ORLEN Spolka Akcyjna · GPW:PKN
ORLEN Spolka Akcyjna — PKN Orlen — Q3 2005 Earnings Presentation
38 slides from ORLEN Spolka Akcyjna's earnings presentation, Nov 14, 2005
Slide 1: Consolidated financial results of PKN ORLEN S.A. Q3 2005 (IFRS)
Consolidated financial results of PKN ORLEN S.A. Q3 2005 (IFRS) Implementation and progress of strategy initiatives Igor Chalupec, CEO Wojciech Heydel, CMO Paweł Szymański, CFO 14 November 2005 1
Slide 2: Financial results Q3'2005 PKN ORLEN Group
Financial results Q3’2005 PKN ORLEN Group Key financial data2 Operating data Q3’2005 Q3'05 vs Q1-Q3'05 vs PLN m Q3'05 Q1-Q3'2005 Q3'04 Q1-Q3'04 ROACE (%) 1 18.3% 28.9% Wolumen volume Wholesale z sprzedaży + 32,1% Without negative goodwill 18.4%* 4 w hurcie 2kw’05/2kw’04 sales 32,0% 20.9% EBITDA 1 62
Slide 3: EBITDA and ROACE comparison 1-3Q'05 vs. 1-3Q'04
EBITDA and ROACE comparison 1-3Q’05 vs. 1-3Q’041 EBITDA (PLN m) ROACE (%) (based on 2004 average market environment)1 (based on 2004 average market environment)1 30,0 4 000 3 000 20,0 2 000 3 696 3 256 10,0 20.0 23.6 1 000 0 0,0 1-3Q'2004 1-3Q'2005 1-3Q'2004 1-3Q'2005 PKN ORLEN without Unipetrol PKN
Slide 4: Agenda
Agenda Comparison of financial results for Q3’05 and 1-3Q’05 Characteristics of macroeconomic environment Financial results Q3’2005 Strategy update Supporting slides 4
Slide 5: Macroeconomic environment
Macroeconomic environment Q3’2005 and Q4’2005 to November, 9th 2005 Refinery margin average $6.09/b in Q3’20053 Exchange rates average1 Increase of 11% y/y 5,0 PLN/USD PLN/EUR 16 Q3'2005 2 2 PLN/USD 2005 E PLN/EUR 2005 E Q3'2004 14 2005 E 2 4,5 12 4,0 10 8 3,5 6 4 3,0 2 After Q3‘05 After Q3‘05 2,5 0
Slide 6: Oil & gas sector – world trends
Oil & gas sector – world trends Possible squeeze of the Brent-Ural differential PKN ORLEN refining margins have lately been dependent Brent-Ural differential - tendencies on the level of the Ural-Brent differential Brent-Ural Brent-Ural differential Refinery margins3 differential (yearly average) US
Slide 7: Agenda
Agenda Comparison of financial results for Q3’05 and 1-3Q’05 Characteristics of macroeconomic environment Financial results Q3’2005 Strategy update Supporting slides 7
Slide 8: Revenues by segment
Revenues by segment IFRS basis, PLN m Q3'04 Q3'05 Unipetrol Q3'05 y/y Comment Revenue total 8 504 3 656 13 075 54% including zRevenue increase due to higher market 2) quotations for refined products and due to Refining 4 125 2 248 7 084 72% Unipetrol consolidation Orlen Deutschland (w ithout excise
Slide 9: Expenses
Expenses Cost increase smaller than revenue increase (exluding Unipetrol) Q3'05 Comment IFRS basis, PLN m Q3'04 Unipetrol Q3'05 y/y Raw m aterials and energy 3 548 2 025 6 542 84,4% z Unipetrol consolidation effect visible Costs of goods for resale 2 771 521 3 387 22,2% in increase in all cost types
Slide 10: Operating profit by segment
Operating profit by segment Significant improvement in operating results Q3'05 Comment IFRS basis, PLN m Q3'04 Unipetrol1 Q3'05 y/y Operating profit 995 132 1 195 20,1% zIncreased operating of which: result due to Unipetrol 2 consolidation and Refining 761 74 1 132 48,8% efficiency improvements in R
Slide 11: Profit and loss account
Profit and loss account Direct effect of full quarter of Unipetrol consolidation 3Q'05 IFRS basis, PLN m 3Q'04 Unipetrol 1 3Q'05 y/y Comment Revenues 8 504 3 656 13 074 53,7% z Strong effect of Unipetrol Cost of sales -6 763 -3 434 -11 047 63,3% consolidation seen in every Distribution costs -538 -2
Slide 12: Operating activity the main driver of the net profit increase
Operating activity the main driver of the net profit increase 3Q’04 3Q’05 In m PLN 1 200 4 2 13 1 000 132 (20) 68 (15) (37) 800 Result of Unipetrol debt 600 consolidation 980 Macroenvironment in the oil 833 & gas business supported 400 the company result, as well as the consolidation of Unipetrol 20
Slide 13: Refining segment in Q3'2005
Refining segment in Q3’20051 Efficiency increase and a favourable operating environment Q3’04 Q3’05 In PLN m 1600 37 4 1400 74 8 26 284 32 1200 80 108 Result of Unipetrol 1000 consolidation 95 321 Macroenvironment in oil & 800 gas supported the increase in the segment result 600 1 132 400 761 200 0
Slide 14: Petrochemical segment
Petrochemical segment Visible decrease of margin on petrochemical products Q3’04 Q3’05 In PLN m 500 2 Result of worsening macroenvironment for 450 petrochemical products 400 88 (17) 350 (47) (89) 300 117 250 (119) 200 Mainly due to maintenance shutdown of the olefin unit 150 and the period of start-
Slide 15: Retail segment
Retail segment High prices result in decreased fuel consumption and a lower segment result In PLN m Q3’04 Q3’05 3 2 120 (10) 9 100 10 (20) 10 80 (27) 60 Decrease of fuel consumption in Poland 40 82 Focus on margin realization 59 20 0 other ∆ margin Unipetrol ∆ cost cutting ∆ other operating segment
Slide 16: Cost cutting program
Cost cutting program Reduction target will be achieved Summary of cost cutting program in Q3’05 z Effects of the initiatives realised in Q3’05 are Efficiency sufficient to achieve the target of PLN 800 m* improvement PLN 228 m initiatives realised z The company is continuously looking for new soluti
Slide 17: Agenda
Agenda Comparison of financial results for Q3’05 and 1-3Q’05 Characteristics of macroeconomic environment Financial results Q3’2005 Strategy update Supporting slides 17
Slide 18: Orlen Deutschland
Orlen Deutschland Assets in a difficult and competitive market Orlen Deutschland Orlen Deutschland, location z 494 retail sites acquired in Northern Germany in 2003 z After optimisation PKN ORLEN has 480 sites 480 under two brands; sites ORLEN Premium 116 STAR Economy 364(1) z Estimated market share
Slide 19: German market Outlook to 2009
German market Outlook to 2009 Current market situation Historical average retail margin z Economy sites are highly favored by 8 Euro cent / litre customers 7 6,91 7,35 6,53 6,46 6,43 6 z Total fuel volume increase on ORLEN 5,6 5,4 5 5 4,9 Deutschland sites in comparison to negative 4 4,58 3,77 marke
Slide 20: ORLEN Deutschland SWAP agreement
ORLEN Deutschland SWAP agreement increases substantially profitability of German investment SWAP profile and its influence on PKN ORLEN z SWAP agreements are being concluded between PKN ORLEN and oil & gas companies acting both in the Polish and German markets in terms of mutual fuel supplies z SWAP
Slide 21: Alternative scenarios
Alternative scenarios Strategic development of Orlen Deutschland and possible effects Possible strategy on German market Substantial z Exit from the market by accounting the sale of sites 1) Exit LOSS Cost of the sites optimisation ROACE1) z 2) Restructuring 14.7% z Headquarters restructuring z Spin
Slide 22: Restructuring and development of Orlen Deutschland
Restructuring and development of Orlen Deutschland Decision of PKN ORLEN supporting increase of shareholder value Development scenario for German market in EUR m 2009 3) Restructuring and ROACE 18,4%* development NPV 142 One off expenses 81 EBITDA EUR m z One-off cost at a level of ca. EUR 31 m 1) z
Slide 23: PKN ORLEN and Mažeikių Nafta - strong regional player
PKN ORLEN and Mažeikių Nafta - strong regional player Combined potential of the companies provides Pozycja partnerów w Środkowo – Wschodniej PKN ORLEN submitted comprehensive offer Europie sound position in Central&East Europe. Terminal Butinge Lithuania • According to the required deadline, Mažeiki
Slide 24: Divisional Management
Divisional Management Implementation planned on 1 January 2006.1 Cooperation within Group; management teams with common targets One company and joint responsibility for results Common strategy Building and enforcing the Group’s common strategy within the confines of the Group Moving part of decision
Slide 25: Expected results of implementation of divisional management
Expected results of implementation of divisional management Following the implementation of segment management synergies in the subsequent areas are expected: ¾ optimisation of investment expenses ¾ production and sales synergies following Strategic the optimisation of operational planning Projects
Slide 26: Implemented the organizational structure and value chain management
Implemented the organizational structure and value chain management is based on the best world principles Divisional Executive Divisional Executive Divisional Executive Divisional Executive Divisional Executive Divisional Executive Director Director Director Director Director Director Refining Lubri
Slide 27: PKN ORLEN enters the polyester market - PET
PKN ORLEN enters the dynamically expanding polyester market - PET Extending the value chain in the petrochemical segment of the PKN ORLEN Group - construction of the paraxial (PX) and teraphthalic acid (PTA) installations Proposed investment in the complex: ¾ PX installation – capacity of ca. 400k
Slide 28: Thank You for Your attention
Thank You for Your attention 28
Slide 29: Contact
Contact For more information please contact our IR Office: Press Office: phone: + 48 24 365 33 90 phone: + 48 24 365 41 50 fax: + 48 24 365 56 88 + 48 22 695 34 57 e-mail: [email protected] fax: + 48 22 695 35 27 e-mail: [email protected] www.orlen.pl 29
Slide 30: Agenda – Supporting slides
Agenda Comparison of financial results for Q3’05 and 1-3Q’05 Characteristic of the macroeconomic nvironment Financial results Q3’2005 Strategy update Supporting slides z Macroeconomic environment in Poland z CAPEX in Q3 2005 z Selected financial and operating data of Unipetrol Group z Selected opera
Slide 31: Macroeconomic environment in Poland
Macroeconomic environment in Poland Increase in real GDP growth Comment 6,9% • Increase of GDP rate of growth in Q3’05 6,1% – better results in manufacturing, trade 4,7% 4,9% 3,9% 4,0% 4,0% and construction industry. Strengthening 2,8% 3,4% in consumer demand by 2.1%. Decrease 2,3% 2,1% in unemploym
Slide 32: Capex in Q3'05
Capex in Q3’05 Focus on petrochemicals development Investment in Q3’05 including Unipetrol PLN m 300 Q3’04 70 Q3’05 250 Q3’05 , Unipetrol 200 24 150 25 205 100 152 145 5 50 78 81 43 28 39 0 Refinery Reta il Petrochemical Others 32
Slide 33: Unipetrol Group Selected financial data for Q3'05 and Q3'04
Unipetrol Group Selected financial data for Q3’05 and Q3’04 Q1-Q3'04 Q3'04 Q1-Q3'05 Q3'05 In '000 CZK CAS CAS IFRS IFRS Chem opetrol a.s. Revenues 19 475,5 6 935,1 23 507,3 8 001,7 EBITDA 2 986,4 965,4 3 656,9 831,5 Net result 849,7 272,0 1 944,1 455,4 Benzina a.s. Revenues 15 383,1 6 243,3 8 540,3
Slide 34: UNIPETROL a.s.
Unipetrol Group Selected financial data for Q3’05 and Q3’04 Consolidated financial highlights of Unipetrol a.s. 2003-2005* Quarterly basis Q1'03 Q2'03 Q3'03 Q4'03 Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 H1'05 Q3'05 In '000 CZK 2003 CAS 2004 CAS 2004 IFRS CAS CAS CAS CAS CAS CAS CAS CAS CAS IFRS IFRS Equity 29
Slide 35: Unipetrol Group Selected operating data for 2003 - 2005
Unipetrol Group Selected operating data for 2003 - 2005 Operating highlights of Unipetrol a.s. Capital Group 2003-2005 Quarterly basis Operating data* Q1'03 Q2'03 Q3'03 Q4'03 2003 Q1'04 Q2'04 Q3'04 Q4'04 2004 Q1'05 Q2'05 Q3'05 Total sales (tt) , of w hich 110 177 720 1 135 2 142 1 024 1 195 1 204 1
Slide 36: Operating data Q3'05
Operating data Q3’051 Operating data1 Q3'04 Q3' 05 y/y Total sales (tt) , of which 4 052 5 226 29,0% - light products sales (tt) 2 2 743 3 400 24,0% - other refinery products sales (tt) 675 926 37,2% - pet-chem sales (tt) 572 859 50,2% - other products sales (tt) 62 41 -33,9% Retail sales of motor f
Slide 37: ORLEN Deutschland
ORLEN Deutschland Financial highlights Q3’05 vs. Q3’04 Financial highlights, PLN m Q3’04 Q3’05 y/y Comment Total assets 1 648 1 485 -9,9% zRevenue increase as a result of product Equity 516 459 -11% price increases and volume increases, PLN m mainly at STAR sites Revenue 2 241 2 390 6,6% zDecrease o
Slide 38: Petrochemical products market
Petrochemical products market from January, 1st 2004 to October, 28th 2005 Ethylene Propylene EUR/tone 900 EUR/tone 900 800 800 700 700 600 600 500 500 400 400 362 257 311 307 289 300 254 273 300 262 230 200 172 180 193 191 200 164 164 117 100 100 0 0 1-Jan-04 1-Apr-04 1-Jul-04 1-Oct-04 1-Jan-05 1-A