PKN ORLEN Group Strategy
Polski Koncern Naftowy ORLEN presents the new strategy for 2007 - 2012 entitled “Striving for regional leadership”. This strategic plan combines shareholder and investor expectations with the Company’s capacities. The key objective is to generate an EBITDA of PLN 11bn, which will represent a 132% increase compared to the 2006 result, and a ROACE of 14%.
The new strategy for 2007 - 2012 stems from the recent dynamic growth of the PKN ORLEN Group and the evolution in the Company's operating environment. The objectives and action plans presented by PKN ORLEN's Board will enable the company to increase operating efficiencies, fully utilize the Group’s potential to increase value, and reinforce its regional leadership in Central and Eastern Europe.
PKN ORLEN Group strategy assumptions
PKN ORLEN has updated its approach to the value-building process and has founded the new strategy on two pillars.
The first assumes efficiency improvements, optimization and investments in core activities to achieve market leadership.
The second is a process of monitoring sales development and expansion opportunities in the newly opened markets of the Baltic states and Ukraine, and supported by the possible consolidation/merger of PKN ORLEN with the Lotos Group. Initiating production operations remains an important aspect of the company's expansion.
In the new strategy, growth in shareholder value will initially stem from internal sources. Once adequate financial and operational results are achieved, the company will consider external value building options.
Pillar I – increasing efficiencies and investing in core operating areas
The strategy focuses on the full utilization of the controlled potential of the Partnership program realized in Unipetrol, and the Value Building Program in Mažeikių Nafta.
The Company’s objective is also to increase wholesale sales based on current refining assets and an expanded logistics network.
In retail, we will continue our dual-brand strategy and focus on increasing sales efficiencies in service stations with offerings that fulfil the needs of local markets.
The evolution of the corporate structure, provided for in the new strategy, will enable a more flexible and dynamic growth environment for the ORLEN Group, further increasing its efficiency.
Pillar II - Monitoring non-organic growth options
The company will continue to monitor expansion options in new, promising markets. The most attractive areas for sales development are the Baltic states and Ukraine. Taking into consideration the strong economic impact of the domestic consolidation of the oil and chemical industries, the Company sees this avenue of development as a particularly important source of future value.
We will continue to build our upstream competence. Any decisions to launch production projects will take into consideration our acceptable level of risk exposure, with a view to guarantee adequate returns. We will reinforce efforts to integrate crude oil trading with wholesale oil product trading.
Objectives and strategic activities in segments
In the refining segment, the new strategy assumes the growth of effective processing capacity in Poland and Lithuania. The PKN ORLEN Group’s processing capacity is to reach approximately 33 m tonnes per year by 2012.
The strategy provides for dynamic growth in retail. The Company's objective is to strengthen, or achieve, leadership in the home markets. The Company will realize this through optimization, further improvements in the efficiency of our service station chains, and expansion in existing and new markets, especially in the Baltic states. In 2012 the number of stations will be: Poland - 1900, Czech - 400, Baltic states - 230, Germany - 750.
Under the strategy, PKN ORLEN will be the first CEE producer of Purified Terephthalic Acid (PTA). Our PTA output levels in 2012 will be 600 000 tonnes per year.
In the chemicals segment, the strategy assumes that the Group’s share in the PCW market in 2012 will be 55% in Poland and 40% in Czech, with a total output of PCW amounting to 485 000 tonnes per year.
We will continue to realize cost-optimizing projects and we are implementing an efficient supply chain management system. Operating regionally, the Company will keep improving human resource management. As a technological leader, we will respond to ever increasing quality and environment protection standards. The PKN ORLEN Group will continue to be a responsible business partner who considers the needs of local communities.