REPSOL Uruguay/Greece (International Business Development)

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Country-risk analysis for a Repsol implantation

Country-risk analysis for a Repsol implantation

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  • 1. Marine CARRE - Fadil DAAKIR - Matthieu DIWO - Miloš IVKOVIĆ INSEEC FINANCE 03 – December 2013
  • 2.  Repsol S.A., through subsidiaries, explores and produces crude oil and natural gas, refines petroleum. CEO Antonio Brufau Niubo repsol.com
  • 3. 2012 2013 (e) 2014 (e) Turnover 58.924.000 57.806.000 58.512.000 EBITDA 6.956.000 6.861.000 6.828.000 EBIT 4.321.000 4.097.000 4.101.000 Debt 12.772.000 10.517.000 9.730.000 Net income 2.135.000 3.212.000 2.238.000 Market Capitalisation - 25.124,68 bn - Free float - 904.10 bn - Earnings per share (EPS) 2,18 2,21 1,57 Dividend 0,97 0,99 1,00 PER 11,58 11,96 12,35 © Thomson-Reuters
  • 4. 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
  • 5. 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 suppliers : Bargaining power of clients : Weak. Weak. Repsol holds the productivity process. The company has a strong power over sucontractor in case of outsourcing. Everybody is suffering from constantly rising high prices. Threat of Substitutes : High. Rising of the sustainable development with the green energy, electric cars… 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)
  • 6. STRENGHTS WEAKNESSES 1.Spanish oil and gas company with global operations 1.Declining oil reserves 2.Strong distribution 2.Environmental hazards 3.Strong brand 3. Work inefficiencies (an inefficient work environment means 4.Partnership with Honda racing in MotoGP that REPSOL’s goods and services are not being utilized 5. Employing over 40,000 people globally properly) 6.Mergers and acquisitions have strengthened position 4.Bad acquisitions (can hurt REPSOL by increasing their costs 7. Innovative culture and philosophy and reducing the value of their combined businesses. 8. Unique products help distinguish REPSOL from competitors Acquisitions can also distract from the core business and merge 9. Strong management cultures that don’t complement each other… …)
  • 7. OPPORTUNITIES THREATS 1.New oil explorations 1.Government regulations 2.Expansion of refineries 2.High Competition/International competitors 3.Processed Petrol 3.Environmental laws 4.Emerging markets : are fast growing regions of the 4.Fuel free automobiles world that enable REPSOL to quickly expand 5.Development of new resources 5.International markets offer REPSOL new opportunities 6.Volatile currencies : make REPSOL’s investments to expand the business and increase sales difficult, because costs and revenues change so rapidly 6.New products : can help REPSOL to expand their 7.Mature markets : are competitive. In order business and diversity their customer base for REPSOL to grow in a mature market, it has to 7. New markets : allow REPSOL to expand their increase market share, which is difficult and expensive business and diversify their portfolio of products and 8.Changes to government rules and regulations can services. negatively affect REPSOL 9.The availability of substitute products
  • 8. URUGUAY Capital Montevideo Area 175.016 km² Currency 1,00 EUR = 28,42 UYU Language Spanish Population 3.447.778 HDI 0.851 (43th) GDP: $ 49,06 bn
  • 9.  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)
  • 10. 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+ Tax rates Income tax rate Corporate tax rate Sales tax 25 % 25 % 22 % countryeconomy.com
  • 11. GDP 70 GDP/Debt (USD billion) Debt 60 53.55 60.80 56.94 53.25 50 40 33.37 30 20 19.45 22.2 26.9 27.36 17.3 10 0 2011 2012 (e)2013 (e)2014 (e)2015 econstats.com
  • 12. EXPORT / IMPORT Massachussets Institute of Technology
  • 13. 2011 2012 2013 (e)2014 (e)2015 (e)2016 (e)2017 6,1 % 6% 6,1 % 6% 6% 6% 6%
  • 14. Consumer Price Index or CPI measures changes in the prices paid by consumers for a basket of goods and services. 2011 2012 2013 (e)2014 (e)2015 (e)2016 (e)2017 8,1 % 7,5 % 6,6 % 6% 6% 6% 6%
  • 15. doingbusiness.org
  • 16. 10 9 8 7 6 5 4 3 2 1 0 8.17 8.2 8.17 3 2.8 2011 2012 Democracy Index 3.2 (e)2013 Corruption Index The Economist & Transparency International
  • 17.  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
  • 18. Petrol prices in 2013 (USD) Value of oil imports (USD billion) 3.50 1.8 2.84 3.00 2.50 2.92 2.97 1.78 2.99 2.46 1.75 1.75 2.00 1.72 1.50 1.72 Aug. Sep. 1.7 1.00 0.50 1.65 0.00 2011 2012 (e)2013 (e)2014 (e)2015 Oct. Nov. globalpetrolprices.com
  • 19. GREECE Capital Athens Area 132.000 km² Currency Euro Language Greek Population 11.000.000 HDI 0.860 (29th) GDP: $ 249,10 bn
  • 20.  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)
  • 21. 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 Tax rates Income tax rate Corporate tax rate Sales tax 40 % 24 % 23 % countryeconomy.com
  • 22. GDP/Debt (USD billion) 400 350 250 200 373.01 355.2 Debt 306.91 303.9 300 GDP 249.10 234.2 211.94 208.53 174.48 137.04 150 100 50 0 2011 2012 (e)2013 (e)2014 (e)2015 tradingeconomics.com & europa.eu
  • 23. EXPORT / IMPORT Massachussets Institute of Technology
  • 24. 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 %
  • 25. 2011 2012 2013 (e)2014 (e)2015 (e)2016 (e)2017 7% 4% -0,8 % -0,4 % 0,3 % 1% 2%
  • 26. Greece is not ranked. doingbusiness.org
  • 27. 10 9 8 7 6 5 4 3 2 1 0 7.65 7.65 6.6 2011 7.2 2012 Democracy Index 7.6 7.5 (e)2013 Corruption Index The Economist & Transparency International
  • 28.  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 thugs insidecrime.com
  • 29. Value of oil imports (USD billion) 24.5 Petrol prices in 2013 (USD) 2.4 24.09 2.36 24 2.35 23.5 23 22.4 22.5 2.34 2.3 2.3 21.77 22 21.25 21.1 21.5 2.25 2.25 21 2.2 20.5 20 2.15 19.5 2011 2012 (e)2013 (e)2014 (e)2015 Aug. Sep. Oct. Nov. globalpetrolprices.com
  • 30. Index Percent Index Percent Natural increase + 0,46 % Natural increase + 0,18 % Fertility rate 1,89 child/woman Fertility rate 1,28 child/woman Life expectancy 76,33 years Life expectancy 79,24 years indexmundi.com
  • 31. PRODUCT PRICE (at station) No discount or anything else, petrol is petrol, you have to pay the full price. PROMOTION PLACE Dani Pedrosa is a motorcycle ricer, a real winner. He’s been sponsored by Repsol for a while.
  • 32. 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.        
  • 33. Income statement dec. 12 Revenues 58 924 000 COGS 8 190 000 SG&A 45 848 000 EBITDA 4 886 000 Taxes 1 581 000 Net income 2 135 000 Revenues Variation Expenses Variation dec. 14 60 270 596 8271900 48 867 147 3 131 548 1 013 298 2 118 249 % 2% 1% 7% -36% -36% -1% 2012 2011 2010 2009 2008 Evo. 58 924 000 61 502 000 55535000 4582700057740000 0,96 1,11 1,21 0,79 1,02 44 471 000 42 904 000 36184000 3143300040861000 1,04 1,19 1,15 0,77 1,04