wood & Company Financial Services, a.s., Research Division - Equity Analyst

* Victor Labate;Piraeus Securities;Analyst

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Presentation

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Operator [1]

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Thank you for standing by, ladies and gentlemen, and welcome to the Motor Oil Conference Call on the Third Quarter 2019 Financial Results. We have with us Mr. Petros Tzannetakis, Deputy Managing Director and Chief Financial Officer; and Ms. Mary Psyllaki, IR Officer of the company. (Operator Instructions) I must advise you that this conference call is recorded today.

We now pass the floor to your speaker today, Mr. Petros Tzannetakis. Please go ahead, sir.

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [2]

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Hello, good evening, good morning, good afternoon to all of you around the world. Q3 results, 9 months results 2019, just overall comment, we live in volatile times. This is what we have been experiencing over the past sort of 3 months, actually almost for the whole year. Volatility challenges makes our life more interesting. Makes us enjoy what we do. Remembering the many years I'm in Motor Oil, I never got bored because there's always something new to do, some new challenge to face.

What happened during the quarter? Crude prices, product prices, crude prices moved up and down, started from a low of $54 , went up to over $60, had an average of $62 per barrel in the third quarter, lower than the previous 2 quarters, mainly reflecting macro considerations. Sweet/sour differentials were very volatile during this quarter. We will see it later also with the crude mix.

Brent Urals spread all over the place. It widened. At some time, Ural was more expensive than Brent. Brent Basrah, Basrah Light, Iraqi crudes, same story. Of course, not more expensive than Brent, but the differentials sort of narrowed compared to previous quarters.

Product cracks, same story. We'll come into some more detail in a minute. IMO implications started becoming more visible during the quarter, influenced -- influencing both the prices, the up-sell price of the products and the cracks of the individual products.

The dollar was stronger vis-à-vis the euro. We had an average dollar parity -- dollar-euro parity of $1.11 compared to $1.12 in Q2 and almost $1.14 in Q1, and the movement in Q3 was from about $1.14 , which was first quarter's average, down to $1.09 effectively, to average $1.11, as we said.

The macros in Greece clearly improved. It is the quarter during which we saw the elections in July. A new government was voted in with absolute majority and a very liberal fiscal and financial policy. Clearly, pro-growth, this influenced in a very substantial way, the perception the markets have on Greece and on Greece's debt and the public debt and the refinancing of the government bonds happened at much, much lower rates than before, which also started, I would call it, almost a frenzy with bond issues by individual companies coming in the market as of September onwards with very satisfactory results for all of them. We'll discuss this further. I'm sure you will have questions.

Domestic demand was stronger in Q3. The demand overall for the quarter was up 3.2%, with gasoline up 1.5% and diesel up 3.3%, which gives a rough average for the automotive fuels of 2.4%, which clearly improved what we saw in Q1, which was automotive fuels minus 2% and Q2, plus 1%; and the first half, just under minus 0.4%.

What happened with -- particularly with Motor Oil's operations, they were strong. They were very strong, particularly compared with the second quarter. Sales were strong. Even though Q3 included the full maintenance of the FCC, which started in September and continued well in October and finished at the end of October.

Recall that we had opted to process lower volumes in the second quarter of '19, so that we did some peripheral maintenance during this quarter because of the very weak margins. But the refinery was flat out in the beginning of the third quarter, making up for those Q2 lost volumes with total production and sales volumes during the third quarter increasing. Trading volumes were also very strong, in line with previous quarter trends because we still have customers who want to buy products. And if we consider that it is more profitable to trade rather than go through the refining process, we prefer to trade and keep our customers happy.

The crude feed was clearly much sweeter. Again, we'll see the slides, and I'll come back on that. And let us sort of start looking at the slides because most of the points are there.

Slide 2 shows you the main highlights. A lot of process volume, high sales, a good EBITDA for the 9 months and an adjusted EBITDA because of inventory gains for the 9 months gives us an adjusted income of EUR 180 million, group net debt and parent company net debt.

Let's concentrate on Slide 3. Slide 3 gives us the mix of crudes. Here, we see the average for the 9 months, which average for the 9 months is roughly 20% of lighter crudes, sweeter crudes, 80% of Iraqi crudes for the 9 months though, which, in order to have this result, it means that the third quarter had 33% of sweeter crudes and 67% of heavier Iraqi ones. Clearly, a change from the 11%/89% mix of the first quarter or the 17%/83% mix of the second quarter.

So clearly, a much lighter mix. Without, of course, as correctly noted by most of people covering us and reading your analysis, without of course having the discounts and the benefits one would expect. But still, it is a much lighter mix.

Moving on to production for feedstock, we had bigger feedstock for crudes. Crude feedstock during this quarter was a strong one, it was definitely much bigger than Q2 and Q1 of this year with lower though fuel oil feedstock and not low, but pretty strong gas oil feedstock. So mainly was more crude, less fuel oil, more gas oil. Overall, therefore, we see a bigger throughput for the refinery, a bigger volume throughput than we saw in Q1 and definitely Q2.

This results in the product mix where we, again, see a lower fuel oil output, influenced by the sweeter crude and also by the big, large increase in the asphalt sales, which, again, we will cover in a minute.

Let us go to the next slide, where we see the details of the sales and more importantly, if we see on Slide 6, they were particularly strong. The 3,776,000 metric tons of sales for Q3 is the -- actually, yes, it is the biggest ever, historically, volume for the third quarter of the year.

Domestic market compared to the third quarter of '18, all of '17 is more or less at the same levels. Even though the domestic market improved, we will not see the improvement here because a big part of our sales in the domestic market comes through direct imports, which are done via the subsidiaries. So Motor Oil sells flat out, but the subsidiaries sell even more by importing directly. We find this quite often more profitable.

We also had a strong increase in LPG sales. So our Coral Gas franchise is doing pretty well. And then when you move up to the green part of this graph, you see aviation and bunkering having improved significantly. And this is both aviation, which improved in the country, but also with our Shell MOH Aviation company, and of course, bunker fuel, which we have much stronger results after the, shall we say, the -- being much more active through our Coral marine business.

Of course, you can see the picture of the trading versus the refining, which I told you earlier on. On the next slide, where, again, you see trading being higher by 0.5 million metric tons. So clearly, what happened in the third quarter is volumes that were lower because of feedstock were eventually more than covered by the increased trading activity. So overall, it was a strong trading business by the company.

If though we'd now look at the refinery operation. The refinery environment was stronger compared to the previous quarter, even though it was weaker compared to year-on-year to the same quarter a year ago. They were stable, the operations. We had the FCC maintenance. So keep in mind, a rough number that we calculated for the loss of income because of the FCC, which is roughly -- it's over EUR 15 million estimate. It's anything between EUR 15 million to EUR 20 million for the period of September. And there will be sort of a similar amount for the period of October, which -- for which we have not adjusted in our numbers because we prefer to only adjust for the inventory loss or gain rather than for -- adjust for other extraordinary things as well. But doing your own analysis, you can include that.

The inventory losses we have were approximately EUR 22 million, which we consider a conservative number. But being realistic and conservative is part of our nature.

Slide 8 shows you the refinery margin as per the calculation. However, keep in mind here that in this number, you also have the effect of the additional feedstock. So when you see $49.3 for the adjusted number dollars per metric ton or $54 for the reported number, in reality -- and this gives you a number of $49.3 divided by 7.2 roughly $6.8. If, however, you work it backwards towards the crude refining margin, this should be closer to $8.1 for the 9 months and to roughly $8 for the third quarter. So just to refresh our memories, we had a very strong Q1 with roughly $9 per barrel pure crude margin, $7.3 for the second quarter, $8.8 flat for the third quarter and roughly $8.1 for the 9 months.

Bringing us to the P&L on Slide 9. You see the gross margin both in the Q3 and the 9 months. Nothing particularly interesting here, a slight increase in the refinery cost is related to the maintenance because part of the maintenance ends up in the refinery cost. You see net financial expenses moving down further, and I'll come to it in a minute, with very minor adjustments for IFRS 16 at the level of the parent. So there is very little distortion because of the IFRS 16 adoption for the parents.

Moving to Slide 10, adjusted numbers. The EUR 22 million inventory loss we had. And the EUR 39 million inventory gain for the 9 months, giving us the numbers of EUR 82.5 million earnings before tax of EUR 214 million for the 9 months. The after-tax number has been calculated with the existing tax rate as of September 30, which was the 29% -- 28%, sorry. And we have not yet included the benefit of a new tax rate that was in the new law submitted in parliament, which is going to apply retroactively from the beginning of the year with a rate of 24%. So clearly, the full year numbers, I understand, and therefore, the Q4 numbers will take the benefit of the 24%, which is a considerable benefit at these numbers.

Looking at the group, we can see an improvement in the EBITDA of the subsidiaries. To a large extent, this is due to the IFRS 16, which, clearly, both Coral and Avin, have many more leases and, therefore, this both changes their EBITDA number and their absolute debt number. The marketing performance overall was good, and it was led by increasing the demand of auto diesel, but also gasoline in Greece that we said and Motor Oil's continued market share gains. And of course, as I said before, the marine diesel helped increase the overall volumes sold, even though at a lower of stability. And here as well, looking at both the reported and the adjusted numbers for the group, the numbers are without the tax, the new tax rate of 24%.

On Slide 13, we have reduced -- we've taken back the forecast for CapEx for the full year from EUR 115 million to EUR 90 million. This is mainly because we see the first payments for the new projects happening very early in January. A little bit on that front. We have finalized all the contracts and agreed with the contractors on all the details of the project. And so the project is effectively kicking off, with first payment happening in January. So everything is there, prepared and ready with final prices agreed and long-lead items as well concluded and having final prices so that we are ready to order.

Therefore, clearly, 2020, we'll have a revised number for CapEx, including the CapEx for the new project.

On Slide 14, it is the yearly net debt figure. The 9 months, you can work it out, we don't have it here. But the cash flow for the 9 months was very good; it was very strong. We had gross cash flow roughly of EUR 64 million and an additional working capital change of about EUR 83 million, giving us operating cash flow of EUR 147 million. So this was a very good cash flow performance for the quarter, which helped us finance the dividend paid, plus the CapEx and acquisitions. So we're pleased with that.

In the bottom, let's say, part of this debt maturity profile, we have included some refinancings we did in Q3. So a little more prolonged in the 2022 and 2023 columns because this process of refinancing is something that continuously happens, and there is more that happens in Q4 and then of course there is more next year.

I think I will stop here. I covered most of the points of the quarter. So I'm ready for your questions. Thank you very much.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We will now take our first question.

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Ekaterina Smyk, BofA Merrill Lynch, Research Division - Analyst [2]

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Ekaterina Smyk, Bank of America. I have a couple of questions. One of them is on your refining margin dynamics. I mean I was prepared to ask you why is your refining margin improved only marginally quarter-over-quarter despite like substantial improvement across all products and also some expansion of euros and although less low expansion across other crude differentials, but still there was a little expansion. But then you mentioned that the crude adjusted refining margin comes at around $8. Would you please -- can you please clarify what this adjustment, what are you exactly doing to adjust for total -- to move total feedstock into crude?

And then if you can provide the comparable number for the second quarter so that we can see the quarter-over-quarter dynamics in the crude adjusted feedstock refining margin?

And my second question is just to follow up on your CapEx. When do you plan to announce the 2020 CapEx guidance? And what is the approximate -- what is the preliminary range for the CapEx figures?

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [3]

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Yes. Now on the -- because, you see the peculiarity with Motor Oil is that, and it's one of its advantages as well, is that we continuously operate in higher capacity than our nominal capacity. It's something that has been picked up by some of your colleagues; one of them is on the phone as well. And he has -- there are statistics of Motor Oil operating at levels of about 108%, 110%. The reason we are able to operate at such capacity is because we try to address bottlenecks at all times and to have units that can add value oversized. So having additional desulfurization capacity and a lot of blending capacity, we can buy diesel with more sulfur and desulfurize it, and also we can buy fuel oil and blend it when there is an opportunity. Therefore, when you see the refinery margin that we have on the slides, in reality, it is roughly 80% -- 75% to 80% crude and about 25% to 20% diesel and fuel oil margin.

And clearly, on the diesel and fuel oil upgrade or blending, you don't get the full refinery margin. This is why this number needs some adjustment. This cannot be a science. It is more a rule of thumb. And we assign a certain profit on the diesel and fuel oil upgrade and blending, which is anything from $15 to $25 per ton. So clearly, it is much lower than the full refinery margin. We multiply this by the volumes that were passed to the refinery and the remaining volumes, practically, and the balance of the refining margin, which gives us the $8 for Q3. The numbers, as I said, in Q1 was $9, in Q2 was $7.3, and in Q3, it was $8, all right? So this is the exercise we do, but I cannot put these numbers in this presentation because it's a nonaccounting exercise. So it's not something -- it's more by experience and logic that we address it, okay?

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Ekaterina Smyk, BofA Merrill Lynch, Research Division - Analyst [4]

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Yes. Yes. Absolutely, yes. Can I just follow-up on this quickly? And then we can go to CapEx.

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [5]

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Yes, yes, yes.

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Ekaterina Smyk, BofA Merrill Lynch, Research Division - Analyst [6]

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Yes. I mean then my question would still be valid. Because I mean I struggle to understand why the quarter-over-quarter improvement is not like substantially -- the improvement is not high, not higher because, like -- I mean by just looking at Mediterranean market, market improved materially in the third quarter, right? We had about $3 run in diesel, about $2 to $3 run in gasoline, and the fuel oil decline was not that material, right, at that point of time if we compare the averages of the quarters. And then there was also some support, at least like it didn't play against you on the side of crude differentials. So I mean if you can just add some color, probably it might be related to your domestic pricing or anything else?

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [7]

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You must -- if you want to look at the real numbers, you must add roughly this 20 -- say, EUR 17 million, EUR 18 million for the FCC loss. Because if you have your FCC not operating, there is roughly these dollars that we lost. So if you add these numbers in a quarter, it changes slightly the picture. So maybe... (inaudible) the FCC...

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Ekaterina Smyk, BofA Merrill Lynch, Research Division - Analyst [8]

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Yes. Absolutely. It will give me $2 to $2.50, right, quarter-over-quarter increase?

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [9]

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Yes. Probably, probably. I have -- don't have -- I haven't done the numbers, but this is it.

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Ekaterina Smyk, BofA Merrill Lynch, Research Division - Analyst [10]

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Yes. Okay. I mean, this makes much more sense now.

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [11]

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On the CapEx, I don't have the final payment schedule for the new naphtha projects. I don't have the final one. I have more of an indicative one. So I don't want, at this point of time, to give guidance. But if one thinks that the project is going to cost us over EUR 300 million, and the money is going to be spent in 2020 and 2021, and there is always some leftover for 2022, If one assumes, let's say, EUR 20 million will be spent in '22 or '25, the remainder can be evenly split between '20 and '21, all right? So say EUR 190 million, EUR 180 million -- sorry, EUR 280 million will be spent in '20 and '21 for the CapEx of naphtha. This should be added to rough number of, I would say, EUR 75 million, which is our normalized yearly CapEx.

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Operator [12]

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We will now take our next question.

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Henri Jerome Dieudonne Marie Patricot, UBS Investment Bank, Research Division - Associate Director and Equity Research Analyst [13]

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Yes. Henri Patricot from UBS. A few questions, please. The first one, I was wondering if we should expect sort of changes to your crude slate is something sweeter, especially considering the big moves we're seeing on the outset for fuel oil this quarter?

And then secondly, I'd be interesting to hear what you're seeing in the bunker market yourself in terms of the fuels, are they being used to switch to IMO, whether that's taking place? And what kind of a fuel is seeing good uptake between gas oil and low sulfur fuel oil.

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [14]

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Yes. Henry, yes, it is becoming sweeter in Q4, still, I mean, even more than Q3, and we are looking at all different crudes. And also continuous, let's say -- not experimenting really. It's looking at the asphalt and how the asphalt is doing because clearly, the asphalt gives us a significant advantage and you can see the volumes having increased drastically. And the asphalt clearly reduces the fuel oil produced and you get a much more value in the product. And so it has become -- that's why I said at the beginning, volatility, volatility never -- you never get bored. And so we had -- we are doing things by changing the plans in very short periods, depending on how the prices move as correctly put by both, you and Ekaterina before.

Now all the bunker markets, first of all, we see something strange. Before we go to a bunker market that with high sulfur fuel oil even though the prices have fallen significantly in the past sort of couple of months, there is still a lot of demand. And we almost have more demand for high sulfur fuel oil than we can produce. But of course, the prices are lower. The crack is into a very negative territory.

In the bunker market, we are clearly ready with -- clearly marine diesel and with very low sulfur fuel oil. And we are ready, and we are offering it to clients. But there is nobody really buying big quantities at this point.

So it's like everybody is -- really is testing and is wanting to examine and experiment his options. So we are there ready to sell in Piraeus through Coral and through the refinery and other companies. But there is no big demand yet. So it's wait-and-see. My feeling is that the closer we go to February and January, February, things will become more real. Somebody will have to put an order in the end and decide what fuels they will burn.

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Henri Jerome Dieudonne Marie Patricot, UBS Investment Bank, Research Division - Associate Director and Equity Research Analyst [15]

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And just to follow-up on the first one, on the crude slate, what kind of sweeter crudes are you running through the refinery this quarter?

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [16]

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Let me have a look. Some CPC, Es Sider, some Azeri, these kinds.

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Operator [17]

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We will now take our next question.

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Victor Labate;Piraeus Securities;Analyst, [18]

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This is Victor from Piraeus Securities. I just wanted to -- I just want to know what is the trend for Motor Oil's refining margin in the fourth quarter compared to the third quarter? And also, if you see -- if you can tell us more about the sweet/sour differential? If it's narrowing or if it's widening?

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [19]

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Yes. Again, here, I mean looking at my numbers. October, we still had the FCC. So it looks like a weak month in October. So it's more a continuation. I mean just to go back to Q3. Q3, we had a very strong July, medium August and a weaker September.

In Q4, we have a weak October with November strengthening. This is the picture. And as I said, again, volatility because it has to do with the cracks of the different products changing. I mean diesel, for example, at some point, it's margin increased with gasoline moving the other way around. So we had diesel stronger in this quarter compared to the third one while gasolines is weaker this quarter compared to the previous one. And with margin -- and with jet being strong in both quarters. So it's a continuous adjustment just because of the discounts of the crudes and the quality of the crudes and the products that are produced.

So weaker at the beginning, becoming stronger now. I cannot tell you how it will would close and what will happen. And again, this is also influenced by the adjusted numbers because I don't do adjustment numbers, we do them at the end of the quarter. And the adjusted numbers, there was a drop in the prices in October. I mean you can see price -- and September, we had gasoline at EUR 5.45 per ton because it's also a factor of the euro-dollar, where we have the euro-dollar at $1.09 in September, but $1.115 in October. So even this parameter makes things more complicated. And at jet -- the jet falling from EUR 5.75 to EUR 5.25 per ton in -- between September and October while -- and the crude as well. While in November, there is a pickup. Gasoline back to where it was in September, jet not picking up, while crude moving higher than it was in September. So crude moves from about EUR 56 to EUR 59 on average, okay. So a difficult question.

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Operator [20]

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We will now take our next question.

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Jonathan David Lamb, Wood & Company Financial Services, a.s., Research Division - Equity Analyst [21]

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Jonathan Lamb speaking, Wood & Company. I wanted to ask a question about crude oils. So we've seen that the crude oil differentials, the heavy differentials have been very negative, and you've been buying sweeter crudes. Is there a problem in, actually, in availability of some of the crudes that you usually use? Or is it just a matter of economics?

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [22]

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It's a matter of economics, Jonathan, because it is not just the discounts of the crudes. It is the product mix that the different crudes give you. So it's a function, at the end of the day, of the different balances between the diesel, the gasoline, the asphalt and the fuel oil. So it's not -- okay, so it's not that one day, yes, we shift it all to sweet ones because no, it doesn't work that way.

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Jonathan David Lamb, Wood & Company Financial Services, a.s., Research Division - Equity Analyst [23]

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Another question. You mentioned asphalt. How much of your heavy end is being turned into asphalt nowadays versus fuel oil?

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [24]

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Let me see if I have it. It's -- I mean it will -- almost 820,000 metric tons was our asphalt sales for the first 9 months compared to roughly half of that a year ago.

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Operator [25]

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There are no further questions at this time. (Operator Instructions) And we will now take our next question.

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George Grigoriou, Pantelakis Securities S.A., Research Division - Analyst [26]

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Yes. George Grigoriou from Pantelakis. Just one question regarding in CapEx. If you could comment, please, on group CapEx going forward? I know it's a bit early yet. But apart from the new unit at the refinery and given that we've got recent reports in the press about power generation or stuff like that. And as well on a net basis given that Optima, you've got them classified in your account as available for sale, the Optima Bank.

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [27]

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Let's start from the last one. It's the easiest one. Optima Bank, we are in the process of gradually divesting. We haven't done anything yet because it is quite a complex procedure. And also there is a lot of fairness opinions and regulatory issues, et cetera. But we are exactly in this phase now with a detailed plan of divesting. That's as far as the bank is concerned.

As far as the other investments, because there has been different things on the press, we have gotten the license for a plant in Crete and we are now doing the feasibility study. We believe that it is a good unit because it's going to be based on LPG rather than natural gas. And this will be the right the right source -- the right way to operate in Crete now. So we are doing the feasibility study, have all the other things in place, and we'll decide later this -- sorry, early in the next year to proceed or not. The estimate for this is around EUR 100 million, just to give you a ballpark figure.

On the other front, the renewables is something that we clearly -- and I forgot to mention it because it is only small at this point of time, but we made sure that we informed the public with this announcement in October about our entrance in the renewable sector. We have a pipeline of different projects we look at. You know clearly that this has a lot of work to be done and a lot of analysis and negotiations, but there is a pipeline. Things don't move that fast because they are sort of smaller projects. So I cannot put a ticket on this, but that is not going to be particularly big. That's it. I don't think we have anything else. We don't have anything else now. That's it, yes.

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Operator [28]

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We will now take our next question.

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Georgii Gorbatov, Goldman Sachs Group Inc., Research Division - Research Analyst [29]

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Petros, it's Georgii from Goldman. I just wanted to check regarding this downward revision of the tax rate. Basically, how this will technically be applied? So apparently, the 24% rate was set for 2019. But as you said, this would be applied retroactively. I just wanted to understand whether we should reflect it in 2019 accounts or for next year?

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [30]

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Yes, Georgii. Yes, yes, that's a fairly good question. And it's something we clearly like. And we clearly believe that this is a very business-friendly movement from the government because the tax reduction is going to be retroactive from the beginning of the year. It's not something we have experienced in the past. So clearly, we are happy. So yes, in your numbers for 2019, if you change your calculation from the current one into one with 24%. So even now 9 numbers -- our 9-month figures should get a boost off, I don't know, I mean can do number, of between of EUR 20 million for the parent in -- I think it's EUR 20 million for the parent in 9 months. What? Yes, plus something less EUR 20 million, okay. So yes, for the whole year and also something interesting is that they will reduce the advance payment because it's another honors thing we've had in Greece that the government required us to prepay 100% of next year's tax based on the current year's tax. So if we had a very good year, not only did we pay the tax for the year, but we had to prepay next year's theoretical tax based on the current year. Imagine what is this for the cash flow. This government understood this and is gradually reducing this requirement by 5% first, but 5% is something.

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Georgii Gorbatov, Goldman Sachs Group Inc., Research Division - Research Analyst [31]

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Yes, understood. And for next year, the tax rate is 20% and it will remain 20% going forward.

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [32]

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We don't know yet. For now, it's 24%. They have not included it in law, the 20%, but they have said it. Okay, so it's -- because the moment you include the 20% and the 24%, there is a deferred taxation element in it as well, even with the 24% because don't forget all the consolidations and everything is done with the 28%.

So there is the deferred tax element there even with the 24%. And also if you want one more, the dividend tax. The dividend tax has been reduced from 10% to 5% immediately, effective immediately. So this is good for the interim dividend. The interim dividend of 35% will now only have a tax of 5% on it. Not yet. We don't know if yet, why. Is it not going to be voted? No. I have my colleagues here every all my -- but it was in the law. All right. Okay. It is in the law, but the law hasn't been voted yet. All right. Yes. Okay, let's be accurate. Let's wait for the voting of the law, yes.

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Operator [33]

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There are no further questions at this time. I would now like to hand the call back to Mr. Tzannetakis.

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Petros Tz. Tzannetakis, Motor Oil (Hellas) Corinth Refineries S.A. - Deputy MD, CFO & Executive Director [34]

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Thank you, all, very much. Good call, good questions. Enjoyable questions makes my life more difficult sometimes, which I enjoy. And see some of you in Prague next week, where we have many, many good meetings. Thank you from all of us here. Have a nice rest of the day. Bye.

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Operator [35]

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This does conclude your conference for today. Thank you for participating. You may all disconnect.