Prague, November 13, 2009– Unipetrol posted an operational profit of CZK 5 mil. in the 3Q/2009. This is the first positive result after 3 consecutive quarters in the red.

The net result was CZK -35 mil. compared to a profit of CZK 557 mil. achieved in the same period last year.

The main reason for these results was the economic recession. The unfavourable situation on the market was reflected in low demand for fuels and a still not recovered demand for petrochemical products. The third quarter was difficult for the refinery segment. Petchem saw better results than in the previous quarter mainly thanks to improved margins. Benzina´s retail showed a respectable q/q increase in sales volumes, which were almost the same as the same period last year.

The consequences of the global economic downturn in the region of Central and Eastern Europe had a major impact on the Group’s result. Unipetrol processed less crude oil than last year mainly due to the weaker demand related to the economic slowdown, but over a 1/3 more compared to 2Q’09, after completed turnarounds and shutdowns. Following this, but also thanks to operational efficiency, Unipetrol sales increased by 19 % q/q.

The improvement in Unipetrol’s results compared to the previous quarters of the year was mainly achieved because of strict cost cutting measures introduced in spring this year. The Group has managed to save more than CZK 600 mil. in fixed costs this year mainly as a result of improvements in operational efficiency.

Similarly, free cash flow improved significantly this year to a positive CZK 666 mil. (compared to a negative CZK -2.204 billion in 1-9/2008).

Comments on the Q3/2009 results

The refinery segment registered a negative EBIT (CZK -465 million). Refineries processed 36 % more crude oil than in 2Q´09, after maintenance work was completed. However there was a 5 % decline compared to the same period last year. The result of the segment was driven mainly by depressed margins resulting from weak demand and excessive production capacities in Europe. The margins for diesel have even dropped to a several year minimum. Another negative factor was the still extremely low Brent-Ural crude oil differential.

The petrochemical segment saw some improvement in demand and margins compared to the previous quarter. Model petrochemical margins increased significantly for olefins, but still stayed far lower than in the same period last year. The margins of polyolefins improved slightly, but did not reach the level of last year. Sales volumes were lower than in the same period last year also due to the termination oxoalcohols production and an unplanned shutdown of a steam cracker in September.

The positive EBIT CZK 219 mil. was achieved because of savings especially in fixed costs.

The motor fuel retail segment posted asignificant improvement compared to the previous quarter and also y/y. The operating profit (EBIT) amounted to CZK 241 million, i.e. almost 30 % more than in 2Q´09 and 60 % more than in the same period last year.

Operational efficiency offset the influence of the economic slowdown. Some improvement in transit transport was registered by the market and Benzina, above all, performed better than the market. Benzina’s sales volumes were up 5 percent q/q and comparable on a year-on-year basis. Other services provided at petrol stations also performed well. Thanks to the past investment in modernizing and re-branding the Benzina petrol station chain, the non fuel business (convenience store, food & drink and car wash) sales increased almost 7 % compared to 3Q´08. 

Outlook for the coming period 

In the next quarter, Unipetrol expects to continue facing unfavourable external conditions, i.e. a weak and only slowly stabilizing market. A slight recovery in transit transport has been seen, contributing to the increase in the consumption of diesel, but it is unclear if this will continue and at what rate. There is a higher demand for olefins, however it is too early to judge whether it will remain for long. The chances of short-term improvements in the polyolefins market are also unclear.

Unipetrol has successfully launched its cost-cutting program. At the end of 3Q´09the fixed costs reduction target of the whole year was almost achieved. The other targets will be fulfilled by the end of the year. The updated cost savings plan for 2009 assumed y/y savings of nearly CZK 1 billion in variable and fixed costs and lower capital expenses. The plan also projects a headcount reduction of approximately 8 percent and no wage increases this year.

”So far we have concentrated on efficiency and optimizing production, cost cutting and also portfolio optimization. We have achieved CZK 600 mil. in fixed cost reductions, i.e. almost the goal for the whole year.

We have seen some improvement in 3Q´09. Unipetrol is back in the black and our cash flow has improved significantly. But it is clear that the market situation is still very unstable. Therefore we need to go on with savings and manage our cash flow very carefully”,says Wojciech Ostrowski, vice-chairman of the Board of Directors and CFO of Unipetrol.

Attachment No. 1

Consolidated unaudited financial results (CZK million)

EBIT Segment Breakdown (CZK million)

1) Restated based on new segment classification valid as of 1Q09

UNIPETROL, a.s. is a group of companies operating in the petrochemical industry in the Czech Republic. In 2005 UNIPETROL became a part of the PKN ORLEN Group, the largest oil processor in Central Europe. The UNIPETROL Group is oriented mostly towards oil processing, fuel distribution and petrochemical production. In all of these business areas the UNIPETROL Group is among the key players both in the Czech Republic and on the Central European market. The Group ranks among the leading firms in the Czech Republic in terms of its revenues, and employs more than 4,000 people. 

Contact: 
Blanka Růžičková 
Spokesperson for Unipetrol, a.s. 
Telephone: +420 225 001 407, +420 731 881 111 
E-mail: blanka.ruzickova@unipetrol.cz