ORLEN Spolka Akcyjna · GPW:PKN
ORLEN Spolka Akcyjna — PKN Orlen — Q3 2004 Earnings Presentation
26 slides from ORLEN Spolka Akcyjna's earnings presentation, Nov 15, 2004
Slide 1: Q3 2004 Results
Q3 2004 Results Consolidated , IFRS basis 15 November 2004
Slide 2: Internal strengthening supports Q3 '04 results
Internal strengthening supports Q3 ‘04 results z Increase in wholesale volume by 10.1%* y-o-y driven by long-term contracts with foreign companies z PLN 182 m savings in Q3 ‘04 due to cost cutting programme z PLN 837 m - net profit the highest quarterly profit in the company’s history z ROACE 18.3%*
Slide 3: Market environment in the oil & gas sector
Market environment in the oil & gas sector Favourable conditions Crude oil price, Brent (USD/b) Q3 ‘04 vs Q3 ‘03 44 Crude oil ⇑ 46.3% (y-o-y) 39 Averege in quarter to 41.57 USD/b 34 46.3% 29 24 Refinery margin ⇑ 134.6% (y-o-y) Averege in quarter Refinery margin *, Brent (USD/b) to 5.02 USD/b Q3 ‘04
Slide 4: 46% increase in crude oil price visible in 57% increase of refining revenues
46% increase in crude oil price visible in 57% increase of refining* revenues IFRS basis, PLN m Q3 '03 Q2'04 Q3 '04 y/y q/q Refining 2 620 3 362 4 124 57% 23% Poland 2 620 2 879 3 610 38% 25% Germany (without excise tax) - 194 231 - 19% excise tax - Germany - 289 283 - -2% Total revenues Retail 3 11
Slide 5: Operating costs: Visible cost cutting effect
Operating costs Visible cost cutting effect IFRS basis, m PLN Q3 '03 Q2 '04 Q3 '04 y/y q/q Raw m aterials and energy 2 774 2 939 3 541 27,6% 20,5% Cost cutting visible in 24,7% 4,5% 3.5% reduction in Costs of goods for resale 2 222 2 651 2 771 external costs External services 456 452 440 -3,5% -2,7%
Slide 6: Positive influence of cost cutting programme on Q3 '04 results
Positive influence of cost cutting programme on Q3 ‘04 results In m PLN PLN 182 m* 17 43 2 39 163 53 47 Production Logistics** Retail Others Acquistion Implementation Savings at and others cost EBIT level in Q3 ‘04 * Reduction costs vs 2002 costs base ** Reduction costs in secondary logistics is att
Slide 7: Cost cutting visible in higher operating profit
Cost cutting visible in higher operating profit IFRS basis, m PLN Q3 '03 Q2 '04 Q3 '04 y/y q/q Profit on sales 1 122 1 523 1 735 55% 14% GA expenses (232) (235) (202) -13% -14% Selling cost (569) (525) (528) -7% 1% Cost cutting visible in 13% GA cost Others* 29 (26) 10 -66% na reduction Operating pr
Slide 8: Net profit – cost-cutting and utilisation of favourable market conditions drives profit
Net profit – cost-cutting and utilisation of favourable market conditions drives profit In m PLN Q3 ‘03 Q3 ‘04 1000 70 ** 4 9 145 900 6* 800 7 0 700 600 665 500 837 400 0 300 200 253 100 0 ∆equity method ∆ Forex ∆ minorities ∆interest other ∆ taxes net profit ∆operating profit net profit one-off ite
Slide 9: Company generates positive free cash flow
Company generates positive free cash flow Operating CF Decrease in Sale of assets PLN 1,149 m ⇑ 16.4% debt PLN 69 m PLN 120 m * Purchase of assets Dividend and PLN 17 m interest 160 PLN 293 m 140 120 R&M 100 Retail 80 Pet-chem 60 Others 40 20 0 Organic investment PLN 420** m ⇓ -9,3% * others -> PLN
Slide 10: Refining & Wholesale: Margin and differential drives segment profit
Refining & Wholesale Margin and differential drives segment profit In PLN m Q3 ‘03 Q3 ‘04 36 23 1 000 900 800 65 36 265 33 0 18 700 600 500 285 400 0 770 300 Favourable market conditions and sales 200 313 volume increase 100 0 ∆ exchange ∆tax allowance one-off one-off other ∆ refining ∆ local pricin
Slide 11: Retail: Cost cutting drives segment profit
Retail Cost cutting drives segment profit In PLN m Q3 ‘03 Q3 ‘04 3 7 9 100 5 16 39 80 0 0 60 81 40 62 Focus on margins and cost cutting 20 0 ∆ Germany segment result segment result ∆ volumes ∆ cost cutting ∆ fuel margin ∆ non-fuel margin others one-off one-off 11
Slide 12: Petrochemical: Margin main drivers of segment profit
Petrochemical Margin main drivers of segment profit In PLN m Q3 ‘04 Q3 ‘03 300 2 4 250 37 64 0 200 150 129 216 100 0 50 54 0 ∆ Anwil ∆ volumes ∆ cost cutting segment one-off one-off segment ∆ margins others results result 12
Slide 13: Supporting slides: Market environment
Supporting slides Market environment 13
Slide 14: Market environment – Poland
Market environment – Poland Noticeable recovery in the economy Real GDP growth 7,0% z Visibleincrease of GDP proves 5E% 6,0% stable economic recovery. High 5,0% unemployment rate continues– 4,0% 18.9% (y-o-y) 3,0% 2,0% 1,0% z Estimated increase in new car 0,0% Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '
Slide 15: Supporting slides: Cost cutting programme
Supporting slides Cost cutting programme 15
Slide 16: Operating cost reduction in PKN ORLEN
Operating cost reduction in PKN ORLEN Fully realised plan for Q3 ‘04 In m PLN ~800 Savings (sustainable) 450-500 Investments and M&A (one-offs) 488 182 One-off spending - M&A -15 -35 -46 - - Implementation cost -2 -27 -18 - - Others -18* -33 -40 -40 % of target -35 -95 -104 -40 completed Q3 ‘04 Afte
Slide 17: Supporting slides: ORLEN Deutschland
Supporting slides ORLEN Deutschland 17
Slide 18: ORLEN Deutschland: Performance better than market in volume sales
ORLEN Deutschland Performance better than market in volume sales ¾ Trends in Q3 ’04 : • Retail margin in July and August remained at a high level. In September there was a drastic decrease of retail margin (over 30% compared to July). It has affected Q3 ’04 financial results. • Total volume of sales
Slide 19: ORLEN Deutschland Financial highlights Q3 '04
ORLEN Deutschland Financial highlights Q3 ‘04 Balance sheet - selected items Q3 '03 Q2 '04 Q3 '04 y/y q/q IFRS basis, m PLN Property plant and equipment 680 767 741 9% -3% Inventories 123 131 123 0% -6% Trade and other receivables 357 308 316 -11% 3% Cash and cash equivalents 384 384 421 10% 10% Tot
Slide 20: Supporting slides: Other data
Supporting slides Other data 20
Slide 21: Operating highlights
Operating highlights Increase of utilisation and headcount reduction IFRS basis, in m PLN 3Q '03 Q2 '04 3Q '04 y/y q/q Total sales, of w hich 4 034 3 548 4 053 0,5% 14,2% - light product sales (tt) ** 2 671 2 426 2 743 2,7% 13,1% - other refinery product sales (tt) 765 587 675 -11,8% 15,0% - pet-che
Slide 22: Profit & loss account
Profit & loss account Substantial cost reduction IFRS basis, m PLN Q3 '03 Q2 '04 Q3 '04 y/y q/q Revenues* 6 609 7 428 8 469 28,1% 14,0% Cost of sales* -5 487 -5 883 -6 734 22,7% 14,5% Distribution costs -569 -525 -528 -7,2% 0,6% Administrative expenses -232 -235 -202 -12,9% -14,0% Other 29 -126 10 -
Slide 23: Balance sheet: Low gearing – future M&A payments fully secured
Balance sheet Low gearing – future M&A payments fully secured IFRS basis, m PLN Q3 '03 Q2 '04 Q3 '04 y/y q/q Non current assets 10 704 10 621 10 617 -0,8% 0,0% Current assets, of which 6 532 7 916 8 582 31,4% 8,4% Inventories 3 002 3 365 3 496 16,5% 3,9% Cash and cash equivalents* 711 1 135 1 502 11
Slide 24: Refining & Wholesale
Refining & Wholesale Excellent segment performance IFRS basis, m PLN Q3 '03 Q2 '04 Q3 '04 y/y q/q Revenue 4 026 5 291 6 015 49% 14% ⇑ 146% y-o-y Segment costs - total 3 713 4 637 5 245 41% 13% Increase in profit as a result of higher margin and higher Profit 313 654 770 146% 18% volume sales Sales (
Slide 25: Retail
Retail Cost cutting drives segment profit IFRS basis, m PLN Q3 '03 Q2 '04 Q3 '04 y/y q/q Revenue 3 239 3 037 3 131 -3% 3% ⇑ 31%, y-o-y Segment costs - total 3 177 2 984 3 050 -4% 2% Increase in segment profit as a Profit 62 53 81 31% 53% result of cost reductions Sales (tt) 1 163 847 894 -23% 6% Str
Slide 26: Petrochemical segment
Petrochemical segment Dynamic profit growth ⇑ 300%, y-o-y IFRS basis, m PLN Q3 '03 Q2 '04 Q3 '04 y/y q/q Revenue 1 085 1 220 1 474 36% 21% Increase in segment profit Segment costs - total 1 031 1 103 1 258 22% 14% mainly due to the favourable Profit 54 117 216 300% 85% market environment and Sales (