REPSOL Uruguay/Greece (International Business Development)

Uruguay or Greece ?

Marine CARRE - Fadil DAAKIR - Matthieu DIWO - Miloš IVKOVIĆ

INSEEC FINANCE 03 – December 2013

Company profile

Repsol S.A., through subsidiaries, explores and produces crude oil and natural gas, refines petroleum.

CEO Antonio Brufau Niubo

repsol.com

Financial report

2012 2013 (e) 2014 (e)Turnover 58.924.000 57.806.000 58.512.000EBITDA 6.956.000 6.861.000 6.828.000EBIT 4.321.000 4.097.000 4.101.000Debt 12.772.000 10.517.000 9.730.000Net income 2.135.000 3.212.000 2.238.000Market Capitalisation - 25.124,68 bn -Free float - 904.10 bn -Earnings per share (EPS) 2,18 2,21 1,57Dividend 0,97 0,99 1,00PER 11,58 11,96 12,35

© Thomson-Reuters

Company ratings

Long-Term Debt ratings

Fitch Moody’s Standard & Poor’s Dagong

BBB- Baa3 BBB- -

Short-Term Debt ratings

Fitch Moody’s Standard & Poor’s Dagong

F-3 P-3 A-3 -

repsol.com

Matrice de Porter

Threat of new competitors :Weak.

The weight of capital hold by Repsol is huge, the company is amongst the 100 richest companies in the world.

Bargaining power of clients : Weak.

Everybody is suffering from constantly rising high prices.

Threat of Substitutes : High.

Rising of the sustainable development with the green energy, electric cars…

Bargaining power of suppliers : Weak.

Repsol holds the productivity process. The company has a strong power over

sucontractor in case of outsourcing.

Plenty of competitors on the market, many of them are listed amongst the 100 wealthiest companies in the world. Strong battle to get and keep market shares, and for new crude oil field (ex : Consortium Libra = Petrobras got 40

% in October 2013)

Key success

STRENGHTS WEAKNESSES

1.Spanish oil and gas company with global operations

2.Strong distribution

3.Strong brand

4.Partnership with Honda racing in MotoGP

5. Employing over 40,000 people globally

6.Mergers and acquisitions have strengthened position

7. Innovative culture and philosophy

8. Unique products help distinguish REPSOL from competitors

9. Strong management

1.Declining oil reserves

2.Environmental hazards

3. Work inefficiencies (an inefficient work environment means

that REPSOL’s goods and services are not being utilized

properly)

4.Bad acquisitions (can hurt REPSOL by increasing their costs

and reducing the value of their combined businesses.

Acquisitions can also distract from the core business and merge

cultures that don’t complement each other… …)

Strategic gap

OPPORTUNITIES THREATS

1.New oil explorations 

2.Expansion of refineries

3.Processed Petrol

4.Emerging markets : are fast growing regions of the

world that enable REPSOL to quickly expand

5.International markets offer REPSOL new opportunities

to expand the business and increase sales

6.New products : can help REPSOL to expand their

business and diversity their customer base

7. New markets : allow REPSOL to expand their business

and diversify their portfolio of products and services.

1.Government regulations 

2.High Competition/International competitors

3.Environmental laws

4.Fuel free automobiles

5.Development of new resources

6.Volatile currencies : make REPSOL’s investments

difficult, because costs and revenues change so rapidly

7.Mature markets : are competitive. In order

for REPSOL to grow in a mature market, it has to

increase market share, which is difficult and expensive

8.Changes to government rules and regulations can

negatively affect REPSOL

9.The availability of substitute products

URUGUAY GDP: $ 49,06 bn

Capital Montevideo

Area 175.016 km²

Currency 1,00 EUR = 28,42 UYU

Language Spanish

Population 3.447.778

HDI 0.851 (43th)

URUGUAY

WTO Member since 1995

No restrictions on: Imports or repatriation of

capital Foreign-exchange market Contracts in foreign currency Equal treatment to local and

foreign investors

Deloitte report (2012)

Ratings / Rates

Sovereign Long-Term Debt ratings

Fitch Moody’s Standard & Poor’s Dagong

BB Ba1 BB BB+

Sovereign Short-Term Debt ratings

Fitch Moody’s Standard & Poor’s Dagong

F3 - A-3 BB+

countryeconomy.com

Tax rates

Income tax rate Corporate tax rate Sales tax

25 % 25 % 22 %

Debt ratio

2011 2012 (e)2013 (e)2014 (e)20150

10

20

30

40

50

60

70

33.37

53.55 53.2556.94

60.80

19.45 22.217.3

26.9 27.36

GDP/Debt (USD billion)GDP

Debt

econstats.com

Main trade partners

Massachussets Institute of Technology

EXPORT / IMPORT

Unemployment

2011 2012 2013 (e)2014 (e)2015 (e)2016 (e)2017

6,1 % 6 % 6,1 % 6 % 6 % 6 % 6 %

Inflation(Consumer Price Index)

2011 2012 2013 (e)2014 (e)2015 (e)2016 (e)2017

8,1 % 7,5 % 6,6 % 6 % 6 % 6 % 6 %

Consumer Price Index or CPI measures changes in the prices paid by consumers for a basket of goods and services.

Interest rate

Private sector

doingbusiness.org

Business ranking

Democracy Index

2011 2012 (e)20130

1

2

3

4

5

6

7

8

9

10

8.17 8.17 8.2

3 2.83.2

Democracy Index Corruption Index

The Economist & Transparency International

Insecurity

One homicide per day (Montevideo)

Hyperviolence: Local drug gangs

Increase of local drug consumption

Increase of drug consumption amongst high school

students in Uruguay went up 50% in 10 years

Important transhipment point for illicit narcotics

(mexican and colombian drug traffickers)insidecrime.com

Prices

Value of oil imports (USD billion)

2011 2012 (e)2013 (e)2014 (e)20150.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

2.46

2.84 2.92 2.97 2.99

Petrol prices in 2013 (USD)

Aug. Sep. Oct. Nov.1.65

1.7

1.75

1.8

1.72 1.72

1.75

1.78

globalpetrolprices.com

Competitors

GREECE GDP: $ 249,10 bn

Capital Athens

Area 132.000 km²

Currency Euro

Language Greek

Population 11.000.000

HDI 0.860 (29th)

GREECE

WTO Member since 1995

No restrictions on: Imports or repatriation of

capital Contracts in foreign currency Equal treatment to local and

foreign investors

Export of Forex must be made through a licensed commercial bank

Deloitte report (2012)

Ratings

Long-Term ratings

Fitch Moody’s Standard & Poor’s Dagong

B- Caa3 B- CC

Short-Term ratings

Fitch Moody’s Standard & Poor’s Dagong

B C B- CC

countryeconomy.com

Tax rates

Income tax rate Corporate tax rate Sales tax

40 % 24 % 23 %

Debt ratio

2011 2012 (e)2013 (e)2014 (e)20150

50

100

150

200

250

300

350

400

208.53

249.10211.94

174.48137.04

355.2

303.9

373.01

306.91

234.2

GDP/Debt (USD billion) GDP

Debt

tradingeconomics.com & europa.eu

Main trade partners

EXPORT / IMPORT

Massachussets Institute of Technology

Unemployment

2011 2012 2013 (e)2014 (e)2015 (e)2016 (e)2017

21,4 % 24,3 % 27,6 % 25,7 % 24,0 % 20,0 % 17,0 %

Inflation(Consumer Price Index)

2011 2012 2013 (e)2014 (e)2015 (e)2016 (e)2017

7 % 4 % -0,8 % -0,4 % 0,3 % 1 % 2 %

Interest rate

Private sector

Business ranking

doingbusiness.org

Greece is not ranked.

Democracy Index

2011 2012 (e)20130

1

2

3

4

5

6

7

8

9

10

7.65 7.65 7.6

6.67.2 7.5

Democracy Index Corruption IndexThe Economist & Transparency International

Insecurity

Increase of right-wing movement : Golden Dawn

Increase of euro-skepticism

New right-wingers deputies in Greek parliament

Seven out of 10 people aged between 18 and 24 say they want to

emigrate

People are scared they'll lose their savings if they leave the Eurozone.

Migrants are being attacked by right-wing thugsinsidecrime.com

Prices

Value of oil imports (USD billion) Petrol prices in 2013 (USD)

2011 2012 (e)2013 (e)2014 (e)201519.5

20

20.5

21

21.5

22

22.5

23

23.5

24

24.524.09

22.4

21.77

21.25 21.1

Aug. Sep. Oct. Nov.2.15

2.2

2.25

2.3

2.35

2.4

2.342.36

2.3

2.25

globalpetrolprices.com

Competitors

Uruguay or Greece ?

Population

indexmundi.com

Index Percent

Natural increase + 0,46 %

Fertility rate 1,89 child/woman

Life expectancy 76,33 years

Index Percent

Natural increase + 0,18 %

Fertility rate 1,28 child/woman

Life expectancy 79,24 years

Mix Marketing

Dani Pedrosa is a motorcycle ricer, a real winner. He’s been sponsored by Repsol for a

while.

No discount or anything else, petrol is petrol, you have to pay the full price.

PRICE (at station)PRODUCT

PLACE

PROMOTION

Uruguay : Here we go

WHY URUGUAY ?

Emerging country in petrol world (big oilfields)

Decrease of unemployment Rising of petrol prices Increase of CPI and imports Repsol is also in all South

America except Uruguay and Paraguay: quick and easy

Good politic context Well ranked as "ease of doing

business"

WHY GREECE IS PUT ASIDE ?

Systemic crisis Strong economic instability Strong politic instability Mass violence Increase of unemployment Decrease of petrol prices Decrease of investments Decrease of loans to private

sector Unemployment is too high Prices and imports are going

down.

Forecast

Income statement dec. 12 dec. 14 %Revenues 58 924 000 60 270 596 2%

COGS 8 190 000 8271900 1%SG&A 45 848 000 48 867 147 7%

EBITDA 4 886 000 3 131 548 -36%Taxes 1 581 000 1 013 298 -36%

Net income 2 135 000 2 118 249 -1%

2012 2011 2010 2009 2008 Evo.Revenues 58 924 000 61 502 000 55535000 4582700057740000 Variation 0,96 1,11 1,21 0,79 1,02Expenses 44 471 000 42 904 000 36184000 3143300040861000 Variation 1,04 1,19 1,15 0,77 1,04