Petchem margins set to keep Poland's Orlen in the black - bank

22 April 2013 16:37  [Source: ICIS news]

LONDON (ICIS)--Poland's PKN Orlen enjoyed excellent petrochemical margins throughout the first quarter of this year, along with strong petrochemical volumes and no major disruptions to production, an investment bank said on Monday.

“Petchems may have contributed well over zloty (Zl) 400m [$127.4m, €97.1m], saving the day for PKN Orlen as, without petchems, it may have just broken even at the LIFO EBIT [last in, first out earnings before interest and tax] level,” Robert Rethy, an analyst at WOOD & Company, said in a note to investors.

The superb run of margins Orlen saw during January to March, up materially year on year and flat quarter on quarter, helped compensate for refinery margins failing to pick up and have made it possible “for Orlen to be in the black during the quarter”.

“Unfortunately, the outlook is hardly bullish, at this early stage, for the second quarter of 2013, with oil prices down materially, refinery margins failing to pick up yet – and, hence, down year on year – and petchem margins ripe for a correction in a weaker demand environment,” he added.

Orlen's model petrochemical margin was €744/tonne in January, €709/tonne in February and €752/tonne in March.

The figures for these three months in 2012 were €529/tonne €607/tonne and €700/tonne, respectively.

WOOD & Company predicted Orlen – set to report its results on 25 April – would record a first-quarter net profit of 172m, EBIT of Zl 469m and LIFO EBIT of Zl 500m.

The figures achieved for the same quarter of 2012 were Zl 1.3bn, Zl 939m and Zl 201m, respectively.

($1 = €0.76, $1 = Zl 3.14, €1 = Zl 4.12)

By: Will Conroy
+44 20 8652 3214

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