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Very good year for PKN Orlen

Very good year for PKN Orlen
In 2010, PKN ORLEN (Poland) posted the best operating and net profits in five years, as well as the highest ever total sales volumes. The Company was consistently reducing its debt, while keeping the ratios required under its loan agreements at safe levels.

There was a significant year-on-year improvement in PKN ORLEN’s operating and financial performance. In 2010 sales revenue grew by 23%, while operating profit (EBIT) and net profit rose by PLN 2bn and PLN 1.2bn, respectively, on the 2009 levels.

At the same time, PKN ORLEN increased its crude oil throughput to 28 million tonnes, which – helped by the recovery on each of its home markets – translated into sales volumes at the all-time high of 34 million tonnes. The refining and retail segments recorded a growth of, respectively, 1% and 5%, which offset the effect of declining volumes of the petrochemical segment (down by 2%), translating into a 2% increase in the total sales volumes relative to 2009. These successes, combined with operational optimisation, cost savings and remeasurement of inventories, resulted in the best operating profit of PLN 3.1bn and net profit of PLN 2.5bn in five years.

“Our financial and operating results posted in 2010 are the best proof that the decisions we made in the period of slowdown laid down the groundwork for effective operation as the macroeconomic climate improves. Thanks to the carefully thought-out and consistently implemented optimisation and investment efforts, the Company achieved the highest efficiency on record and is well positioned for further growth, including development of new business segments and transformation into a multi-utility,”said Jacek Krawiec, CEO of PKN ORLEN.

As part of its cash release efforts, following a change in the rules governing mandatory stock-holding, last year PKN ORLEN carried out two crude sale transactions, which generated cash of PLN 1.7bn. Furthermore, PKN ORLEN continued to implement working capital reduction measures launched in 2009, which brought an additional cash inflow of PLN 4.3bn by the end of Q4 2010 (PLN 1.9bn in 2010 alone).

Increased operational efficiency and optimisation efforts further reduced the Group’s indebtedness – by PLN 2.5bn year on year. Such reduction in debt enabled the Company to achieve the target financial leverage of 39% envisaged in its strategy. In addition, the ratio of net debt to operating profit before amortisation/depreciation and dividend from Polkomtel was reduced to the safe level of less than 1.5. Fitch and Moody’s recognised the Company’s consistent and successful efforts, changing the Company’s outlook from negative to stable.

“Over the past twelve months we have launched a number of projects and initiatives, which contributed to greater stability and secure financial standing. These were the objectives of our strategy adopted in 2008. Successful implementation of the objectives demanded considerable effort from all of us, particularly in the context of the global crisis and economic slowdown which created additional obstacles. Today our liquidity position is very good: in the prior year net cash provided by operating activities totalled PLN 6.1bn and liquidity available under credit facilities is EUR 1bn. We are ready to start preparing for the implementation of the scheduled development projects,” said Sławomir Jędrzejczyk, Vice-President of the Management Board in charge of finance.

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