The unfavourable external environment has pushed margins further down in both the refining and petrochemical segments. The polyolefin market has registered some recovery of demand.
Unipetrol has started to apply austerity measures. Fixed and variable costs are to be cut by almost a billion crowns, and capital expenditure is to be reduced by more than 30% in comparison with last year.
Prague, 14 May 2009– Unipetrol’s result for the first quarter of 2009 is a loss. The Group has posted a negative operating result (EBIT) of CZK -127m, with total losses of almost CZK -185m. The financial results have been hit by the global economic crisis, the consequences of which were fully reflected in the results of all segments of the Group in the first three months of 2009. The unfavourable external factors, which had started to produce a heavy impact on Unipetrol’s results as early as late 2008, were exacerbated by the continuing economic recession. They are reflected in a further drop in demand, and, in turn, margins, particularly those on the key refinery and petrochemical products.
Unipetrol’s Q1 revenues dropped to CZK 14.5bn, which is 34% less than in the same period of 2008. The main cause is low margins, as the Group actually processed approximately the same quantity of crude oil on a year-on-year basis, and the sales volumes of its largest, refining, segment went up by 7% compared with last year.
Comments on the Q1 2009 results
The refinery segment posts a negative EBIT (CZK -329m). Although this operating result implies a moderate improvement compared with the preceding quarter (CZK -946m), it reflects a number of unfavourable factors. In addition to contracted demand, caused by lower industrial production, these factors mainly include lower prices of crude oil and oil products, decreasing margins on the key products, and a further squeeze on the Brent-Ural differential. One positive factor went against these negative factors – the Czech crown weakening against the US dollar.
The results achieved by the petrochemical segment have also improved in comparison with Q4 2008. This segment reports a positive EBIT of CZK 110m, thanks primarily to a slight recovery in the demand for plastics. But although the model polyolefin margins have risen, they still remain below the historical level. Demand for olefins and other products of the ethylene unit was, however, much lower than in the preceding period, as were the margins.
Retail distribution declined year-on-year because of the economic crisis. On the other hand, the decrease is much smaller than the expected slump of the whole market. One-off expenses on the marketing campaign for premium fuels have also contributed to the drop in this segment’s operating profit (EBIT). The non-fuel business continued to develop very well. Thanks mainly to the earlier investment in their upgrade and rebranding, Benzina fuel filling stations are increasing their sales in shops, catering services, and car washes.
Outlook for the coming period
Unipetrol has started to apply strict austerity measures. Across the Group, the company has updated its Plan for Improving Efficiency and Operating Excellence. The company’s Supervisory Board approved this more specific, and also more stringent, business plan for 2009 at the end of last month. The required cost-cutting applies to all business lines of the Group.
The updated plan envisages savings of almost a billion crowns in variable and fixed costs and much lower capital expenditure. Compared with 2008, investment is to be reduced by more then one billion CZK, implying a drop of more than 30%. Most of the originally planned capital investment projects are being moved forward to the coming years. The plan also envisages a zero growth in wages and staffing level reductions by 8%.
“The updated plan responds to the financial results and also to the fact that over the past few months, the forecasts of the further development of the Czech economy have turned worse. Our aim is to stabilise the Unipetrol Group, take it through the current economic crisis, and ensure that it emerges stronger from the crisis once the period of growth arrives,” explains Krzysztof Urbanowicz, Unipetrol CEO.
Consolidated, unaudited financial results (CZK million)
| |
1Q/08 |
4Q/08 |
1Q/09 |
q/q |
y/y |
| Revenues |
22,149 |
19,015 |
14,513 |
-24% |
-34% |
| EBITDA |
1,491 |
-351 |
709 |
n/a |
-52% |
| EBIT |
653 |
-1,261 |
-127 |
n/a |
n/a |
| Net profit * |
406 |
-1,200 |
-185 |
n/a |
n/a |
EBIT Segment Breakdown (CZK million)
| |
1Q/08 |
4Q/08 |
1Q/09 |
q/q |
y/y |
| EBIT, of which |
653 |
-1,261 |
-127 |
n/a |
n/a |
| • Refining |
109 |
-946 |
-329 |
n/a |
n/a |
| • Petrochemicals |
391 |
-379 |
110 |
n/a |
-72% |
| • Retail distribution |
171 |
89 |
57 |
-37% |
-67% |
*) Net profit attributable to the shareholders of the parent company
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
UNIPETROL, a. s.
Telephone: +420 225 001 407, +420 731 881 111
E-mail: blanka.ruzickova@unipetrol.cz