Modernisation and rebranding of 90 Benzina stations completed

The main driver of UNIPETROL’s increasing earnings was the continuous improvement of internal efficiency and profitability in all segments, supported by favourable market and macroeconomic conditions. The company was able to generate significantly more profits although the revenues in the first half, CZK 45.474bn, were approximately at the same level as in the last year.

Financial highlights of H1 2007 
Prague, August 13, 2007 - UNIPETROL’s total revenues grew by 1% compared with H1 2006 and amounted to CZK 45.474bn. Profits increased significantly year on year with EBITDA growing by 25% and net profit by 45%. UNIPETROL’s gearing (net debt/equity) was further reduced (to 8.4%), which had a positive impact on financial costs that in Q2 alone dropped by 48% compared with the previous year. Sales volumes grew in all segments, most strongly in fuel retail where the sale went up by 20% compared with the first half of the previous year.

Consolidated, unaudited results for H1 2007 (in million CZK)

* One-offs H1 2006: Adjustment for hydrocracker shutdown in March 2006 with a negative impact of CZK 300m on the gross margin and excluding SPOLANA H1 2006 EBIT of CZK 185m and depreciation of CZK 180m. One-offs H1 2007: Adjustment for KAUČUK impairment (accrued profit in H1 2007 and depreciation) of CZK 888m.

Outlook for the rest of 2007 
The modernisation and improvement of BENZINA’s retail network is well on track. The company can reconfirm that out of a total of 319 filling stations it will be able to introduce 156 refurbished stations, with 78 of them upgraded to the BENZINA Plus premium brand, by the end of 2007. “The current score is 90 stations, of which 50 have been upgraded to BENZINA Plus. We are also continuously monitoring the quality of the services provided by each of the station operators. Based on that, we have so far replaced 30 partners for more customer-focused ones,” says Martin Durčák, CEO of BENZINA.

A high priority has also been given to the Partnership Programme. The series of projects and initiatives started in 2005, focused on identifying and utilising the synergies between UNIPETROL and PKN ORLEN, was expected to generate an additional EUR 138m in 2008 EBITDA (under the 2004 macroeconomic conditions); however it is expected now to reach the goal one year earlier. “The EUR 94 million created by the Partnership Programme in H1 EBITDA, as well as the status of the implementation of the other initiatives planned for this year, give us confidence that the goal is at hand,” says François Vleugels, CEO of UNIPETROL.

The implementation of the New Corporate Governance Model continued by the earlier publicised merger of CHEMOPETROL, UNIPETROL RAFINÉRIE and UNIPETROL RPA into UNIPETROL RPA, resulting in a more efficient management of the wholesale of refining and petrochemical products. Later the project will continue mainly by stabilising and fine-tuning the new model as well as by rather subtle changes such as commencement of the provision of the Shared Service Centre’s  (Unipetrol Services) services to PARAMO.

Strong financial performance is expected to continue in most segments for the rest of this year; however, the good results in the first half of this year will be weakened in the latter part of the year by the planned shutdowns in UNIPETROL production plants. “In addition to regular maintenance, we are going to invest in an expansion of the production capacity, which will help to strengthen our market position and bring us additional profits in the future. The investments will also lead to an extension of the maintenance cycle to four years and to improved reliability of all units, which will save us significant amounts in the years to come,”& amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; lt; /em> explains F. Vleugels. The impact of the shutdowns on 2007 EBITDA is estimated at the level of CZK 2bn. As announced earlier, the overall 2007 investments within the UNIPETROL Group will amount to CZK 5.5bn, which is significantly more than in the previous year (CZK 3.9bn).

Results by segments (Q2 2007) 
Refining: The refining business, traditionally strongly influenced by macroeconomic conditions, has registered a fairly good quarter. Although the margins dropped significantly in June the quarterly average stayed above Q2 2006 (USD 6.68/bbl compared with USD 6.29/bbl). The amount of processed crude went up by nearly 6% (y/y) and even by 9% compared with the first quarter of this year. Motor fuel wholesale went up by 5% (y/y).

Petrochemical: The petrochemical segment remained in a very good condition, staying the main driver of the Group’s successful performance. The main factors that helped to produce such good results are similar to those of Q1 2007, i.e., the full utilisation of available production capacities and favourable market conditions for the company’s products. The petrochemical sales went up by over 15% (y/y) and they especially profited from strong margins on ethylene and benzene.

Retail: The sales of all fuels went up by over 20% in this quarter (compared with a year ago), driven mainly by the sales of diesel, which themselves grew by over 29%. BENZINA reported total revenues of CZK 4.005bn and a net profit of over CZK 23m for the first half of 2007. Again, this means a significant improvement compared with the same period of last year (-255 million CZK).

UNIPETROL, a.s. is a group of companies operating in the petrochemical industry in the Czech Republic. In 2005 UNIPETROL became part of the PKN ORLEN Group, the largest downstream oil company in Central Europe. UNIPETROL primarily focuses on crude oil processing, fuels distribution and petrochemical production. In all these areas UNIPETROL group is one of leading players in both the Czech and Central European markets. In 2006 UNIPETROL posted revenues amounting to CZK 95 billion and a net profit of CZK 1.6 billion. The UNIPETROL group employs approximately 4,000 people.

Contact: 
Michaela Lagronová 
Spokesperson 
Unipetrol, a.s. 

GSM: +420 602 304 708 
E-mail: michaela.lagronova@unipetrol.cz 
www.unipetrol.cz