Czech Unipetrol’s Q4 operating loss expected to widen

26 January 2012 09:46  [Source: ICIS news]

LONDON (ICIS)--Unipetrol’s operating loss is expected to widen on a few factors, including lower olefin and polyolefin margins, and a one-off charge related to the impairment of fixed assets, the Czech petrochemical producer said in a quarterly trading statement on Thursday.

The charge of more than koruny (Kc) 500m ($26m) will result in a loss in the company’s fourth-quarter operating result that is lower than the Kc230m recorded for the third quarter of the previous year, the company added.

“The reason for the impairment is the decrease in the value of the assets [caused by] the deteriorated external environment, in which [lubricating oils and bitumen subsidiary] PARAMO operates,” Unipetrol said.

“The main [negative] factors that influenced the quarter-on-quarter performance of the petrochemical segment in the fourth quarter of 2011 were lower olefin as well as polyolefin margins, by 10% and 15% respectively, on lower spreads across all type of benchmark products except ethylene and suppressed sales volumes [caused by] lower-than-expected GDP growth in the fourth quarter,” the statement added.

Unipetrol's model olefin margin fell to €262/tonne ($345/tonne) in the fourth quarter of 2011 from €292/tonne in the third quarter. The company’s model polyolefin margin decreased from €251/tonne to €214/tonne.

Prague-based investment bank Wood & Company described Unipetrol’s latest operating figures as “rather bleak”.

Wood & Company analyst Robert Rethy added in a note to investors: “We certainly did not expect miracles in this period and we were prepared for an operating loss, but the extent of the loss is much higher than our estimate, and one-offs and financials should add to these losses on the bottom line.”

“We now foresee a bottom-line loss that far exceeds Kc1bn in 4Q11 alone, dragging down the full-year figure into the red,” Rethy said.

The operating loss is partly attributed to Unipetrol’s Kc300m expenditure as a result of a several-week shutdown at all of the company’s petrochemical units at its main production site in Litvinov in the Czech Republic, Unipetrol said.

Unipetrol, the majority of which is owned by Poland’s PKN Orlen, is expected to publish its fourth-quarter results on 9 February.

($1 = 0.76, $1 = Kc19.35)

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By: Will Conroy
+44 20 8652 3214



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