Unipetrol's 2008 EBIT outlook improves - Erste

03 October 2008 14:01 [Source: ICIS news]

PRAGUE (ICIS news)--Unipetrol's chances of hitting its 2008 operating profit target have risen on falling naphtha feedstock prices and a strengthening of the dollar in the third quarter, Erste banking and financial services group said on Friday.

The Czech petrochemical and refining group even stood a fair chance of slightly exceeding the target, added analyst Jakub Zidon, saying the quarter had evidently seen falling world oil prices translating into naphtha price reductions.

Zidon predicted Unipetrol would post a full-year operating profit of koruna (Kc) 5.2bn ($290.2m/€209.6m) compared with Kc4.8bn given in its latest forecast.

“These figures are still relatively challenging,” said Zidon, “but Unipetrol, which in petrochemicals is basically an exporter, has also seen a third quarter weakening of the Czech koruna against its large dollar earnings that was good for the supportability of its profit plan.”

Analysis released by investment bank Wood & Company on September 30 showed that Unipetrol was one of the most exposed companies in central and eastern Europe to foreign exchange rate movements because nearly 60% of its revenues are collected in dollars and 35% in euros.

Zidon said that when Unipetrol released operating profit guidance of Kc4.8bn at the beginning of this year it was regarded by analysts as “extremely low”, but given the year's subsequent “huge drop in petrochemical margins” and an ethylene cracker shutdown it had scheduled for October 6 meant “it is now taken as a quite ambitious plan”.

“Our EBIT (earnings before interest and tax) forecast now stands at Kc5.2bn, but this figure will be achievable only in the case that [Erste's integrated] petchem margin recovers to a full-year average of €400/tonne, compared to the first half average of €363/tonne,” he concluded.

Erste figures showed the petrochemical segment typically created some 70% of Unipetrol's EBIT.

($1=Kc17.92, €1=Kc24.80)

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By: Will Conroy
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