PKN ORLEN’s record performance in 2021

- We are successfully implementing our strategic objectives, developing and at the same time leveraging the potential of the entire ORLEN Group. Combined with effective management, this brings the expected results. Our record results for 2021 are an effect of the right decision we made to diversify our business. We are consistently investing in our core business while being heavily engaged in developing new areas, and this translates into tangible benefits. We have strong financial foundations and are well positioned to tackle strategic challenges. The principal goal is to build an integrated multi-utility group which will lead energy transition in Central Europe. The profit earned last year will be used in our further investments, including in low- and zero-emission energy sources. They will strengthen the Group’s position in international markets, driving its sustainable value for shareholders and building the strength of the Polish economy - says Daniel Obajtek, President of the PKN ORLEN Management Board.

In 2021, the ORLEN Group reported:
- LIFO-based EBITDA of PLN 14.2 billion, up by PLN 5.8 billion (y/y)
- net profit of PLN 10.2 billion, up by PLN 11.5 billion (y/y)
- revenue of PLN 131.6 billion, up by 53% (y/y)
- sales of 38.9 million tonnes, up by 2% (y/y)

In the fourth quarter of 2021, the ORLEN Group reported:
- LIFO-based EBITDA of PLN 4.3 billion, up by PLN 1.5 billion (y/y)
- net profit of PLN 3.2 billion, up by PLN 3.2 billion (y/y)
- revenue of PLN 41.2 billion, up by 78% (y/y)
- sales of 10.6 million tonnes, up by 7% (y/y);

A record-breaking result was posted in the fourth quarter of 2021 by the refining segment, whose LIFO-based EBITDA rose to PLN 2.1 billion. This strong performance is an effect of positive impact of macroeconomic factors (year on year) resulting from a higher Brent-Urals differential, increased margins on light and middle distillates, depreciation of the złoty against the US dollar, and the measurement and settlement of CO2 futures. Over the period, the Group also recorded a 10% year-on-year increase in sales volumes, including 21%, 8%, 110% and 26% increases in sales of, respectively, gasoline, diesel oil, JET fuel and heavy fuel oil, with sales of LPG down 8%. The ORLEN Group’s crude throughput amounted to 8.6 million tonnes, up by 1.2 million tonnes year on year. PKN ORLEN’s crude throughput and fuel yields rose by, respectively, 0.4 million tonnes and 5 pp year on year. At ORLEN Unipetrol, crude throughput increased by 0.2 million tonnes and fuel yields by 3 pp year on year. ORLEN Lietuva recorded an increase of 0.6 million tonnes and 2 pp in crude throughput and fuel yields, respectively, year on year. Sales went up by 10% year on year, to 6.8 million tonnes, including by 6% in Poland, 16% in Lithuania, and 12% in the Czech Republic, partly thanks to improvement in the market and macroeconomic landscape.

The petrochemical segment once again confirmed its strong position. In the last quarter of 2021 its LIFO-based EBITDA reached PLN 1.4 billion, up 76% year on year. This result is due to a year-on-year increase in petrochemical margins on olefins, polyolefins, PTA, PVC and fertilizers, as well as the measurement and settlement of CO2 futures. Sales amounted to 1.3 million tonnes and were down 7% year on year, including by 13% in Poland (mainly in the case of fertilizers and PTA), which was due to shutdown maintenance of the PTA and Reforming V units. Sales in Lithuania and the Czech Republic rose by, respectively, 47% and 3% year on year as a result of improved operating parameters of the PE3 unit.

The power generation segment delivered EBITDA of PLN 248 million, including PLN 554 million generated by the Energa Group (up by PLN 40 million year on year). This result was mainly driven by higher gas and lignite prices in the Czech Republic’s Unipetrol and price relations between energy purchases and resale in the Energa Group, which were partially offset by measurement and settlement of CO2 futures. During the period, the Group had installed power and heat generation capacities of 3.3 GWe and 6.1 GWt, respectively. Electricity output, of which approximately 60% was from zero- and low-carbon sources, totalled 3.2 TWh. Electricity sales were slightly lower compared to the same period last year. On the other hand, there was an increase in electricity distribution, due to more employees working from home in Poland. With a view to building new business lines in the power generation segment, PKN ORLEN continued its focus on the development of offshore wind power generation.

The retail segment delivered EBITDA of PLN 572 million in the fourth quarter, down 25% year on year. The figure reflects a decline in fuel margins in the Polish market, with a concurrent increase in margins generated in the Czech and German markets and relatively unchanged margin levels in Lithuania (year on year). In Poland and Lithuania, the Group recorded higher non-fuel margins, with a decrease in these margins in Germany and the Czech Republic. Sales went up by 9% year on year, including by 14% in the case of gasoline, 7% – diesel oil, and 2% – LPG. In Poland, sales rose by 12%, in the Czech Republic by 6% and in Germany by 2%, with lower sales in Lithuania (down 3%). At the end of 2021, the ORLEN Group’s retail chain comprised 2,881 service stations, up by 26 stations year on year, including in Poland by 8, in Germany by 4, in the Czech Republic by 5 and in Slovakia by 9, with the number of stations in Lithuania remaining relatively unchanged. The Group thus increased its shares in the Czech and Slovak markets. Work continued on expanding the non-fuel product range. The number of Stop Cafe/star Connect/ORLEN w ruchu (ORLEN in motion) non-fuel sales outlets rose by 72 year on year: by 25 in Poland, 29 in Germany, 14 in the Czech Republic, 3 in Slovakia, and 1 in Lithuania. At the end of December 2021, the outlets totalled 2,290, including: 1,750 in Poland, 327 in the Czech Republic, 168 in Germany, 29 in Lithuania, and 16 in Slovakia. PKN ORLEN consistently adapted its service station chain to sell alternative fuels. As a result of these efforts, the number of alternative refuelling points increased by 296 year on year, to more than 500. Customers have access to 462 EV charging stations, located mainly in Poland, 2 hydrogen refuelling stations, and 44 CNG stations.

Once again, the Upstream segment delivered a solid EBITDA of PLN 185 million, almost four times higher compared with the previous year, reflecting a positive impact of macroeconomic factors (year on year), driven by higher prices of crude oil, gas and natural gas condensate and a positive effect of cash flow hedges. Over that period, the average production in Poland was 1 kboe/d and remained roughly unchanged year on year, while in Canada it reached 14.9 kboe/d, having slightly declined by 0.3 kboe/d. In the fourth quarter, development work was under way as part of the Edge, Płotki and Sieraków projects carried out jointly with PGNiG in Poland. In addition, drilling work was completed on the Miocene project and commenced on the Płotki project, jointly with PGNiG. As part of seismic surveys, interpretation of the Koczała-Miastko 3D seismic data was completed (the Edge project). In Canada, the drilling of the first well was completed and the drilling of another well began on the Kakwa project. Under the Ferrier project, PKN ORLEN was involved in the drilling of two wells and commenced modernisation work to increase the recovery of hydrocarbons in the southern part of the area.

In 2021, PKN ORLEN consolidated its position and maintained financial ratios at safe levels. The Group generated cash flows from operating activities of PLN 13.4 billion and maintained its investment grade ratings: BBB- with a positive outlook from Fitch Ratings and Baa2 with a positive outlook from Moody’s. Net debt decreased by almost PLN 1 billion to PLN 12.2 billion at the end of the year. PKN ORLEN issued corporate bonds with a total value of PLN 1 billion, as well as EUR 500m worth of green eurobonds, the proceeds from which will be allocated to finance investments in renewables. This benchmark issue of green eurobonds, blazing a trail not only for PKN ORLEN but the entire Polish market, attracted huge investor interest, with as many as 234 subscription orders placed for a total of nearly EUR 3 billion. This means that PKN ORLEN’s green bonds were six times oversubscribed relative to the planned issue size. In addition, PKN ORLEN allocated PLN 9.9 billion to investments which will support further value creation and growth of its competitiveness on international markets. Consistent implementation of the growth plans in all areas of activity made it possible, in accordance with the strategy, to pay dividend for 2020 at PLN 3.5 per share.

2021 saw continued implementation of the strategy to build a multi-utility group. As a result, in early 2022 PKN ORLEN selected four partners to implement the remedies negotiated with the European Commission in connection with the acquisition of the LOTOS Group. In 2021, the ORLEN Group also applied to the Office of Competition and Consumer Protection for clearing the acquisition of PGNiG. Investment projects aimed at driving profits and expanding the product mix were continued during the period. The Group was strongly focused on the development of offshore projects. As part of these efforts, a partnership agreement was signed with GE Renewable Energy to strengthen PKN ORLEN’s competitive position in securing new wind farm licences for the Baltic Sea. The ORLEN Group also launched “Hydrogen Eagle”, a scheme to develop an international chain of hydrogen hubs powered by renewable energy sources and to build more than 100 hydrogen refuelling stations. The Group also engaged in the development of nuclear energy generation by signing a cooperation agreement with Synthos to invest in zero-carbon nuclear energy technologies based on micro and small modular reactors (MMRs and SMRs). PKN ORLEN commenced its largest investment project in the last 20 years – the construction of an olefin unit. The Research and Development Centre was opened in Płock, and the green glycol unit was placed in service in Trzebinia. The projects to build a visbreaker unit and to ramp up the production capacity for nitrogen fertilizers by 50% in Włocławek were continued. In line with the strategy, retail operations were strongly expanded. 400 automated parcel machines were placed in service as part of the ‘ORLEN paczka’ (‘ORLEN Parcel’) service, and a new retail format ‘ORLEN w ruchu’ (‘ORLEN in Motion’) – retail stores outside the service station chain – was launched. In addition, the Group completed the acquisition of 100% of the shares in OTP, Poland’s largest road carrier of liquid fuels.

Press conference live streaming (27.01.2022, 12:00): https://transmisje.orlen.pl/