Poland’s PKN Orlen downgraded on nonperforming subsidiaries

22 October 2012 13:33  [Source: ICIS news]

LONDON (ICIS)--WOOD & Company on Monday downgraded its recommendation on the stock of Polish oil and petrochemical group PKN Orlen from ‘Hold’ to ‘Sell’, noting difficulties with subsidiaries which management is struggling to resolve.

“We continue to see serious problems with the nonperforming subsidiaries and we are not aware of any solutions from management in sight,” the investment bank added in its latest analysis of Orlen.

Lossmaking Czech petrochemical and refining subsidiary Unipetrol is seen by WOOD & Company as one of the major trouble spots in Orlen’s operations.

The bank said it believed Unipetrol might have to streamline capacity further to achieve break-even operations, something which the company, in early September, said it was considering.

The downgrade on Orlen’s stock was also issued because European refining is structurally challenged and due to the bank’s analysts viewing “Orlen’s expansion in power generation, and in other non-core areas, with concern”, WOOD & Company said.

Orlen’s 2012-2017 strategy, which has been delayed since the beginning of this year, is due to be published in December  following a November board approval process.

By: Will Conroy
+44 20 8652 3214

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