Moody`s Investors Service upgraded PKN ORLEN rating

Polski Koncern Naftowy ORLEN S.A. ("PKN ORLEN", “Company”), informs that, on 6 November 2013 Moody`s Investors Service (“Moody’s”, “Agency”) has upgraded PKN ORLEN rating to Baa3 from Ba1. The rating outlook is stable.

Moreover the Agency has upgraded PKN ORLEN's baseline credit assessment to ba1 from ba2.

In the Moody’s opinion the change of rating reflects improvement in operating performance and Company’s financial metrics in the past couple of years, despite difficult conditions for the refining sector in Europe for the majority of this time. PKN ORLEN has successfully maintained low (below 30%) level of gearing and achieved resilient operating cash flows. The Agency notes that, since the beginning of 2012, PKN ORLEN generated positive free cash flow despite significant working capital swings during this period, this has enabled a decrease in net debt.
 
The Agency, in its statement, indicates that announced by PKN ORLEN strategy is an ambitious plan of improving Company’s core business while expanding into the energy and upstream sectors, however the Agency recognises the flexibility of these plans.

In line with the announced by the Company strategy, PKN ORLEN paid dividend in 2013. The Company plans a gradual increase in the dividend payout up to 5% of dividend yield, based on the annual average market capitalization of the Company for the previous year, taking into account the achievement of strategic targets of safe financial standing and forecasts regarding macro environment.

The outlook for the Baa3 rating is stable, reflecting Moody’s expectations that PKN ORLEN will be able to maintain current standalone credit profile, including positive cash flow and Debt/EBITDA ratio below 3.5 as well as maintain by PKN ORLEN reported gearing below 30%.

See also regulatory announcement no 66/2009 dated 19 May 2009.