ORLEN Spolka Akcyjna · GPW:PKN
ORLEN Spolka Akcyjna — PKN Orlen — Q3 2003 Earnings Presentation
21 slides from ORLEN Spolka Akcyjna's earnings presentation, November 2003
Slide 1: 3Q 2003 Results: Restructuring yields significant results
3Q 2003 Results Restructuring yields significant results November 2003
Slide 2: Financial highlights
Financial highlights Operating cash flow almost PLN 1 bn IFRS basis , in PLN m 3Q 03 3Q 02 change l Surge in revenues due to Revenue 6 609 4 691 40,9% EBIT 350 285 22,8% consolidation of German activities EBITDA 651 578 12,6% l First effects of cost-cutting visible Net profit 253 176 43,8% in increa
Slide 3: Market environment in oil & gas sector
Market environment in oil & gas sector Satisfactory margin level Crude oil price, Brent (USD/b) 30 l Stable demand for crude in OECD countries (y-o-y) 28 5,5% l Average increase in crude oil (Brent) 26 in 3Q by 5.5% from USD 26.94 to USD 28.41 (y-o-y) 2002 2003 24 l Increase in Refinery Margin by 88
Slide 4: Market environment – Poland
Market environment – Poland Economic recovery on track Real GDP growth 3.9E% 5% l Visible GDP growth confirms economic FY estimation: 3.0- 3.5% 4% recovery. Unemployment rate 17.5% 3% (down by 0.1 pp y-o-y, down 0.3 pp q-o-q) 2% l Increase in new car sales of 11.8%E 1% (3Q03 vs. 3Q02) 0% l Optimisti
Slide 5: Operating highlights
Operating highlights Wholesale market share in fuels regained l Increase in total retail sales due to IFRS basis, in PLN m 3Q 03 3Q 02 change consolidation of the German activities… Retail sales of motor 1 051 599 75,5% l … and domestic retail consumption as fuels (tt) a result of our network modern
Slide 6: Profit / Cash flow – visible effects of restructuring
Profit/ Cash flow – visible effects of restructuring in Ý operating CF Ý profitability IFRS basis, in PLN m 3Q 03 3Q 02 change l Increase in consolidated retail sales of PLN 1.9 bn due to Revenues 6 609 4 691 40,9% consolidation of German retail Cost of sale -5 487 -3 741 46,7% network…* Distributio
Slide 7: Balance sheet
Balance sheet Financial strengthening of PKN ORLEN’s position IFRS basis, in PLN m 3Q 03 2Q 03 change Non current assets 10 704 10 323 3,7% l Change in inventory structure Current assets, of which 6 532 6 430 1,6% and higher demand led to value Inventories 3 002 3 150 -4,7% decrease in inventory Cas
Slide 8: PKN ORLEN maintains its position on the Polish fuel market
PKN ORLEN maintains its position on the Polish fuel market Gasoline Diesel (tt) oil 1 400 1 400 1 200 1 200 1 000 66,7% 67,1% 1 000 59,2% 60,9% 59,0% 800 66,4% 800 600 600 400 400 200 200 0 0 III Q 2001 III Q 2002 III Q 2003E III Q 2001 III Q 2002 III Q 2003E PKN ORLEN's domestic sales of gasoline P
Slide 9: Satisfactory profitability in refinery and wholesale segment
Next quarter of satisfactory profitability in refinery and wholesale segment l Substantial shift between gasoline Refining and wholesale and diesel with LPG IFRS basis, PLN m 3Q03 3Q02 change l Increase in sales volume of Revenues 4 026 4 094 -1,7% Ekoterm (6% y-o-y) Total costs of the 3 713 3 776 -
Slide 10: Retail: margin optimization and domestic market recovery
Margin optimization and domestic market recovery visible in improved segment result Retail IFRS basis, PLN m 3Q03 3Q02 change l Next quarter of visible recovery in Revenues 3 239 1 163 178,5% domestic volumes* by 2.4% y-o-y Total costs of l Decreasing volumes of gasoline are 3 177 1 176 170,2% the s
Slide 11: Robust profitability of Pet-chems
Next consecutive quarter of robust profitability of Pet-chems Petrochemicals IFRS basis, PLN m 3Q03 3Q02 change l Increase of sales volume in Revenues 1 085 1 150 -5,7% monomers and fertilizers resulted Total costs of the 1 031 1 112 -7,3% in total sales growth of 16% segment Profit of the 54 38 42,
Slide 12: Outlook for 4Q 2003
Outlook for 4Q 2003 Retail – a small percentage increase in volumes with a slight decrease in unit margins on fuels. But a still visible increase in the margin of non-fuel products. A visible shift between gasoline and diesel and LPG Wholesale – price policy focused on maximisation total margin
Slide 13: Impact of Cost-cutting
Impact of Cost-cutting 13
Slide 14: Cost-cutting in line with our plan
Cost-cutting in line with our plan lPLN 49 m savings in 3Q03 , with PLN 4 m implementation cost lPLN 100 m savings in 2003 as a result of smooth start up of about 500 initiatives, including for example: lDecrease of catalysator utilisation lRenegotiation of services with external companies lReductio
Slide 15: PLN 100 m savings to realize in 2003
PLN 100 m savings to realize in 2003 in PLN m l~800 Savings Inwestmets and lCurrently we estimate implementation costs about PLN 100 m savings in l450-500 2003 lIn 3q03 we have recorded PLN 49 m savings l80-130 49 lEstimated cost of l-4 implementation to the l-20 l30-40 l-50 end of the year PLN 34 m
Slide 16: Number of initiatives started reflects effective cost-cutting implementation
The number of initiatives started reflects the effective implementing the cost-cutting programme Number of initiatives with first results Number of initiatives started lSavings Total number of initiatives potential in lSegment 2005 in PLN m lNumber of initiativeslStatus l% l60 l98 l100 lProduction a
Slide 17: Examples of initiatives with first results
Examples of initiatives with first results In PLN m lLevel o f costs in 2002 lSavings lRealisation of included in potential in full potential lInitiatives initiatives 2005 lCurrent achivments l Production and technology l Decrease of fresh lto be l9,2 lIII q. 2003 l Decrease in utilisation parameter
Slide 18: Production and logistics are pillars of the cost cutting programme
Production and logistics are pillars of the cost cutting programme in 2003 In PLN m l15 l~ 100 l-35 l40 l80 lLogistic lProductio lSale lCorporate lSavings n and centre estimation in technology 2003 * .Mainly caused by programme’s implementation costs (e.g. cost of Voluntary redundancy scheme) 18
Slide 19: Supplementary slides
Supplementary slides 19
Slide 20: Over 50% stations in Germany operating under new brand
Over 50% stations in Germany is operating under new brand Ø By the end of the year all planned stations in Germany will be rebranded Ø Net profit at a level of PLN 3.4 m Ø Recorded trend in 3q 2003 in ORLEN Deutschland: • Station with low margin and high volume: (previous: Eggert) – sales volume inc
Slide 21: Influence of ORLEN Deutschland and JV with Basell on consolidated results
3q2003 - influence of ORLEN Deutschland and JV with Basell on consolidated Balance Sheet and P&L Balance sheets - selected item s (PLNm ) 3Q2003 3Q2003 Germ any 2Q2003 Property, plant and equipment 9 653 680 9 449 Inventories 3 002 123 3 150 Trade and other receivables 2 710 357 2 734 Cash and cash