Poland: PKN Orlen & Grupa Lotos Record Higer Earnings
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Tuesday, 20 May 2008 |
Poland's state-controlled oil companies, PKN Orlen and Grupa Lotos,
posted higher first-quarter earnings thanks to revaluation of their
crude stockpiles and financial gains and said refining margins should
improve this quarter.
Poland's state-controlled oil companies, PKN Orlen and Grupa Lotos,
posted higher first-quarter earnings thanks to revaluation of their
crude stockpiles and financial gains and said refining margins should
improve this quarter.
Their shares fell on a retreat in the local stock market as
analysts said results were driven chiefly by accounting gains, while
operating performance came in line with expectations.
Net profit at PKN jumped almost 13-fold to 626 million
zlotys, beating the consensus analyst estimate of 541 million. Lotos,
whose output is about a quarter of PKN's, lifted its bottom line almost
fivefold to 268 million zlotys to beat an average forecast of 191
million.
Soaring oil prices bolstered the value of crude stockpiled
for production and added 580 million zlotys to PKN's operating profit,
while Lotos booked 255 million zlotys in financial gains from currency
and refining margin hedging.
"The headline earnings look strong, but the quality of the
earnings is weak compared to the fourth quarter," UniCredit analyst
Robert Rethy wrote in a note to clients.
In the last two quarters, both companies suffered from the
strong zloty and shrinking refining margins, which cut more than 650
million zlotys from PKN's operating profit in the January-March period.
But the market started to pick up last month and Grupa Lotos
chief executive Pawel Olechnowicz said margins may be better this
quarter then they were at the start of the year.
Lotos should also show better operating results this year
than in 2007, excluding the effect of inventory revaluation,
Olechnowicz told a news conference.
PKN's Lithuanian unit, Mazeikiu Nafta, which depressed
year-ago earnings by 335 million zlotys, ended the first quarter with a
small operating loss. Chief financial officer Waldemar Maj said the
refinery will post a profit this quarter.
Recovery at Mazeikiu, after its key installation came back
online following a fire, also boosted volumes of processed crude at PKN
by 13 percent compared to a year earlier.
PKN, Poland's largest company by sales, lifted profit at its
retail arm by 53 percent to 103 million zlotys as double-digit growth
in new car sales amid the economic boom in Poland drove demand at
petrol stations.
Operating profit at its chemical unit more than doubled to
91 million zlotys after the company increased margins on sales of
artificial fertilisers.
"Good news was the strong retail and chemical earnings," ING
oil analyst Tamas Pletser said in a note to clients. "Petrochemical
performance was Especially a surprise to us compared to peers like MOL;
this result was outstanding."
Total revenues at PKN, which include its German retail unit,
Unipetrol and its Lithuanian refinery, advanced 34 percent to 17.9
billion zlotys and were exactly in line with expectations.
The company also got a boost from currency gains on its
euro-denominated loans due to the strong zloty, which translated into
156 million zlotys in financial income for the quarter compared to a
loss a year earlier.
PetrolWorld 160508 Source: Piotr Skolimowski
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