Polyolefins sales boost PKN Orlen Q1 profit

15 May 2007 02:34  [Source: ICIS news]

PRAGUE (ICIS news)-- PKN Orlen, the Polish oil and petrochemicals group, posted on Monday a 19.2% rise in its first quarter petrochemicals operating profit compared with the same period in 2006, boosted by polyolefins sales.

First quarter operating profit reached zloty (ZI) 369.6m ($132.9m/€98.3m) while revenues were up 10.4% to (ZI) 3.3bn, the company said in a statement.

"In particular the [Orlen-owned] Unipetrol group [in the Czech Republic] boasted an excellent operating profit allocated to the petrochemicals segment in the amount of (ZI)224m, which meant a 66.5% growth for Unipetrol," a spokesman for the group said.

Growing margins and favourable market conditions in central and eastern Europe was driving the petrochemicals market, he added.

Orlen’s petrochemicals business was also boosted by Basell Orlen Polyolefins (BOP), the high density polyethylene (HDPE) and polypropylene (PP) 50:50 joint venture in Plock, Poland, which became fully operational last August.

"The positive sales dynamics of polyolefins boosted the operating result of BOP, which achieved a profit of (ZI)48m, compared with (ZI)11m in the first quarter of last year," the spokesman said.

Orlen’s chemicals segment posted a first quarter operating profit up 45.4% to (ZI)82.8m, although revenues were down 13.1% to (ZI)736.9bn.

"The sales of polyvinyl chloride (PVC) were adversely affected by fierce price competition on the part of Chinese producers, as well as from [Hungary’s] Borsodchem on the domestic market," the spokesman said.

The group encounter logistical problems during the quarter that made it impossible to transport fertilizers by river, he said, adding that road transportation was also difficult because of a shortage of vehicles for distribution purposes.

But operating profit at PVC and fertilizers subsidiary Anwil rose to (ZI)83m compared with (ZI)52m in the first three months of 2006.

Sales for Anwil’s nitrogen fertilizer CANWIL rose 7.2% on robust demand during peak season. The company also benefited from the construction season which lifted the PVC and PVC granulates prices by 9.7%.

"Another factor worth mentioning is the buoyant state of the sodium hydroxide and caprolactam markets and a higher demand for those substances," the spokesman said.

At group level, the company’s operating profit fell 10.1% to (ZI)374.7m with revenues increasing 18.6% to (ZI)13.4bn from the first quarter of 2006.

Newly-acquired Mazeikiu, a refining subsidiary in Lithuania, posted a significant operating loss of (ZI)334m as it was hit by a fire last October.

($1=ZI2.78/€1=ZI3.76)

By: Will Conroy
+44 20 8652 3214

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