Prague, 25 February 2010 – Unipetrol’s 2009 results were largely affected by the impact of the unfavourable macroeconomic conditions. Despite the fact that Unipetrol has reduced its costs significantly in all segments of its business, the economic slowdown stayed the key 2009 result driver. Negative external factors, such as low demand for fuels and other refinery products, depressed refinery and petchem margins and the narrow Brent-Ural differential were the main reasons why Unipetrol reported a negative operational result (EBIT) of CZK -654 m. Unipetrol processed a total of 4,110 kt of crude oil in 2009. The Group reported revenues of CZK 67.4 bn, while the consolidated net loss was CZK -840 m. 1)

Reacting to unfavourable external conditions, Unipetrol implemented a number of cost-saving and optimizing measures. The successfully implemented optimisation plan resulted in an improvement to operational efficiency. The Group managed to decrease its fixed and variable costs by more than CZK 1 bn compared to 2008. As a result of carefully managed cash flow, the company remained in a very good financial position. Unipetrol’s free cash flow almost doubled, and indebtedness (measured by net debt to EBIDTA of 0.44x) is at its lowest level since the beginning of the economic slowdown.

Retail distribution has performed very well. In spite of the complicated developments on the market, Benzina’s EBIT grew by 36% y/y to CZK 693 m. The company added three more petrol stations to its portfolio and strengthened its position in the premium fuels category. Benzina remained the market leader with a share of almost 14%. Petchem, which has been facing low demand since the second half of 2008, recorded flat sales volumes. The economic slowdown was visible mainly in the refinery segment, where the demand for Unipetrol products declined by 12%.

Commentary to the Q4 results:

While the Q4/2009 results were seasonally affected, the cost-saving measures began to make themselves felt. The EBIT for Unipetrol Group was better than in the same period of last year.

The motor fuel retail segment posted very good results in Q4/2009. EBIT improved significantly year-on-year. Operating profit reached CZK 208 m, i.e. 106% more than in 4Q/2008. Benzina’s sales volume showed a slight two percent deterioration compared to Q4/2008. For the whole of 2009, Benzina only recorded a 1% year-on-year decrease. The company strengthened its leading position thanks to the marketing of its Verva premium fuels and also thanks to previous investment in modernisation and the rebranding of the Benzina petrol station chain. The non-fuel business (convenience store, food & drink and car wash) also performed well.

The petrochemical segment recorded operational profit of CZK 33 m. The performance of the segment was better than Q4/2008, mainly thanks to cost reductions and the sale of unused CO2 allowances. The main drivers remained weaker demand for olefins and lower petchem margins due to the higher feedstock price.

The quarter-on-quarter performance of the refining segment was mainly influenced by the following factors: lower demand for fuels due to seasonal influences and, because of the 6% quarter-on-quarter decrease in crude oil throughput, continuing low refining margins, especially for middle distillates. On the other hand, the positive factors were as follows: an increase in the Brent-Ural differential and the effects of ongoing cost cutting measures.

Outlook for the coming period:

“ The situation in refining has not improved yet; the petrochemical industry is recovering but at a slow pace. It is quite clear that we still have hard times ahead. To minimise the impacts of the negative macroeconomic situation we need to continue with our strict cost controls and to go on improving operational efficiency," says Piotr Chełmiński, chairman of the board of directors and CEO of Unipetrol.

Unipetrol will have to face this unfavourable situation, characterised by a weak and only slowly improving market. Low demand for refinery and petrochemical products, resulting from the economic slowdown, is expected to continue in the first half of the year. Higher excise tax for fuels and the proposed increase in the obligatory biocomponents level will make increasing the sales volumes in the refinery and retail segments a challenge.

To offset the above-mentioned adverse situation, Unipetrol will continue its strict cost controls. The company is in a very good cash situation and its indebtedness is at a very low level (net debt to EBITDA = 0.44x). The results of the 2009 optimization program should be fully visible this year. Unipetrol reduced its fixed costs by over CZK 800 m last year, exceeding the plan by CZK 200 m. The other targets, i.e. reductions in variable costs and lower capital expenditures, were also met.

1) Net profit attributable to the shareholders of the parent company

Consolidated unaudited financial results (CZK million)

EBIT Segment Breakdown (CZK million)

1) Restated based on new segment classification valid as of 1Q´09

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