„We have generated a net profit of nearly CZK 8 billion. At the same time, we invested an all-time high of nearly CZK 11 billion in modernization and reconstruction of production technologies, especially in the construction of the new polyethylene unit. These investments are the foundation for Unipetrol’s further development in the future,” said Andrzej Modrzejewski, CEO and Chairman of Unipetrol Group’s Board of Directors, adding: „The good financial situation allowed us to pay dividends for the first time after eight years. We also continue in consolidation of the entire Group. The simplification of administrative procedures and streamlining of the intragroup processes help greatly to increase our competitiveness.“

 

Downstream Segment
In 2016, in the downstream segment, which consists of the refinery and petrochemical part, the Unipetrol Group posted an operating profit EBITDA LIFO of CZK 11.136 billion. In the y/y comparison, it is an increase of CZK 970 million (+9.5 %). Payments from insurers of CZK 7.9 billion and the increase of the asset value (impairment allowance reversal) in the downstream segment of CZK 1.9 billion had a positive impact on the results. On the other hand, the financial results were negatively affected by production limitations in refining and petrochemical production.

 

Benzina Retail Segment
The retail segment showed operating profit EBITDA LIFO of CZK 958 million at the end of 2016. Its y/y increase by CZK 129 million (+15.6 %) was caused by higher fuel sales resulting from positive macro environment. Improved results were achieved also in the segment’s non-fuel part with a contribution of the modern food concept STOP CAFE. In the course of the year, this concept was introduced to 39 filling stations. Overall, a total of 168 Benzina filling stations have been equipped this way. The Unipetrol Group also continued in its gradual takeover of 68 OMV fuel stations. Last year it took 20 stations, increasing the total number of Benzina filling stations to 363. The takeover project ought to be completed during 2017. Benzina’s market share increased to 17.6 % (as of end October 2016), strengthening its market leader position in the Czech Republic.

 

Group Consolidation
Unipetrol continued to consolidate its group in order to simplify organizational and administrative processes, thereby reducing operating costs and increasing competitiveness on both Czech and international market. The acquisition of SPOLANA a.s. took place in June of 2016. This acquisition enabled the Group to plan better and optimize its production capacities, to open new business opportunities and increase the Group’s resilience to the influences of external environment. Towards the end of 2016, integration of ČESKÁ RAFINÉRSKÁ, a.s., was completed and a new organizational unit called UNIPETROL RPA, s.r.o. – RAFINÉRIE, odštěpný závod (REFINERY, registered branch) was established. 

 

Investments
Last year, the Unipetrol Group invested heavily in modernization and reconstruction of its production capacities. The investments reached an all-time high of CZK 10.8 billion. In last March and April, a regular scheduled turnaround (regular maintenance of all facilities in Chempark Litvinov – Zaluzi, especially with regard to safety and reliable operation) was carried out successfully. In June 2016, Unipetrol started a construction of a new polyethylene unit PE3 in Litvinov – Zaluzi. It is the largest investment in the history of Czech petrochemical industry. Total costs of PE3 project will be CZK 8.5 billion. Putting the unit into operation is planned for 2018. In October 2016, Unipetrol resumed production of the steam cracker in Litvinov – Zaluzi and restored full operation of its refinery in Kralupy nad Vltavou.

 

Incomes from Insurance
The unplanned shutdowns of the Litvinov steam cracker and the refinery in Kralupy nad Vltavou are subject of payments from the insurance against property damage and business interruption. Based on internal estimates made at the end of the year, the Group expects, that it should be entitled to recovery of financial resources spent on repairing the damage cause at the steam cracker of CZK 3.9 billion and the right to the lost business profit of CZK 10.1 billion. In 2016, Unipetrol recognized the amount of CZK 7.9 billion in financial statements. The Unipetrol Group also expects financial compensation from insurers to cover the costs of repairing the damage on property at the refinery in Kralupy nad Vltavou of CZK 0.3 billion and for the lost business profit of CZK 0.9 billion. The final amount of compensation will depend on the final agreement with the insurers.

 

Employment
In 2016, the number of Unipetrol Group’s employees increased by 733 people. At the end of the year, Unipetrol Group was therefore employing a total of 4,497 workers. The increase was due to the acquisition of SPOLANA a.s. and due to Unipetrol opening itself a total of 58 new jobs. Unipetrol will continue in the recruitment process also in 2017 planning to hire more than 100 new employees, mainly for the operation in Litvinov – Zaluzi. 

 

Unipetrol Group’s Unaudited Consolidated Financial Statements (CZK million)

 _____________________________________________________________________________________________________________