ORLEN Spolka Akcyjna · GPW:PKN
ORLEN Spolka Akcyjna — PKN Orlen — FY2007 Earnings Presentation
33 slides from ORLEN Spolka Akcyjna's earnings presentation, Feb 29, 2008
Slide 1: 2007 financial results (IFRS) and financial assumptions for 2008 plan
PSG\JAN05\EP\K2_OVERVIEW(01).PPT 2007 financial results (IFRS) and financial assumptions for 2008 plan Waldemar Maj, CFO February 29, 2008 1
Slide 2: Agenda
Agenda z 2007 financial results – overview z Financial assumptions for 2008 plan z Supporting slides 2
Slide 3: Realization of PKN ORLEN Group strategy in 2007
Realization of PKN ORLEN Group strategy in 2007 Implementation of projects enabling long term production and sales increase Segment Action realized Effect achieved • Restoring the VDU in Mazeikiu Nafta (Lithuania) • Restoration of processing capacities to before 2006 fire level, 10 m t • Modernisati
Slide 4: EBITDA increased by 8% in 2007 vs 2006
EBITDA increased by 8% in 2007 vs 2006 despite maintenance turnarounds both in refining and petrochemical segments Key financial data in 20071 PLN m 2006 2007 r/r [%] 1 2 3=2/1 EBITDA 4 685 5 039 8% EBITDA 5 293 5 947 12% excluding one-off efects* Net profit attributed to shareholders of the parent
Slide 5: Wholesale and retail fuel volumes sales increase
Wholesale and retail fuel volumes sales increase as a result of efficiency improvement and retail network modernization Key operating data in 2007 2006 2007 y/y [%] y/y [%] unconsolidated Group unconsolidated Group unconsolidated Group 1 2 3 4 5=3/1 6=4/2 Wholesale (kt) 1 6 806 9 703 7 093 13 761 4,
Slide 6: EBIT increase by 2% on yearly basis
EBIT increase by 2% on yearly basis Efficiency improvement by PLN 282 m, EBIT increase by PLN 44 m PLN m EBIT change + PLN 44 m inventory valuation macro and one-offs efficiency change + PLN 1 130 m - PLN 1 368 m + PLN 282 m 4 000 +1 130 Fuel sales increase by 7 % y/y 3 500 3 000 +439 2 577 +105 2 6
Slide 7: Refining segment
Refining segment Efficiency improvement by PLN 148 m, EBIT increase by PLN 75 m PLN m EBIT change + PLN 75 m inventory valuation macro and one-offs efficiency change + PLN 1 053 m - PLN 1 126 m + PLN 148 m 3 000 +1053 Wholesale volume 2 500 increase by 4,2% +356 2 000 -523 +256 1 614 1 689 -270 -33
Slide 8: Retail segment
Retail segment Efficiency improvement by PLN 81 m, EBIT decrease by PLN 16 m PLN m EBIT change - PLN 16 m one-offs efficiency change 700 - PLN 97 m + PLN 81 m 600 500 439 +34 +13 +3 423 400 +31 300 -84 * -13 • volume increase by 6% y/y • volume increase by 15,5% • non-fuel revenues increase 200 by 1
Slide 9: Petrochemical segment
Petrochemical segment Efficiency improvement by PLN 89 m, EBIT increase by PLN 226 m PLN m EBIT change + PLN 226 m inventory valuation macro and one-offs efficiency change + PLN 77 m + PLN 60 m + PLN 89 m 1400 1300 1200 1100 +18 1 068 +32 +43 1000 +189 -4 +77 900 842 800 +143 700 Total sales volume
Slide 10: Chemical segment
Chemical segment Efficiency improvement by PLN 16 m, EBIT increase by PLN 22 m m PLN EBIT change + PLN 22 m macro and one-offs efficiency change 290 + PLN 6 m + PLN 16 m 270 246 +17 250 224 +33 -1 230 210 190 -27 PCV sales increase 170 over 6% y/y 150 EBIT 2006 other operat. macroec on. Anwil other
Slide 11: Agenda
Agenda z 2007 financial results – overview z Financial assumptions for 2008 plan z Supporting slides 11
Slide 12: Investment plans for 2008 as part of strategy till 2012
Investment plans for 2008 as part of strategy till 2012 Projects driven by higher demand for high margin middle distillates and petrochemical products Segment Planned action Expected effect • Completion of the main investment phase of HDS1 VII • Start up in 2009 of the installation with and Hydrogen
Slide 13: Main operating assumption as for 2008
Main operating assumption as for 2008 Dynamic increase of production and sales in the refining segment Key operating assumption in PKN ORLEN Group in 2008 Estimated change 2008/2007 in % Plan for 2008 Crude throughput in PKN ORLEN Group +19% Increase by 4.5 mt y/y to 27.6 mt/y Crude throughput in Ma
Slide 14: Disclaimer statement
Disclaimer statement This presentation of PKN ORLEN S.A. (“Presentation”) has been prepared by PKN ORLEN S.A. (“PKN ORLEN” or “COMPANY”) Neither the Presentation nor any copy hereof may be copied, distributed or delivered directly or indirectly to any person for any purpose without the PKN ORLEN’s k
Slide 15: Thank You for Your attention
Thank You for Your attention For more information on PKN ORLEN, please contact Investor Relations Department: telefon: + 48 24 365 33 90 faks: + 48 24 365 56 88 e-mail: [email protected] www.orlen.pl 15
Slide 16: Agenda (supporting slides)
Agenda z 2007 financial results – overview z Financial assumptions for 2008 plan z Supporting slides z 4Q2007 financial results z Macrodata z Other finacial and operational data (quarterly and annual basis) z Shutdown schedule as for 2008 z Biofuels z Hedge policy z LIFO metodology 16
Slide 17: EBIT: 4Q'2007 compared to 4Q'2006
EBIT: 4Q’2007 compared to 4Q’2006 Efficiency decrease by PLN 205 m, EBIT increase by PLN 288 m PLN m EBIT change + PLN 288 m inventory valuation macro and one-offs efficiency change + PLN 1 030 m - PLN 537 m - PLN 205 m 1 000 +1 030 800 Seasonal fixed costs increase. +574 (Fixed costs in 4Q’07 are a
Slide 18: Refining segment on quarterly basis
Refining segment on quarterly basis Efficiency decrease by PLN 151 m, EBIT increase by PLN 459 m PLN m EBIT change + PLN 459 m inventory valuation macro and one-offs efficiency change + PLN 970 m - PLN 360 m - PLN 151 m 1000 + 970 800 +347 600 Fuel yield decrease by 2pp y/y 400 -295 -319 241 -93 -26
Slide 19: Retail segment on quarterly basis
Retail segment on quarterly basis Efficiency improvement by PLN 6 m, EBIT decrease by PLN 48 m PLN m EBIT change - PLN 48 m one-offs efficiency change 140 - PLN 54 m + PLN 6 m 120 114 100 Volume increase by 11% 80 +4 66 +10 -41 60 +11 -13 40 -19 Unit margin 20 decrease 0 EBIT 2006 other MN PKN Orlen
Slide 20: Petrochemical segment on quarterly basis
Petrochemical segment on quarterly basis Efficiency improvement by PLN 3 m, EBIT decrease by PLN 27 m PLN m EBIT change - PLN 27 m inventory valuation macro and one-offs efficiency change + PLN 60 m - PLN 90 m + PLN 3 m 300 250 200 150 +60 +235 100 82 +6 +6 +11 55 50 -64 -105 -20 0 EBIT 2006 invento
Slide 21: Chemical segment on quarterly basis
Chemical segment on quarterly basis Efficiency decrease by PLN 12 m, EBIT decrease by PLN 43 m PLN m EBIT change - PLN 43 m one-offs efficiency change - PLN 31 m - PLN 12 m 120 100 81 80 60 +1 38 40 -31 -13 20 0 EBIT 2006 other Anwil other companies EBIT 2007 operat. revenues and costs 21
Slide 22: Macroeconomic environment in 2007 compared to 2006
Macroeconomic environment in 2007 compared to 2006 Strong Polish zloty and high crude oil price as external factors influencing PKN ORLEN results Model PKN ORLEN refinery margin (Group) Model PKN ORLEN refinery margin (Plock) Increase by 29% y/y to 2,7 $/b in Q4’07 Increase by 28% y/y to 3,7 $/b in
Slide 23: Impact of one-off items on EBIT in 4Q'07 and 2007
Impact of one-off items on EBIT in 4Q’07 and 2007 EBIT increase excluding one-off items Impact of one-offs on 4Q’07 EBIT IFRS, in PLN m 4Q'06 2006 4Q'07 2007 1 2 3 4 EBIT (reported in accordance to average weighted) -168 2 577 120 2 621 One-off items +/- on EBIT -569 -608 -576 -908 Maintenance shutd
Slide 24: EBIT breakdown in PKN ORLEN Group in 4Q'07 and FY2007
EBIT breakdown in PKN ORLEN Group in 4Q’07 and FY2007 Performance improvement in refining, petrochemical and chemical segments in FY2007 Unipetrol effect MN effect IFRS, m PLN 2006 2007 y/y [%] in 2007 in 2007 1 2 3 4 5=4/1 EBIT, of which 2 577 450 -665 2 621 1,7% 1 Refining 1 614 115 -390 1 689 4,6
Slide 25: Mazeikiu Nafta Group. Key elements of the financial statements
Mazeikiu Nafta Group. Key elements of the financial statements1 EBIT decrease in 2007 due to the maintenance shutdown and low utilisation ratio change change IFRS, in USD m 4Q'06 4Q'07 2006 2007 y/y [%] y/y [%] 1 2 3=2/1 4 5 6=5/4 Revenues 690 832 20,6% 4 300 3 502 -18,6% EBITDA -83 -17 -79,9% 109 7
Slide 26: Unipetrol Group. Key elements of the financial statements
Unipetrol Group. Key elements of the financial statements1 EBIT decrease in 2007 due to the planned refinery and petrochemical maintenance shutdowns change change IFRS, in CZK m 4Q'06 4Q'07 2006 2007 y/y [%] y/y [%] 1 2 3=2/1 4 5 6=5/4 Revenues 21 719 21 149 -2,6% 93 698 88 779 -5,2% EBITDA 590 227
Slide 27: ORLEN Deutschland
ORLEN Deutschland EBIT increase of 7% in 4Q’07 vs 4Q’06 change change IFRS, PLN m 4Q'06 4Q'07 2006 2007 y/y [%] y/y [%] 1 2 3=2/1 4 5 6=5/4 Revenues 2 156 2 358 9,4% 8 838 8 684 -1,7% EBITDA 14 24 71,4% 98 101 3,1% EBIT -6 4 - 28 30 7,1% Net profit -5 4 - 27 32 18,5% Reference retail margin in Germa
Slide 28: Key production data
Key production data In Lithuania temporarily utilization of 51% in 2007 due to vacuum distillation unit (VDU) fire in 2006. VDU was rebuilt by the end of January 2008 Operating data 4Q'06 4Q'07 y/y [%] 2006 2007 y/y [%] 1 2 3=2/1 4 5 6=5/4 1 Refinery in Poland Processed crude (tt) 3 484 3 512 0,8% 1
Slide 29: Key planned shutdowns in PKN ORLEN Group in 2008
Key planned shutdowns in PKN ORLEN Group in 2008 Introduced maintenance policy enables to optimise production and increase volumes sales of refining products in long time horizon 1Q‘08 2Q’08 3Q’08 4Q’08 Płock: HDS VI Płock: HOG Mazeikiu Nafta No shutdowns in 2008 Kralupy refinery Płock: Olefins Chem
Slide 30: Biofuels
BIOfuels PKN ORLEN fully prepared for regulations National Target Index (NTI): Regulations z NTI calculation: In order to fulfill NTI in 2008 amounting to 3,45% PKN ORLEN plans to put on the market around 55 th. tonnes of rapeseed oil ester in B100 and over 200 th. tonnes of rapeseed oil ester as bi
Slide 31: Exchange rate and interest rate risk management policy
Exchange rate and interest rate risk management policy focused on stabilizing cash flows Exchange rate and interest rate risk management policy z The policy does not allow to speculate and is based on detailed parameters such as level and period of hedging activity z The company uses simple instrume
Slide 32: Explanation of differences between results based on LIFO and weighted average (1/2)
Explanation of differences between results based on LIFO and weighted average valuation of crude oil (1/2) Crude oil inventories (tt) Crude oil price (PLN/t) 300% 1 800 1 500 200% 1 200 900 100% 600 300 0% 0 2000 2001 2002 2003 2004 2005 2006 2007 2000 2001 2002 2003 2004 2005 2006 2007 Unit cost LI
Slide 33: Explanation of differences between results based on LIFO and weighted average (2/2)
Explanation of differences between results based on LIFO and weighted average valuation of crude oil (2/2) LIFO valuation practices in PKN ORLEN Additional commentary to LIFO valuation According to LIFO method: • According to the LIFO approach, increase in z Crude oil from inventories used for produ