Earnings Call: Q2 2023

Aug 30, 2023

Ladies and gentlemen, thank you for standing by. I am Mina, your call's call operator. Welcome, and thank you for joining the Motor Oil conference call and live webcast to present and discuss the first half 2023 financial results. All participants will be in a listen-only mode, and the conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Mr. Giannakis Petros, Deputy Managing Director, and Mrs. Psyllaki Mary, Investor Relations Officer. Mr. Giannakis, you may now proceed. Hello to all of you. Good morning and good afternoon, wherever you are. From sunny Athens, Q2 2023 results and half one 2023 results. I like starting with a small catchphrase. I think the most appropriate for this time, it is consistency and perseverance. It goes well with what we're going to discuss about the past quarter and about the current quarter. Let's move to the slides. Slide 5, what we see the highlights. Strong financial performance in the first quarter, a weaker second quarter, mostly due to the scheduled maintenance in the refinery and to a smaller extent, weaker global refining margin environment. For the first half of the year, the group turnover was close to EUR 6 billion, down 25% year-on-year. Adjusted EBITDA was EUR 602 million, down 14%, and adjusted net profit EUR 329, down 35%. Net debt stood at EUR 1.5 billion approximately, EUR 210 million below what it was at the end of 2022, and actually significantly lower than it was in the first half of last year, and the cash flow generation of EUR 258 million for this period. Going to the next slide, we see the segments, the way we have been reporting them for the past almost a year and a half now. We see the adjusted EBITDA at EUR 155 for the second quarter from EUR 509 a year ago, mostly hurt by the maintenance during this quarter. Fuels marketing profitability continued to be weak year-on-year due to the margin cap still in place. Unfortunately, this has been in place since the year of the crisis with the war in the Ukraine and continues being implemented by the Greek government and renewed every period that it elapses. The bucket is being kicked down the road. Power and gas continued to increase its contribution to group EBITDA. We'll come into some more details later. Reported numbers were slightly lower due to inventory losses during the period after the drop in oil and product prices. Slide 7. We see the different indicators. The Brent oil price continued to fall for the fourth consecutive quarter to an average $78 a barrel, as a persistent uncertainty around the global economy and limited supply disruptions. The dollar weakened further, Q-on-Q, standing at an average of 109 compared to 107 in the previous quarter. During this quarter, we saw a normalization in middle distillate cracks from the highs experienced in the full year 2022 and in the first quarter of 2023 as a result of weaker demand due to muted economic activity and sufficient supply from other countries compensating for the lost Russian volumes. Gasoline cracks strengthened further during this quarter. Looking at this table, you can see the green line is the gasoline coming up from 13, going up to 20. Because of healthy demand, inventories are tight. Seasonally, it improved even further, the summer driving season coming up, and we will talk about it later, and refinery outages in Europe and the U.S. Fuel oil cracks improved further in the second quarter due to decreased supply of medium and heavy crudes. Crude differentials continued to narrow as a result of tighter supply after the OPEC cuts, and the Basrah Medium discount narrowed to 5.3 from 8.5 in the first quarter, but it was slightly better year-on-year. On the next slide, we see the fuel marketing and the statistics for the domestic market and the different market segments. The demand was healthy in this quarter. Sales in the domestic market increased by 4.7% in the second quarter, with a similar rate of growth across all the three market categories. On a year-to-date basis, sales were still marginally down year-on-year, mostly due to weak heating diesel sales during the first quarter. We had a mild winter and increased stockpiling by consumers during the first quarter of 2022 due to the subsidies. Next page, we see the selected products for the domestic consumption. Strong growth for LPG, gasoline, and jet. Milder growth for diesel and bunkering. Specifically for the second quarter, you can see the total civil is up by about 5%. You do not have the percentages, but you see the numbers. Gasoline up by 5%, automotive gas oil by 2%. Heating is not significant because it is already very small in this quarter. Looking at it for the first half, including the first quarter, the total civil market was down by 2%, but mainly almost exclusively caused by lower heating gas oil sales because of the mild winter, because gasoline was up 5% and diesel 3% on a half yearly measure. Slide 11, power and gas. High inventory levels and lower than expected heating demand. Gas prices continue to drop. TTF fell to EUR 35 per megawatt hour in the second quarter, from EUR 53 in the previous quarter and about EUR 100 a year ago. European gas storage was full by 77% at the end of June versus 58% a year ago. Currently, it is over 90%. In the same vein, Greek wholesale electricity price fell to an average of EUR 106 per megawatt in the second quarter, from EUR 157 in the first quarter and EUR 237 in the second quarter of 2022. EUAs remained barely unchanged quarter-on-quarter, with an average of 89 from 84. Greek electricity production continued to head south during the second quarter, ending the first half down by 13%, as a result of mild weather conditions and continued cutting back by customers. Renewables accounted for 51% of total production in the second quarter from 47% a year ago. Let us move to the next slide. What do we see here? It is by segment. We see solid performance from the refinery despite the big maintenance. Profitability is not really comparable year on year, because such a maintenance only takes place about every 4 or 5 years. Last year, in the second quarter, we reported the group's highest ever EBITDA, driven by product supply disruptions due to the war in the Ukraine. Fuels marketing, it's still weak performance, somehow improved in the second quarter versus the first one. But this cap is there and is dragging profitability down. Power and gas, increasing contribution of the segment due to the addition of Anemos renewables and the continuous good performance of NRG. Slide 14, the refinery. Clearly affected by the turnaround maintenance to the main extent and to a lesser extent because of the correction in the refinery margins for the whole industry, as you can see in the benchmark margin. Our maintenance program took place during May, June and involved almost all the refinery units. Furthermore, it involved the revamping on one of the two crude distillation units, actually the oldest and largest one, leading to an increase in the refinery capacity by about 8%. Thus, our new operating capacity is moving from 185,000 barrels per day to 200,000 barrels per day. And this, again, is the number we give as operating capacity because effectively, we can operate higher than that, and we've already tested it, and it is easily possible. Therefore, a small impact of the maintenance will be felt in the third quarter of the year because the crude unit came back into operation in the middle of July. Adjusted EBITDA stood at EUR 89 million from the historical high of EUR 451 million of last year. Reported EBITDA was a bit lower because of the inventory loss. And there were some costs that burdened the refinery OPEX through the refinery maintenance. CO2 costs were higher by about EUR 7 million in the second quarter and by about EUR 18 million in the first half. CapEx was also hit by additional charges for the maintenance of about EUR 30 million. Last but not least, net debt dropped considerably to EUR 329 million year on year. Sorry, it fell by EUR 329 million year on year, standing at EUR 392 million at the end of June. So this is the net debt for the refinery. On slide 15, you see the processed volume and the crude mix. Clearly, processed volume was lower by 33% quarter on quarter and 16% for the first half. Crude utilization fell to 139 barrels per day in the third quarter compared to 181 in the first quarter. The mix of crude was similar to the previous period, with Iraqi crude being the dominant crude used. But it is a slightly lighter mix than we used to have in the past because of the way the market has moved. Slide 16, production yields. What we clearly see here is an increased gasoline yield of 22%. Bottom right, you can see this 22% compared to 13% a year ago. This clearly is the result of the new Naphtha reformer. Also, lower fuel oil yield, 14% bottom right, compared to 25% bottom left, as a result of the elevated light product yields, as well as a higher contribution from asphalt, which has moved to 11% compared to 7% a year ago. Slide 17, sales. Sales volume fell by 28%, again as a result of maintenance, but domestic sales went up by 26% and mainly the loss happened in the exports, while shipping and aviation also grew by 6%. Looking at it for the first half, the number is much softer with sales volumes being down by 9% and domestic sales growing by 25%, and shipping by 9%. This is important to see and to notice for the first half because it gives us the confidence that during the second half, we will be able to catch up a part of the lost volumes of the second quarter. Finally, in terms of country mix, we clearly say that Greece is a bit higher compared to a year ago, with shipping and aviation being at 10%, and then having Libya, Italy, and Gibraltar being the large destinations. Margins. The result of what we said, we see on page 18. Our adjusted margin is at 104 from 155. On the right-hand side, you can see this. 159 in the second quarter of 2022. In the first half, our adjusted margin stood at 133, only slightly below the historical high of 140. One point that we must emphasize here is that as we have written in the notes, in the bottom notes with the small letters there, S&P Global proceeded with methodology changes to the product yields and energy consumption, and therefore we also revised the numbers from 2020 to align with S&P Global new methodology. After all, there must be some credible benchmark with which we compare, so we follow it. Slide 19, the fuels marketing segment. Sales volumes increased by 20% year-on-year, with Greece delivering a strong rate of 16% in the first half. Profit performance remained weak, in line with what we said earlier, and something that we have also communicated in the conference call of the first quarter. Adjusted EBITDA stood at 37 in the first half, compared to 75 a year ago, held back by the margin caps in Greece and pricing restrictions in international markets and higher operating costs. Keep in mind that the total number of stations stands at around 1,530, 95% of which is located in Greece. Power and gas. The EBITDA climbed to 93 from 32 a year ago as a result of addition of Anemos and strong performance of energy. Renewables operating capacity stood at 772 megawatts at the end of the first half, unchanged quarter-on-quarter, but higher year-on-year due to the incorporation of Anemos from December onwards. MORE EBITDA stood at 22 in the second quarter from 32 in the first, due to anemic, playing with the word wind in Greek, to anemic wind conditions during the second quarter of 2023. The metrics of wind were very weak during this period. Generally, this first six months has been peculiar as far as the weather conditions. A warm winter, a very mild winter, and much lower wind intensity in the second quarter, moving also a little bit into the third quarter, into July. Going to slide 22. Again, the result of everything said up to now. Reported EBITDA 535. Obviously, it seems low compared to the record high of 932 a year ago, but it still is a very strong number, and we must not forget that, particularly if one compares it to the average annual EBITDA of the last five years, before 2022. 2022 was an exceptional year. 2023 started strongly, weaker because of maintenance, picking up steam now. Below the EBITDA, we note a significant increase in net financial expenses as a result of higher interest rates and additional loans versus a year ago. Again, with reminding come from associates is not comparable, as last year's number included a gain of EUR 35 million from the sale of 50% of Alpha. Net debt decreased from EUR 176 million at the end of 2022 to EUR 155 million in the end of June because of solid cash flow generation. Free cash flow reached EUR 258 million from only EUR 10 million a year ago, by solid profitability and lower working capital outflow, and lower investments. We can see also the company profile and the company balance sheet, but let's not spend time on this. CapEx. Given the spending so far, we feel confident with our previous guidance for the group at EUR 270 million, of which EUR 170 million in the current refinery. Group bank debt decreased by EUR 247 million versus the end of 2022 because of this solid cash flow generation. The weighted average interest cost stood at 4% in the first half for the group, compared to 3.4% at the end of 2022, with the main burden falling on the subsidiaries of Motor Oil, therefore on the other segments and not on the parent Motor Oil. Because the parent Motor Oil has a large part of its loans with fixed interest rates because of the two bonds, the Eurobond and the Greek bond, and interest rate swaps on a significant amount of the remaining loans. So refinery itself, its cost of debt is almost unchanged because in the loans where debt cost increased, we have interest income from our deposits. But in the subsidiaries, because the expansion of MORE has mainly happened through debt, the increase in interest rate there of Euribor has been felt. On the next page. We have covered the debt. I don't think there is a next page as far as the slides are concerned, because I prefer not to expand any further and have questions. A little bit, an update of where we stand today, an update on the developments of the third quarter. The maintenance is behind us. The refinery is running flat out. The units are performing very well. Our choice of having the shutdown in May, June, we believe, proves after the fact to have been quite correct. Industry margins have fully recovered from the correction seen in the second quarter. The new reformer continues to operate under very favorable pricing terms. Just to give you a number, the year-to-date average difference in the price of gasoline between gasoline and naphtha stands at $250 the metric ton. With the current, today's actually standing at 357. This is a very favorable development and, for as long as this lasts, we are happy for the payback of this project. Our refining margins once more outperform the market, and so far in the third quarter, they are close to the levels of the first quarter of 2023. In the fuels marketing, our sales are resilient and our market shares are intact. Profitability is slightly improving, only slightly because the cap is still there, but mainly because of tourism and the mix of where the sales happen with tourist destinations having a big growth in demand. The numbers hopefully will look slightly better in the third quarter for this sector as well. In the renewables as well, wind conditions have now improved in August, and we are more optimistic as far as the wind metrics for the second half of the year. We continue with the construction of the wind generators that we had announced to you earlier. Out of this 84 megawatts that we have told you, 60 are close to completion and are going to be operational in the third quarter. Some recent developments. There have been some organizational changes and additions in the group, which we announced a couple of days ago. As the group grows, expands, the organization must also adapt. People are moving around and new people are coming. I'm leaving the position of General Manager of Finance of Motor Oil, which I've been holding since, I don't remember when. Yes, many years. Manos Christeas is taking this responsibility, who has been with us since 2020. Loukas Tripelopoulos, who was responsible for the treasury operations, will replace Manos as General Manager of Finance for the retail subsidiaries. A new person is coming in to replace Loukas from outside. It is people from outside and people from inside. Her appointment starts as of two days ahead, on September 1st. She's an ex-banker, and her name is Xanthe Hara. She's also here with us. All these associates are with me in the room. I will continue as Deputy CEO, Deputy MD, and keep my responsibilities in the group, supervising the finance functions of the group, as the group now is becoming much bigger. Another sort of two or three little points. Our IRIS CCUS project was selected by the EU's Innovation Fund as eligible for a grant of EUR 127 million. That's a very important milestone because this will help us with the project of the carbon capture for the CO2 emission control. Unagi, which we announced two months ago, the three projects of a total of 300 megawatts received the final grid connection terms in early July, and we proceeded with the payment of the relevant letters of guarantee. These projects are also gradually taking their path. Last but not least, with the FSRU, which seems to be dragging from quarter to quarter. The environmental terms of the project were approved earlier this week, and in terms of funding, the DG COMP from the European Union has sent questions on the project, for which we will respond hopefully by September. It has been included that in the national plan for energy and climate, together with the FSRU of Alexandroupolis. These are the two FSRUs included in this plan. We are continuing our gradual process without, though, having taken a final investment decision, because clearly this depends on the support that we will manage to get. Therefore, I guess we'll have to sort of wait for another quarter and see how these things mature and how the back and forth with the DG COMP moves forward before we decide, we make our final decision. I think I'll stop now and listen to your questions. Thank you very much. Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question is from the line of Tessa Peter with One Investments. Please go ahead. Hi. Good afternoon, and thanks for taking the question. I have three questions. I will go one at a time, please. One is just to understand a bit on the margin development, in two parts. One is you talk about the naphtha numbers, which is very helpful, and I was wondering if there was anything also on the, say, cost efficiency from the topping investment on the positive. Then on the other side, on the margin, we have seen the fuel oil spread and the Basrah Heavy crude spread become less helpful Q3 versus Q2, and I was wondering if you could give any sense as to how that trend in the year is impacting the margin. That is the first question. Peter, hello. Naphtha, I am not sure if I understood the question. The naphtha, the numbers I sort of mentioned before is EUR 250 is the delta between gasoline and naphtha, the average for the year up to date. The current run rate is over EUR 350, which practically gives approximately 1 million capacity, which naphtha is turned into gasoline. We are talking about big numbers. Okay? With the fuel oil and the lighter crudes, yes, the discounts have narrowed on the one hand, but the fuel oil numbers are relatively healthy. Fuel oil 3.5% sulfur now is at -$7.40 crack, which is a very strong crack for fuel oil. Okay. Maybe the discount is lower, but we are almost compensated by this lack of discount by the crack itself. Just to give you some more light with the current situation, the gasoline crack today is at 29, gas oil at 38, jet at 39. These are yesterday's numbers. I am not saying that nobody can claim that these numbers will stay, but clearly, they show you where we are currently and how the margins look for the current period, for the current month or so. Yeah. The other part of the question was on the top end where you have the extra capacity. I was wondering if you looked at it as a, say, cost per unit, whether that also is coming down because of fixed cost leverage and other efficiency may have incorporated into the big upgrade. Clearly, it would come down because you are talking about a bigger capacity by 8%. Yeah. Okay. I guess in order to be able to answer such a metric and to calculate it, you need some run time before we can see it. Yeah. Okay. Currently, it is clearly very good that we can run 200 barrels per day instead of 185,000 barrels per day. As long, of course, as we are able to sell the product, which we are. Mm-hmm. Yeah. Okay. Another question on free cash flow. I was slightly surprised in the free cash flow. I thought with the sales head of production and using of inventory, that you may have seen more free cash inflow in the second quarter. I was wondering if there's anything on the working capital side which we needed to understand how free cash flow from working capital should be developing. Yeah. Again, very valid question, but the second quarter was the one where we operated in a much lower capacity. Our sales were down, considerably down, and inventories were up. Just to give you numbers, May refinery throughput, crude throughput was at 120,000, and June at 63,000 barrels per day. Effectively, these months generated losses. Mm. Okay. Inventories were going gradually up because we wanted to be able to supply our customers, even though the refinery was not operating. Maybe a little bit more trading during this period, which locked down some part of the cash than release it. We see a big release as we speak, which is convenient because we have the tax payments. Keep this in mind that the installments of the statutory tax and the extraordinary tax are happening as we speak. They started at the end of July, and they are EUR 88 million per month from July until February. Right. No, that is very helpful. Thank you. The last question I just had We generate cash flow. Good cash flow as we speak because sales are up, refinery margins are up, profits are up. Generate cash flow. Part of it will go to the payment of the tax, which is convenient because it means you do not need to increase your borrowing or anything like that. Yeah. No, that is clear. Thank you. The last question, please, is just to help us when in the medium term understand the opportunity on the renewable side. I was wondering, is there a point at which you may be able to give us a sort of longer visibility on the capacity expected to come through, and maybe also understanding the sort of PPA terms you are getting so we can get some understanding of the visibility of the development of the renewable side going out in years? Yes, hopefully. We plan to be able to do it in the call of November, in the nine-month results, because we are sort of bringing up to the present the plan, the 2030 plan, and we have big, better visibility of how the pipeline will look. Great. Okay. We will look forward to that then. Thank you. Thanks for that. Thanks for all the help. The next question is from the line of Athanasiou Nikos with Eurobank Equities. Please go ahead. Hello, and thank you very much for the comprehensive presentation. I have two short questions, if I may. The first one, I am not sure I understood correctly the timing of the maintenance. So it was from early May until mid-July, and can you tell us how much did that cost? The second question is an adjustment to what you answered before about the RES. What percentage of the EUR 270 million of CapEx will be allocated to RES for this year? Thank you very much. Let us deal with the first question. Maintenance started in early May, beginning of May. A number of units of the refinery were stopped in order to be maintained and revamped for the crude unit. This is like a sequential process. Because some, like the crude unit, the maintenance lasts 40 days. Others, the maintenance lasts 20 days, others 30 days. There is a period during which everything stops, and there is a general shutdown, and this lasts about a week. This happened in June, if I remember well. The rest is more periodic, so there is no exact timing I can give you. What I can give you is the throughput, which I referred to earlier on, the crude throughput, how it was lower during this period. Now, with the CapEx, sorry. Plus, to throw some more light, because it is a difficult question to answer. To throw some more light is that when the hydrocracker, for example, had its maintenance and it lasted 30 days, it coincided with the shutdown of the crude unit and the shutdown of some other unit, but it was up and running before the crude unit. So you started having some income from the process, from the operation of the hydrocracker. The last one, which was the crude unit, which came back in operation at the middle of July. So from beginning of July until the middle of July, you only had the crude unit missing and giving you. So it is a very progressive thing that happens. On the cost, about EUR 30 million from the maintenance went into CapEx and another EUR 20 million into OPEX. This is for the first half. There is some remaining amount for July because, as I said, some maintenance happened July and some of the payments happened in July. I don't have the numbers of July in front of me. Okay, this is clear. What about the renewables CapEx for this year? The renewables CapEx for this year is about EUR 50 million, is the budget. Okay, great. That is clear. Thank you very much. The next question is from the line of Grigoriou George with Pantelakis Securities. Please go ahead. Yes. Hello. Thank you for taking my questions. I know, I understand you're going to provide us a detailed breakdown of the renewables pipeline in November, and I know it's still early yet for next year, but could you provide us roughly a ballpark figure for CapEx in 2024 and possibly or hopefully for 2025 also? Thank you. Mr. Grigoriou, that's a difficult question. I don't have it at this point of time. I don't have it. What I can tell you, no, I don't have it. Okay. I'll come back on that. Okay? Okay, fair enough. Thank you. That is all. The next question is from the line of Kish Maria Ana with UBS. Please go ahead. Hi. Thank you for taking my question, and thank you for the presentation. I actually have two very quick follow-ups. First, regarding the maintenance completion, if you can give us a sense of what the utilization rate is currently, where are we running at? Also with the working capital, should we expect a full reverse in second half? If you can give a sense of that. Thank you very much. Ana, hello again. We are now running above the 200,000 as we speak. Because we like testing the new unit, so we run above it. Closer to 210,000. But I prefer not to commit to this number because you have known me now for a number of years, both you and Henry, and know that we are conservative. So I prefer to come back after the fact and tell you, but the testing of the unit is clearly for higher numbers. Sorry, what was your second question? Second question was on the working capital. Should we expect- The working capital. Yes. Again, the feeling from the way the sales are going and looking at my computer table. Let's see in my computer, what does the table show? It shows that there is a reversal even though we pay EUR 88 million per month. Say EUR 90 million to make it round in July, EUR 19 million, August, EUR 19 million, September, EUR 270 million approximately, and still cash is growing. I cannot say with conviction, give a forecast. All I can say is that it is working in the right direction. Understood. Thank you very much. The next question is from the line of Memis Osman with Ambrosia Capital. Please go ahead. Hello. Many thanks for your presentation and your time. Two from me, please. One, you mentioned the cracks normalizing in Q2. Just curious on your thoughts on why you think, quote unquote, "cracks became not normal again so far in Q3," and if you could provide any color for Q4. That is my first one. The second one is, you mentioned asphalt yields moving higher. Just wanted to confirm this would be just the state, the domestic buyer. Thank you. Yeah. Hello, Osman. No, the second is easy. It is all exports. Okay. Asphalt, we do almost exclusively exports. Where do you export? Anything I have to check because I don't remember the latest one, but usually it's North Africa, East Africa, and sometimes it even goes Mm-hmm? Skopje. Who? Skopje. Ah, and even the Balkans. Perfect. You see, it's good to have a group of people here because they give me the answers. Now on the cracks, I believe it's demand. It's very simple economics, demand, supply. Now again, it's demand. I think from what I read, some inland European refineries are not operating at high capacities because of lack of crude, because many of Central European refineries relied on Russian crude, which they can't get now. So to them, getting crude is not that easy. Demand is strong, and demand in the Mediterranean is strong because you have the whole basin here, so you're not so much affected by recession in Europe. One that is very interesting, clearly along the lines of your question, is gasoline. We managed to sell so much more gasoline than we were selling a year ago. Okay. We sell much more gasoline, and the crack of gasoline is much higher, which clearly shows that there is demand for gasoline. Jet, I guess, has to do with aviation. Yes. Now, what do we expect for the fourth quarter? Again, boringly conservative. I will say I want to keep, as we say in Greek, a small basket rather than a big basket, and do the maximum we can in order to sustain our profitability by doing new things. So, the mere fact that we sell 1 million metric tons of gasoline more than we did a year ago, and we are able to continue operating the Naphtha reformer very successfully, is something that effectively the refinery you look at today is a different refinery to the one you were looking a year ago. Something that very few people recognize. I mean, you clearly recognize if you yourself, because you have been following us for many years and the people who you know ask the question know us, but the wider public just sees another refinery, does not understand that this refinery gradually is a different refinery to what it was a year ago, purely of its capacity and of its yield mix. Whatever happens with margins, the mere fact that the multiplier is increasing, its volume of high value-added products times margin, gives a more optimistic outlook. Understood. Maybe a follow-up, for Q3, and particularly July, I have read somewhere that these high temperature levels may have also caused some refineries to cut back on operations. Is that something you think played? Very possibly. I mean, if there is such an English expression. Yes. Very possible. Yep. Not for us. Not for us because we are used to it. Right. Understood. Thank you very much. Thank you. The next question is from the line of Orsini Luca with One Investments. Please go ahead. Hi, Petros. Hi, Luca. Good afternoon. I just have one question. I see that the benchmark has changed. Can you tell us a little bit about this change and whether this benchmark is becoming more relevant for us or still has distortions. Yes. I think Mary can respond to this because she's done all the homework. It is. It is more representative because it It is more representative. Because it includes NRG consumption. Because it includes NRG consumption, and there are some changes in the product yields to what it was before. The previous one, we have been highlighting in meetings and presentations everywhere that it was almost meaningless, because after Urals was out of the picture, it relied only on Azeri crude, and we don't run on Azeri crude, the refinery, and I don't think very few of the refineries run on exclusively Azeri crude. It is still using Azeri, which is not relevant in our case, but at least it also has other parameters which are relevant to our case. So it is definitely more relevant than the previous one was. Then, a kind of curiosity, but not only curiosity question. After the changes you made in the refinery and some of the upgrades that you have made, has this changed your need of having heavier or lighter crude, or it remains the same as before by and large? Are you becoming more flexible, I imagine? Luca, how many years do I know you? I do not know. 2011, I believe. Mary. I think 2011. Luca, you ask very difficult questions, which even I cannot answer. Let's see. This is a very difficult question, but it's fun. The very fact that fuel oil is relatively expensive now shows that we would like heavier crude because we produce more fuel oil. That's one side of the coin. The flip side is, because we have less heavy crude and we have more medium crude, we end up producing and having a high yield of expensive products, and all expensive products these days have very high cracks. We are effectively not penalized currently by the fact that we have a smaller percentage of heavier crude in our diet. What you asked doesn't hurt us at this point of time. Now, the question is, in 3 or 4 or 5 months' time, if this crack environment changes, yes, but maybe if this changes, the whole global environment will have changed, and maybe there will be higher demand for crude, and so there will be more heavy crude being available and sold to us. It's moving parts. It's continuous moving parts. Our challenge is, what we are called for to do, is to navigate and operate optimally in these moving parts. Yes. Just a last follow-up question. Have you got in plan another significant improvement in the refinery, another hydrocracker or another bit that you periodically add, or for the moment you're happy where you are? We have this polypropylene splitter that we have already started and awarded the contract, which is smaller. It's EUR 125 million budget, and which we announced a few months ago, and this should be ready by 2026, I think. Okay. So always upgrades on the way. Good. Thank you, Luca. Thank you. As a reminder, if you wish to ask a question, please press star and one on your telephone. Once again, to register for a question, please press star and one on your telephone. As a final reminder, to register for a question, please press star and one on your telephone. Bye-bye. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Tzannetakis for any closing comments. Thank you. Closing comments is thank you very much for listening in. Thank you for asking good questions, and it was fun talking to all of you, and see you in the next quarter somewhere in Europe or in Greece. Have a nice day, all of you. Bye from all of us here. Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant evening.