SINGAPORE, Aug. 31,
2023 /PRNewswire/ -- Kenon Holdings Ltd. (NYSE:
KEN), (TASE: KEN) ("Kenon") announces its results for
Q2 2023 and additional updates.
Q2 and Recent Highlights
Kenon
- Kenon has returned approximately $24
million of capital to shareholders by repurchasing
approximately 1.8% of its total outstanding shares since the start
of the $50 million share repurchase
plan announced in March 2023.
OPC
- Financial results:
-
- OPC's net loss in Q2 2023 was $11
million, as compared to a net loss of $10 million in Q2 2022. OPC's Q2 2023 net loss
included its share in profit of CPV of $4
million as compared to a $10
million share in loss of CPV in Q2 2022.
- OPC's Adjusted EBITDA1 (including proportionate
share in Adjusted EBITDA of associated companies) in Q2 2023 was
$47 million, as compared to
$26 million in Q2 2022.
ZIM
- Financial results2:
-
- ZIM reported a net loss in Q2 2023 of $213 million, as compared to net profit of
$1.3 billion in Q2 2022.
- ZIM reported Adjusted EBITDA1 in Q2 2023 of
$275 million, as compared to
$2.1 billion in Q2 2022.
Discussion of Results for the Three Months ended June 30, 2023
Kenon's consolidated results of operations from its operating
companies essentially comprise the consolidated results of OPC
Energy Ltd ("OPC"). Our share of the results of ZIM
Integrated Shipping Ltd. ("ZIM") are reflected under results
from associated companies.
See Exhibit 99.2 of Kenon's Form 6-K dated August 31, 2023 for summary of Kenon's
consolidated financial information; summary of OPC's consolidated
financial information; a reconciliation of OPC's Adjusted EBITDA
(which is a non-IFRS measure) to net loss; a summary of financial
information of OPC's subsidiaries; and a reconciliation of ZIM's
Adjusted EBITDA (which is a non-IFRS measure) to net
(loss)/profit.
OPC
The following discussion of OPC's results of operations is
derived from OPC's consolidated financial statements, as translated
into US dollars.
Summary Financial Information of OPC
|
|
For the three months
ended
June
30,
|
|
|
2023
|
|
2022
|
|
|
$
millions
|
|
Revenue
|
165
|
|
121
|
Cost of sales
(excluding depreciation and amortization)
|
(129)
|
|
(100)
|
|
Finance
(expenses)/income, net
|
(16)
|
|
9
|
|
Share in profit/(loss)
of associated companies, net
|
4
|
|
(10)
|
|
Loss for the
period
|
(11)
|
|
(10)
|
|
Attributable
to:
|
|
|
|
|
Equity holders of
OPC
|
(6)
|
|
(4)
|
|
Non-controlling
interest
|
(5)
|
|
(6)
|
|
|
|
|
|
|
Adjusted
EBITDA3
|
47
|
|
26
|
|
|
|
|
|
For details of OPC's results by segment please refer to Appendix
A.
Revenue
|
|
For the three months
ended
June
30,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
$
millions
|
|
|
|
|
|
Israel
|
|
|
147
|
|
|
|
105
|
|
U.S.
|
|
|
18
|
|
|
|
16
|
|
Total
|
|
|
165
|
|
|
|
121
|
|
OPC's revenues are denominated in NIS. Excluding the impact of
translating OPC's revenue from NIS to USD, OPC's revenue increased
by $55 million in Q2 2023, as
compared to Q2 2022. Set forth below is a discussion of significant
changes in revenue between Q2 2023 and Q2 2022.
OPC's revenue from the sale of electricity to private customers
is derived from electricity sold at the generation component
tariffs, as published by the Israeli Electricity Authority
("EA"), with some discount. Accordingly, changes in the
generation component tariffs generally affect the prices paid under
Power Purchase Agreements by customers of OPC-Rotem and OPC-Hadera.
The weighted-average generation component in Q2 2023 was
NIS 0.3039 per KW hour, which is
approximately 9% higher than the weighted-average generation
component tariff in Q2 2022 of NIS
0.2799 per KW hour.
Set forth below is a discussion of changes in the key components
in revenue for Q2 2023 compared to Q2 2022.
- Revenue from sale of energy to private customers in
Israel – Excluding the impact
of translating OPC's revenue from NIS to USD, such revenues
increased by $22 million primarily as
a result of (i) $15 million from an
increase in the generation component tariff and (ii) an increase of
$6 million from the consolidation of
results of the Gat Power Plant in Q2 2023;
- Revenue from private customers in respect of infrastructure
services – Excluding the impact of translating OPC's revenue
from NIS to USD, such revenues increased by $14 million primarily as a result of (i) an
increase of $6 million from an
increase in the infrastructure tariff, (ii) an increase of
$6 million from an increase in
customer consumption and (iii) an increase of $2 million from the consolidation of results of
the Gat Power Plant in Q2 2023;
- Revenue from sale of energy to the System Operator and to
other suppliers – Excluding the impact of translating OPC's
revenue from NIS to USD, such revenues increased by $7 million as a result of consolidation of
results from the Gat Power Plant in Q2 2023; and
- Other revenues – Excluding the impact of translating
OPC's revenue from NIS to USD, such revenues increased by
$8 million primarily as a result of
revenue from test runs of Tzomet Power Plant prior to the
commencement of commercial operations, which took place in
June 2023.
Cost of Sales (Excluding Depreciation and
Amortization)
|
|
For the three months
ended June 30,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
$
millions
|
|
|
|
|
|
Israel
|
|
|
118
|
|
|
|
93
|
|
U.S.
|
|
|
11
|
|
|
|
7
|
|
Total
|
|
|
129
|
|
|
|
100
|
|
OPC's cost of sales (excluding depreciation and
amortization) is denominated in NIS. Excluding the impact of
translating OPC's cost of sales (excluding depreciation and
amortization) from NIS to USD, OPC's cost of sales (excluding
depreciation and amortization) increased by $38 million in Q2 2023, as compared to Q2 2022.
Set forth below is a discussion of significant changes in cost of
sales between Q2 2023 and Q2 2022.
- Natural gas and diesel oil consumption in Israel – Excluding the impact of
translating these costs from NIS to USD, such costs increased by
$15 million primarily due to (i) an
increase of $4 million from an
increase in gas prices, which are linked to an increase in the
generation component tariff and movements in the USD/NIS exchange
rate, (ii) an increase of $10 million
from an increase in gas consumption; and (iii) an increase of
$5 million from the consolidation of
results of the Gat Power Plant in Q2 2023, partially offset by a
decrease in gas expenses of $4
million as a result of the commencement of delivery of gas
from Energean from Q2 2023;
- Expenses for infrastructure services in Israel – Excluding the impact of
translating these costs from NIS to USD, such costs increased by
$14 million primarily as a result of
(i) an increase of $6 million as such
expenses are linked to the infrastructure tariff, (ii) an increase
of $6 million due to an increase in
customer consumption and (iii) an increase of $2 million from the consolidation of results of
the Gat Power Plant in Q2 2023; and
- Other expenses – Excluding the impact of translating
these costs from NIS to USD, such costs increased by $11 million primarily as a result of test runs of
Tzomet Power Plant prior to the commencement of commercial
operations, which took place in June
2023.
Finance (Expenses)/Income, net
Finance expenses, net in Q2 2023 was $16
million, as compared to finance income, net of $9 million in Q2 2022, mainly due to (i) an
increase in interest expense relating to loans for the Gat Power
Plant and the Mountain Wind project and (ii) a one-off revaluation
gain from an intercompany loan amounting to $16 million during Q2 2022.
Share of Profit/(Loss) of Associated Companies, net
OPC's share of profit of associated companies, net increased by
$14 million in Q2 2023 to
$4 million, as compared to share of
loss of associated companies of $10
million in Q2 2022, primarily as a result of the Towantic
Power Plant being fully operational in Q2 2023 as compared to Q2
2022, when the power plant was undergoing unplanned maintenance
work.
For further details of the performance of associated companies
of CPV, refer to OPC's immediate report published on the Tel Aviv
Stock Exchange ("TASE") on August 23,
2023 and the convenience English translations furnished by
Kenon on Form 6-K on August 23,
2023.
Liquidity and Capital Resources
As of June 30, 2023, OPC had cash
and cash equivalents of $221 million
(excluding restricted cash), restricted cash of $32 million (including debt service reserves of
$14 million), and total outstanding
consolidated indebtedness of $1,356
million, consisting of $89
million of short-term indebtedness and $1,267 million of long-term indebtedness. As of
June 30, 2023, a substantial portion
of OPC's debt was denominated in NIS.
As of June 30, 2023, OPC's
proportionate share of debt (including accrued interest) of CPV
associated companies was $780 million
and proportionate share of cash and cash equivalents was
$8 million.
Business Developments
Tender for sale of Eshkol as part of the reform of Israel
Electric Company ("IEC")
On August 9, 2023, OPC announced
that OPC Eshkol submitted a petition to the Tel Aviv Administrative
Court requesting remedies including (a) cancellation of the
decision by the Tender committee to cancel the Tender and replace
it with a new "tender"; (b) to instruct the Tender committee to
sell the Eshkol power plant only by way of the Tender; (c) to
declare that OPC Eshkol, which was declared a "second qualifier",
is the winner of the Tender; and (d) to require the IEC to engage
with OPC Eshkol in the purchase contract for the Eshkol power
plant. Simultaneously with the submission of the petition, OPC
Eshkol submitted a motion for an order delaying any actions that
frustrate the resolution of OPC Eshkol's petition.
In August 2023, the Court ordered
an extension for the date for submission of bids in the competitive
process and scheduled a hearing for September 5, 2023.
For further details relating to the Eshkol tender, refer to
OPC's immediate report published on the Tel Aviv Stock Exchange
("TASE") on August 23, 2023
and the convenience English translations furnished by Kenon on Form
6-K on August 23, 2023 and Kenon's
reports on Form 6-K furnished by Kenon on May 22, 2023, June 18,
2023, July 19, 2023 and
August 10, 2023.
ZIM
Discussion of ZIM's Results4 for Q2
2023
ZIM carried approximately 860 thousand TEUs in Q2 2023
representing a 0.5% increase as compared to Q2 2022, in which ZIM
carried approximately 856 thousand TEUs. The average freight rate
in Q2 2023 was $1,193 per TEU, as
compared to $3,596 per TEU in Q2
2022.
ZIM's revenues decreased by approximately 62% in Q2 2023 to
$1.3 billion, as compared to
$3.4 billion in Q2 2022, primarily
due to a decrease in freight rates.
ZIM's operating loss and net loss was $168 million and $213
million, respectively, in Q2 2023, as compared to operating
income and net income of $1.8 billion
and $1.3 billion, respectively, in Q2
2022. ZIM's Adjusted EBITDA5 in Q2 2023 was $275 million as compared to $2.1 billion in Q2 2022.
ZIM's total cash (which includes cash and cash equivalents and
investments in bank deposits and other investment instruments) was
$3.2 billion as of June 30, 2023, as compared to $4.6 billion as of December 31, 2022.
Additional Kenon Updates
Kenon's (stand-alone) Liquidity and Capital
Resources
As of June 30, 2023, Kenon's
stand-alone cash was $632 million. As
of August 31, 2023, Kenon's
stand-alone cash was $625 million.
There is no material debt at the Kenon level.
Kenon's stand-alone cash includes cash and cash equivalents and
other treasury management instruments.
Share Repurchase Plan
Kenon has completed its initial and second repurchase mandates
under the share repurchase plan of up to $50
million announced in March
2023, through open market purchases on the TASE only and
repurchased approximately 942,000 shares for total consideration of
approximately $24 million since
commencement.
Kenon has entered into an additional mandate for repurchases of
up to $10 million of shares through
open market purchases on TASE only, which will expire on
November 30, 2023.
About Kenon
Kenon has interests in the following businesses:
- OPC (55% interest) – a leading owner, operator and developer of
power generation facilities in the Israeli and U.S. power
markets;
- ZIM (21% interest) – an international shipping company;
and
- Qoros (12% interest6) – a China-based automotive company.
For further information on Kenon's businesses and strategy, see
Kenon's publicly available filings, which can be found on the SEC's
website at www.sec.gov. Please also
see http://www.kenon-holdings.com for additional
information.
Caution Concerning Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements include statements relating to (i) OPC,
including the impact of changes in tariffs, business developments,
and other non-historical statements (ii) Kenon's share repurchase
plan and mandate thereunder including the amount of the share
repurchase mandate and (iii) other non-historical matters. These
statements are based on current expectations or beliefs and are
subject to uncertainty and changes in circumstances. These
forward-looking statements are subject to a number of risks and
uncertainties, many of which are beyond Kenon's control, which
could cause the actual results to differ materially from those
indicated in such forward-looking statements. Such risks include
(i) risks relating to OPC's business, including the impact of
tariffs, the outcome of bids and tenders and the cost and capacity
of projects (ii) risks relating to Kenon's share repurchase plan
including the amount of shares that will actually be repurchased
and the timing thereof and (iii) other risks and factors including
those risks set forth under the heading "Risk Factors" in Kenon's
most recent Annual Report on Form 20-F filed with the SEC and other
filings. Except as required by law, Kenon undertakes no obligation
to update these forward-looking statements, whether as a result of
new information, future events, or otherwise.
1 Adjusted EBITDA is a non-IFRS measure. See
Exhibit 99.2 of Kenon's Form 6-K dated August 31, 2023 for the definition of OPC's
Adjusted EBITDA and ZIM's Adjusted EBITDA and a reconciliation to
their respective net (loss)/profit for the applicable period.
2 Represents 100% of ZIM's results. Kenon's
share of ZIM's results for the three months ended June 30, 2023 and June 30,
2022 was approximately 21%.
3 Non-IFRS measure. See Appendix C for a
definition of OPC's EBITDA and Adjusted EBITDA and a reconciliation
of these measures to net loss.
4 Represents 100% of ZIM's results. Kenon's
share of ZIM's results for the three months ended June 30, 2023 and June 30,
2022 was approximately 21%.
5 Adjusted EBITDA is a non-IFRS measure. See
Exhibit 99.2 of Kenon's Form 6-K dated August 31, 2023 for the definition of ZIM's
Adjusted EBITDA and a reconciliation to its respective net
(loss)/profit for the applicable period.
6 Kenon has agreed to sell its remaining 12%
interest to the Majority Shareholder.
Contact Info
|
|
Kenon Holdings
Ltd.
|
|
Deepa
Joseph
Chief Financial Officer
(Interim)
deepaj@kenon-holdings.com
Tel: +65 9669
4761
|
|
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SOURCE Kenon Holdings Ltd.