Rubis: French Oil and an 8% Dividend

Rubis is a French multinational corporation specializing in the storage and distribution of oil and gas. It currently operates in over 40 countries, with its strongest presence in Europe, Africa, and the Caribbean. The company is currently trading at an attractive valuation and offers an impressive 8% dividend yield. In this blog, I will introduce Rubis and explain why I decided to invest in its shares.

Rubis' Business Model

Rubis is a French company founded in 1990 with the goal of investing and managing assets in the oil and energy sector. Its main activities are the distribution and storage of petroleum products, including liquefied petroleum gas (LPG), gasoline, diesel, heating oil, and related derivatives. The company focuses on the following key areas:

• Distribution: Supplying and selling energy products to various end-users, ranging from households to industrial and commercial customers.

• Trading: Buying and selling petroleum derivatives, leveraging its global presence and extensive logistics network to secure the best sources and prices.

  
  

  

  
  

Rubis' business model is typical of a multi-sector energy company operating in the "midstream" (logistics and storage) and "downstream" (retail and distribution) segments. In recent years, the company has also been exploring opportunities tied to the transition to low-carbon energy sources, while maintaining a core focus on traditional petroleum activities.

A key competitive advantage for Rubis lies in its focus on markets and regions where it can capitalize on local infrastructure gaps and build a strong customer base reliant on dependable energy supply. The company operates in Europe, Africa, the Caribbean, and other markets that are not as saturated by larger global players.

Annual Report

Rubis delivered exceptional results in 2023, underscoring the strength of its business model, which combines traditional energy activities with renewable energy initiatives. Despite volatile market conditions, Rubis exceeded its goals and increased its dividend for the 28th consecutive year.

Key Financial Metrics for 2023:

• EBITDA: €798 million, a 19% increase compared to 2022.

• EBIT: €621 million, a 22% year-over-year increase.

• Net Profit (Group Share): €354 million, reflecting a 35% increase.

• Operating Cash Flow: €583 million, a 35% increase compared to 2022.

• Net Financial Debt: €1.36 billion, with a debt-to-EBITDA ratio of 1.8x, an improvement from the previous year.

  

  
  

Segment Highlights:

1. Energy Distribution:The segment achieved a 20% EBIT growth, with volumes increasing by 4%. There was particularly strong demand for LPG in Morocco, Kenya, and South Africa.

2. Renewable Electricity Production:Rubis Photosol expanded its portfolio by 77%, reaching 893 MWp. Additionally, the company strengthened its presence in Italy and Spain through new acquisitions.

3. Liquid Fuel Storage:Rubis Terminal JV posted a 16% revenue growth and a 14% increase in EBITDA, with an average occupancy rate of 95%.

   
   

Investments and Financial Stability:

• Total investments amounted to €283 million, of which €77 million was allocated to renewable energy initiatives.

• Despite increased investments, Rubis maintained a solid balance sheet with a debt-to-EBITDA ratio of 1.4x.

  
  

The Last Quarter

Rubis delivered mixed results in Q3 2024, reflecting growth in energy distribution but also challenges from oil price volatility and delays in price adjustments in certain regions.

Key Highlights for Q3 2024:

1. Energy Distribution (Retail & Marketing):

   • Sales Volume: Up 7% compared to the same period last year.

   • Gross Margin: A slight decrease of 1%, reaching €190 million.

   • LPG: Sales volume increased by 2%, with gross margins remaining stable at €70 million.

   • Fuels: Sales volume rose by 8%, with unchanged gross margins at €107 million.

   • Bitumen: Sales volume grew by 18%, but gross margins fell by 10% to €14 million.

2. Support & Services:

   • Gross Margin: A 25% decline compared to the same period in 2023.

   • LPG and fuel trading in the Caribbean maintained strong momentum, while bitumen trading weakened compared to the exceptionally strong results in Q3 2023.

3. Renewable Electricity Production:

   • Portfolio Capacity: Surpassed 1 GWp.

   • Revenue: €17 million, reflecting a 6% year-over-year increase.

     
     

Balance Sheet Analysis

Rubis' balance sheet remains stable and relatively solid, although it does not indicate extraordinary performance.

Total Assets: €6.35 billion, a slight decrease from €6.47 billion in the previous year.

Equity: Declined from €2.86 billion to €2.76 billion.

Goodwill: The company reports €1.6 billion in goodwill, which, as an intangible asset, may lose its value in the event of financial difficulties. Excluding goodwill, tangible equity amounts to approximately €2 billion.

Long-Term Debt: Rubis carries €1.2 billion in long-term debt, mainly from investments in renewable energy projects, particularly in solar panel infrastructure.

The company's balance sheet is stable and well-managed, though not exceptional. Its debt levels are sustainable, especially given the steady cash flow from operations.

Dividend and Valuation

Rubis currently offers an 8% dividend yield, making it highly attractive from an income perspective.

P/E Ratio: 8, meaning investors are paying €8 for every €1 of earnings. This is significantly lower than the market average of around 30, making Rubis an appealing investment.

Conclusion

Rubis is an interesting company, currently trading at an attractive valuation and offering a high dividend yield. I have decided to allocate a portion of my portfolio to Rubis stock, though they represent a smaller share of my investments, approximately 6%.