ORLEN Spolka Akcyjna · GPW:PKN
ORLEN Spolka Akcyjna — PKN Orlen — FY2004 Earnings Presentation
32 slides from ORLEN Spolka Akcyjna's earnings presentation, Mar 2, 2005
Slide 1: Financial results: FY 2004 and financial assumptions for the 2005 plan
PSG\JAN05\EP\K2_OVERVIEW(01).PPT Financial results: FY 2004 and financial assumptions for the 2005 plan Igor Chalupec, CEO 2 March 2005 1
Slide 2: Financial results 2004: highest net profit in PKN ORLEN's history
Financial results 2004 The highest net profit in PKN ORLEN’s history Key financial data 20041 Operating data 2004 z ROACE2 19.0% z Cost cutting5 PLN 637 m z EBITDA PLN 4.0 bn z Wholesale volume sales6 + 8.0% z Net profit3 PLN 2.4 bn z CAPEX PLN 1.5 bn z Utilisation ratio7 90.0% z Operating cash flow
Slide 3: Agenda
Agenda z Summary of 2004 financial results z Assumptions for 2005 financial plan z Supporting slides 3
Slide 4: Macroeconomic environment in 2004
Macroeconomic environment in 2004 Extraordinary favourable conditions in oil & gas business Refinery margin $5.6/b average in 2004 Exchange rate average in 20041 Increase of 84% 2004/2003 2) 1) 5.0 12 2004 2 2003 3 4.5 10 8 4.0 6 3.5 4 3.0 PLN/USD 2004 PLN/EUR 2004 2 2.5 0 01.04 02.04 03.04 05.04 06
Slide 5: Revenues in segmental breakdown
Revenues in segmental breakdown Dynamic increase across all segments IFRS basis, PLN m 2003 2004 y/y Revenues increased by 25% across all segments Revenue total 24 412 30 535 25% due to growth of fuels of which sales volume by 5.6% and Refining1) 2) 10 066 14 337 42% growth of fuels and petrochemica
Slide 6: Operating cost
Operating cost Variable costs grew less than revenues IFRS basis, PLN m 2003 2004 y/y Increase due to the growth Raw m aterials and energy 11 005 12 407 12.7% of fuel prices in Orlen Deutschland (39.8%)1 Costs of goods for resale 7 537 10 594 40.6% External services 1 789 1 774 -0.8% Staff costs 1 0
Slide 7: Operating costs and segment split of operating profit
Operating costs and segment split of operating profit 2004 vs. 2003 Operating profit IFRS basis, PLN m 2003 2004 change improvement due to a favourable refining and Operating profit 1 267 2 777 119.2% petrochemical margin, the Brent/Ural of which differential and efficient Refining 1 1 213 2 292 89.
Slide 8: Profit and loss account
Profit and loss account Record net profit Reduction of distribution cost IFRS basis, PLN m 2003 2004 change and administrative expenses by PLN 187 m Revenue 24 412 30 535 25.1% (2004/2003) Cost of sales -19 986 -24 403 22.1% Distribution costs -2 259 -2 180 -3.5% Impact of foreign exchange rates on
Slide 9: Change in operating profit and net profit bridge
Operating activity main driver supporting 2.5x increase in net profit 2003 2004 PLN m 3 000 58 50 325 (21) 2 500 (326) (141) 2 000 1510 1 500 Operating profit increase more than 2 442 119% shows unquestionable 1 000 improvement in oil & gas sector 500 987 0 ∆ FOREX ∆ equity method ∆minority interets
Slide 10: EBITDA and ROACE in 2004 compared to adjusted 2003 results
EBITDA and ROACE in 2004 compared to adjusted 2003 results1 EBITDA (PLN bn) ROACE (%) 4.4 20.0 19.8 4.3 4.3 4.2 19.0 19.0 4.1 4.0 4.0 18.0 3.9 3.8 17.0 3.7 3.6 3.5 16.0 1 2003 - adjusted 1 2004 2003 - adjusted 2004 1)2003 results adjusted to 2004 results with: Brent price 38.3$/b, Brent-Ural differe
Slide 11: Refining segment
Refining segment1 Increase in operating efficiency through favourable macroeconomic conditions PLN m 2003 2004 3 500 62 17 151 219 3 000 (43) (96) 2 500 733 (155) Effective realisation of cost cutting programme (254) 2 000 (292) 737 Increase in the segment result 1 500 a result of favourable environ
Slide 12: Retail segment
Retail segment Improvement results due to cost cutting programme PLN m 2003 2004 7 18 200 (20) 150 (25) 141 Keeping favourable (87) 100 trend in non-fuel products sales (23) Poor Orlen Deutschland 50 result confirms the validity of current strategy 38 49 0 Deutschland segment result segment result O
Slide 13: Petrochemical
Petrochemical Almost double increase in segment result mainly due to petrochemical margins improvement 2003 2004 PLN m 26 1200 63 (28) (29) 1000 147 (98) (112) 800 (70) 493 Anwil took advantage of 600 favourable macroeconomic Due to the difference in conditions valuation of contribution to BOP in 20
Slide 14: Agenda
Agenda z Summary of 2004 financial results z Assumptions for 2005 financial plan z Supporting slides 14
Slide 15: Macroeconomic assumptions for 2005
Macroeconomic assumptions for 2005 Macro assumptions1 2004 2005 • Refinery margin2: 5.6$/b 3.4$/b • Brent/Ural differential: 4.1$/b 3.5$/b • Brent crude oil: 38.3$/b 36.0$/b • Exchange rate PLN/USD2 3.65 3.20 • Exchange rate PLN/EUR2 4.53 4.40 • Fuel consumption in Poland3: +8.1% +3.7% • Retail fuel
Slide 16: Operating assumptions for 2005
Operating assumptions for 2005 • Wholesale volume sales increase > 4% (gasoline, diesel, Jet, LHO) • Retail volume sales increase >5% (gasoline, diesel, LPG) • Petrochemical volume sales increase: >5% • Crude oil processed 13.1 m tonnes • Utilization rate1 96% • Main maintenance shutdowns: Olefins 6
Slide 17: Financial assumptions for 2005
Financial assumptions for 2005 Financial assumptions • EBITDA : > 14% referring to macro environment in 20041 • Personnel cost: below the 2004 level2 • CAPEX PLN 2.3 bn3 • Dividend: recommendation of 30% payout ratio4 Total increase in CAPEX of ca. PLN 800 m 2005 vs. 2004 777 2004 2005 722 622 639 3
Slide 18: Strategic actions in 2005
Strategic actions in 2005 Internal strengthening of home markets • Effective implementation of new retail • Preparation of new cost cutting strategy programme • Closing the Unipetrol acquisition • Centralization of procurement transaction programme • Implementation of a new • Preparation and impleme
Slide 19: PKN ORLEN share price performance against WSE indexes
PKN ORLEN share price performance against WSE indexes PKN ORLEN PKN Orlen price performance1 share price PKN Orlen share price Analysts Brokers’ comments2 comments Brokers’ comments Strategy will create shareholder value for shareholders 50 70 % yes 49 60 PKN ORLEN 48 50 47 46 40 neutral Strongly ag
Slide 20: Agenda – supporting slides
Agenda – supporting slides z Supporting slides z Macroeconomic environment z Operating and financial data for Q4 2004 z Cost cutting z ORLEN Deutschland 20
Slide 21: Macroeconomic environment in Q4 2004
Macroeconomic environment in Q4 2004 Exchange rates1 in Q4’04 Refining margin – $7/b average in Q4’04 Increase by 139% 2004/2003 5.0 12 2) 3) PLN/USD '04 PLN/EUR '04 4Q '2004 4Q 2003 4.5 10 8 4.0 6 3.5 4 3.0 2 2.5 0 10.04 11.04 12.04 10.04 11.04 12.04 Brent $44/b average in Q4 ’04 Brent/Ural differe
Slide 22: Macroeconomic environment in Poland
Macroeconomic environment in Poland Real GDP growth • Strong growth of GDP supports 6.9% stable economic tendency. Still high 6.1% unemployment rate – 19.1% 4.0% 4.7% 4.8% 4.5% (decrease by 0.9 pp y/y) 3.9% 2.3% • New car sales estimated decline to 10% to 318.1 thousand (2004/2003) 1q '03 2q '03 3q
Slide 23: Profit and loss account Q4 2004 vs. Q4 2003
Profit and loss account Q4 2004 vs. Q4 2003 IFRS basis, PLN m Q4 '03 Q4 '04 Revenue 6 908 8 313 Distribution and GA cost Cost of sales -5 775 -6 674 reduction by PLN 117 m Distribution costs -664 -585 Administrative expenses -243 -205 Other1 -74 -251 Increase in „other costs” Profit from operations
Slide 24: Operating highlights Q4 '04 vs. Q4 '03
Operating highlights Q4 ‘04 vs. Q4 ‘03 Opearing data1 Q4 '03 Q3 '04 Q4 '04 y/y q/q Total sales (tt), of w hich 4 112 4 053 4 041 -1,7% -0,3% light product sales 2 2 721 2 743 2 754 1,2% 0,4% - other refinery products sales (tt) 801 675 618 -22,8% -8,4% - pet-chem sales (tt) 563 579 569 1,1% -1,7% -
Slide 25: Refining, Wholesale and Logistics 4Q'04 vs. 4Q'03
Refining, Wholesale and Logistics 4Q‘04 vs. 4Q ‘03 IFRS basis, PLN m Q4 '03 Q3 '04 Q4 '04 y/y q/q Revenue 4 372 6 015 5 933 36% -1% Segment costs - total 4 133 5 245 5 392 30% 3% Profit 239 770 541 126% -30% Sales (tt) 2 473 2 524 2 519 2% 0% Changes Structure of volume sales ⇑ 2% y/y 2003 2004 Tota
Slide 26: Retail Q4 2004 vs. Q4 2003
Retail Q4 2004 vs. Q4 2003 IFRS basis, PLN m Q4 '03 Q3 '04 Q4 '04 y/y q/q Revenue 3 174 3 131 2 937 -7% -6% Segment costs - total 3 212 3 050 3 003 -7% -2% Profit -38 81 -66 74% -181% Sales (tt) 1 049 894 852 -19% -5% Changes Structure of volume sales Change in structure and volume sales 2003 2004 7
Slide 27: Petrochemical 4Q'04 vs. 4Q'03
Petrochemical 4Q’ 04 vs. 4Q’03 IFRS basis, PLN m Q4 '03 Q3 '04 Q4 '04 y/y q/q Revenue 1 164 1 474 1 496 29% 1% Segment costs - total 1 092 1 258 1 241 14% -1% Profit 72 216 255 254% 18% Sales (tt) 563 579 569 1% -2% Changes Structure of volume sales ⇑ 1% y/y 2003 2004 15% Total volume sales increase
Slide 28: Cost cutting programme in 2004
Cost cutting programme in 2004 Realisation of cost cutting programme in 2004 PLN m 800 700 600 500 Savings 400 800 (sustainable) 300 637 200 100 167 Investments and 0 acquisition costs -113 (one off) -100 -208 -40 -200 -300 Q4 '04 realisation 2004 realisation 2005 - plan - Acquisition 0 -35 - - Impl
Slide 29: Positive effect of cost cutting programme on 2004 results
Positive effect of cost cutting programme on 2004 results PLN m 637 m PLN1 600 119 70 500 112 120 400 77 300 171 200 378 100 227 0 Production Logistics Retail Other Acquisition and Implementation Other Impact on EBIT development costs Effects and costs of implementing cost cutting programme in 2004
Slide 30: Impact of cost cutting programme on Q4'04 results
Impact of cost cutting programme on Q4’04 results PLN m PLN 149 m1 140 18 18 120 26 100 2 85 1 80 41 60 40 64 20 46 0 Production Logistics Retail Others Acquisition and Implementation Impact on EBIT development costs 1) Cost cutting refers to 2002 cost base 2) Planed restructuring provision 30
Slide 31: ORLEN Deutschland: volume sales higher than average for the market
ORLEN Deutschland Volume sales higher than average for the market Trends in Q4’04 z Retail margin in Q4’04 at 4.1 cent/litre (decrease in Q4‘04 of almost 30% compared to Q3 ‘04). This had material effect on the financial results of Orlen Deutschland in Q4 ’04 and FY 2004. z Average retail margin in
Slide 32: ORLEN Deutschland Financial highlights 2004 vs. 2003
ORLEN Deutschland Financial highlights 2004 vs. 2003 Financial highlights, PLN m1 2003 y/y 2004 Total assets 1 628 -13% 1 416 Equity 571 -22% 447 PLN m2 Revenue 6 270 38% 8 634 Costs of sale - 5 946 40% - 8 315 Distribution and GA costs - 375 15% - 433 Profit/loss on sales - 51 121% - 114 Other reve