Unipetrol Q2 profits fall 80% on high feedstock

13 August 2008 11:13  [Source: ICIS news]

PRAGUE (ICIS news)--Czech refiner Unipetrol has posted an 80% fall in its second-quarter net profit to koruny (Kc) 302m (€12.7m/$19m) from Kc1.5bn year on year due to higher feedstock prices and lower margins, it said on Wednesday.

"The petrochemical segment was influenced by a 13% quarter-on-quarter increase in naphtha prices creating further pressure on margins, with the highest negative impact in June," it added in a statement. "The model olefin margin decreased 14% quarter on quarter and the model polyolefin margin decreased 13% quarter on quarter."

Unipetrol, majority-owned by Poland’s PKN Orlen, which reported its results earlier in the day, added that its operating profit for the period fell 61% to Kc838m, while revenues rose 9% to Kc27.1bn, with petrochemical revenues alone falling 21% to Kc11.5bn.

The second quarter saw the euro lose a further 3% against the koruna, which according to Unipetrol, "is negative as all petchem prices (and margins), even those sold domestically, are quoted in euro."

Looking at ethylene contracts, Unipetrol said they had risen from €890/tonne in April-June 2007 to €1,038/tonne in the same period of this year. In the first quarter of 2008, they stood at €1,023/tonne.

Another problem had been energy costs that increased 78% in the second quarter to Kc 464m year on year, it added.

Looking ahead, Unipetrol chief executive Francois Vleugels expected a "significant" improvement in the company’s performance in the third quarter.

The company observed that crude oil and naphtha prices have been weakening since their peak in mid July, while the koruna/euro exchange rate had stabilised.

The ethylene contract price for the third quarter of 2008 was up by 18% quarter on quarter and high density polyethylene (HDPE) and polypropylene (PP) prices sharply increased in August quotations against July, by 11% and 8% respectively, while benzene had gained 28% in the year-to-date comparison, it said.

($1 = Kc15.89, $1 = €0.67)

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By: Will Conroy
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