PKN examines return on capital

10 March 2003 00:00  [Source: ICB]

Poland's PKN Orlen is planning to increase its return on capital employed (Roce) from 5% in 2002 to around 12% by 2004, through a company restructure and by changing the way it incentivises its managers.

A spokesman told ECN that the firm will be divided into segments, and each segment given a Roce target. Managers at all levels will then be paid according to their segment's Roce performance, as well as the company's earnings before tax and interest (Ebit). Previously, only Ebitwas used in determining bonuses.

The spokesman said PKN Orlen had decided not to introduce the targets in 2003 because of the large amount of capital expenditure being committed this year to the Basell joint venture and to re-branding its service stations in Germany.

A period of price protection for 200 of its subsidiaries has ended in 2002. They had earlier been split from the parent company with agreements whereby PKN would pay inflated prices for their goods and services. PKN's full year petrochemical operating profits rose 6% to Zloty200m (E47m/$51m) on sales up 21% to Zloty4.17bn.

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