PKN ORLEN - consolidated 2007 results
Significant improvement in efficiency, growing sales volumes and consistency in implementing its strategy impacted PKN ORLEN Group's EBIT despite unfavourable macroeconomic factors and one-off events in 2007.
In 2007 the corporation implemented the assumptions of the 2007-2012 strategy as planned. AB Mažeikiu Nafta rebuilt its production capacity (after the fire in 2006) and realized the planned modernizations to increase energy savings. The Czech refinery in Litvinov increased fuel output capacity thanks to the expansion of its hydrocracking installation. The restructuring of the retail chains in Poland and Czech Republic also progressed to schedule. PKN ORLEN successfully launched the ORLEN brand in Lithuania. There are currently 15 stations operating under the ORLEN Lietuva brand.
The Corporation's 2007 results were significantly impacted by macroeconomic factors such as, in particular, the appreciation of the zloty and diminishing URAL/Brent differential. That, along with the security policy implemented by the company, resulted in a PLN 467m reduction of the Group's operating profit.
In 2007 the PKN ORLEN Group generated PLN 63,793m in revenue which represents a 20.7% increase compared to 2006. The Group reported an EBITDA of PLN 5,039m, representing an almost 8% increase over the 2006 result.
2007 operating profit was PLN 2,621m, up 1.7% compared to the previous year at the EBIT level. The ORLEN Group generated this result despite the unfavourable impact of one-off events such as the reconstruction and modernizations at AB Mažeikiu Nafta and the downtimes at PKN ORLEN and the Czech-based Unipetrol. Profit was also significantly impacted by macroeconomic factors which (although favourable for the chemical and petrochemical segments, bringing in a total of PLN 280m at the EBIT level) negatively impacted the refining segment, reducing its EBIT by PLN 689m.
The ORLEN Group's consolidated net profit attributable to shareholders of the holding company in 2007 amounted to PLN 2,323m - a 17% increase over 2006.
Q4 2007 results
In Q4 2007 the PKN ORLEN Group generated PLN 16,902m in revenue which represents a 28.9% increase year-on-year. PKN ORLEN reported quarterly operating profit at PLN 120m.
Strategic assumptions for 2008
Under the strategy adopted for the years 2007-2012, PKN ORLEN will systematically continue efforts aimed at organic growth. We will finalize the next phases of key investments within the Group designed to adapt our production capacities to growing diesel and petrochemical demand, including desulphurisation installations at Płock and Mažeikiu. The Group will finalise important stages of tereftalan acid (PTA) and paraxylene installations. We estimate that these projects will increase the Group's crude processing by 19% (80% in Mažeikiu Nafta and 11% in Unipetrol). We assume that refining products wholesale will grow 15% and retail sales will increase 11%. Due to the planned olefin installation shutdown PKN ORLEN assumes that sales of petrochemicals and chemicals will decrease 10% and 1% respectively.
2008 will be yet another year of stable growth for the whole Corporation. We will continue efforts to optimize and develop our retail chain in all of PKN ORLEN's home markets.
As a result of our refurbishment strategy in 2008, crude processing levels at our Polish, Lithuanian and Czech plants will grow approximately 19% compared to 2007. We have decided to extend the technical maintenance intervals at individual installations and to optimize them throughout the PKN ORLEN Group. In 2008, PKN ORLEN is planning to stop the HON, HOG and olefin installations in Płock, PCW in Anwil, production at Chemopetrol and at the Kralupy refinery. In 2008 AB Mažeikiu Nafta will operate without planned downtimes.
