Moody's changes rating outlook for PKN ORLEN to positive
Today, Moody's Investors Service changed the outlook on PKN ORLEN's Ba1 rating to positive from stable. The rating action reflects a marked recovery in the operating performance reported by PKN ORLEN despite the challenging conditions persisting in the European fuel sector. The revised outlook is an indication that over the next 12 to 18 months Moody's may upgrade PKN ORLEN's rating.
Moody’s viewed positively the Company's efforts made in the past 18 months to improve both its operating performance and key financial metrics. In the rating's rationale, the analysts emphasised the successful sale of PKN ORLEN's stake in Polkomtel and the refinancing of main credit lines.
“I am glad that the Company's ratings are gradually improving. It follows from our reasonable belt-tightening measures and efficiency enhancement in each segment, but also from difficult investment decisions, such as the construction of the PX/PTA complex, taken despite the recession engulfing Europe at that time,” said Jacek Krawiec, CEO and President of the ORLEN Management Board.
Moody’s noted that the value of the Company's strategic reserves is nearly equal to its total net debt. The analysts also emphasized that the commissioning of the PX/PTA plant, which for over a year had offset crisis-related revenue swings in the petrochemical sector, and steady increase in sales volumes helped PKN ORLEN maintain a stable operating profit. While conditions in the refining sector remained tough, PKN ORLEN consistently implemented initiatives aiming to increase its crude throughput capacity, raise diesel production and improve energy efficiency.
“PKN ORLEN continues successful efforts to rebuild its position on the financial market and as a result regain investors' trust. Moody’s is the second agency, after Fitch Ratings, to appreciate the steps the Company has been taking to improve its liquidity and downsize debt. I believe that we are able to strengthen our ratings over a short term,” said Sławomir Jędrzejczyk, Vice-President of the Management Board of PKN ORLEN.
According to Moody's, a further upgrade of PKN ORLEN's rating will depend on the scale and impact of investment projects provided for in its updated strategy and dividend distributions, if any, on the Company's ability to generate free cash flows.
