MOSCOW (MRC) -- Poland's top refiner PKN Orlen has reported a 55% fall in first-quarter net profit that missed forecasts, hurt by the oil price slump and a stronger Polish currency, as per Reuters.
The state-run company reported a bottom line of 337 million zlotys (USD89 million) compared with 795 million zlotys net profit expected in a Reuters poll. The oil price has fallen from peaks above USD100 per barrel in mid-2014 to around USD43 now.
Adjusted operating profit, or EBIT LIFO which removes the impact of crude oil price changes, fell 2 percent to 1.4 billion zlotys versus 1.35 billion zlotys expected by analysts.
Polish refineries' main assets include oil inventories. The difference between the price they paid for the oil and the current price has a significant effect on financial results.
The refineries use the LIFO method - last in first out - to show the current value of inventories and to evaluate current production at the current price of oil.
In the first quarter PKN's negative LIFO effect was 900 million zlotys due to weak oil prices and a strengthening of the Polish zloty against dollar.
"The LIFO (negative) effect is much higher than in the consensus and this is the major difference. Looking at the clean operational results, they are solid," said analyst at Haitong Bank Lukasz Janczak, who expected a negative LIFO effect of 400 million zlotys.
As MRC wrote before, PKN Orlen may review its strategy and long-term financial targets to adjust to market conditions, the company said in early February 2016. PKN's 2014-2017 strategy assumed its average annual EBITDA LIFO - or earnings before interest, taxes, depreciation and amortization, excluding the impact of oil prices changes - would be 5.1 billion zlotys (USD1.2 billion).
Polski Koncern Naftowy ORLEN S.A. (PKN Orlen) is a Polish oil and gas coSolvents plant shut bympany. 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.
MRC