MOSCOW (MRC) -- Poland's largest oil group PKN Orlen said on Wednesday it might temporarily shut down its Lithuanian unit after impairments for the loss-making arm took the firm's second quarter loss to a record 5.2 billion zlotys (USD1.7 billion), said Reuters.
The Polish state-controlled group's results were weighed down by in-group impairment charges. The writedown for Orlen Lietuva stood at 4.2 billion zlotys, while for PKN's Czech unit Unipetrol it was 711 million zlotys.
PKN said the situation in Orlen Lietuva worsened in the second half of 2013 because margins were at a 10-year low. The group wants to lower the unit's expenditure to below USD20 million a year and improve efficiency.
"The fourth and first quarters of the year are usually the worst for the refining sector - lowest margins and weak sales," PKN's deputy chief Slawomir Jedrzejczyk said in a statement.
"That's why we are bracing for the worst scenarios, which may happen at the turn of 2014 and 2015. The first step may be to temporarily shut down the Lithuanian refinery."
PKN struggles with a sector-wide problem of low margins, with the Lithuanian unit additionally hit by high transportation costs.
Analysts on average expected PKN to swing to a net profit of 353 million zlotys in the second quarter from a loss of 207 million zlotys a year earlier, helped by a revaluation of oil reserves. But even though the group beat market forecasts with sales of 28.65 billion zlotys in the second quarter, net profit before the writedown stood at 134 million.
PKN now sees its investments at an annual average of 4.1 billion zlotys until 2017, as it wants to focus on the more profitable upstream business. It is targeting oil output at 6 million of barrels of oil equivalent (boe) a year by 2017.
Polski Koncern Naftowy ORLEN S.A. (PKN Orlen) is a Polish oil and gas company. It has a lot of petrol stations in Poland, Germany, Czech Republic, Lithuania and Slovakia. It is the biggest company in Poland and one of the biggest oil and gas companies in Europe. Polish group PKN Orlen PKNA is a majority owner - 63% of czech polyolefins manufacturer Unipetrol.
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