ORLEN Spolka Akcyjna · GPW:PKN
ORLEN Spolka Akcyjna — PKN Orlen — Q2 2005 Earnings Presentation
37 slides from ORLEN Spolka Akcyjna's earnings presentation, Aug 16, 2005
Slide 1: Consolidated financial results of PKN ORLEN S.A. Q2 2005 (IFRS)
PSG\JAN05\EP\K2_OVERVIEW(01).PPT Consolidated financial results of PKN ORLEN S.A. Q2 2005 (IFRS)1 Strategy implementation update Igor Chalupec, CEO Paweł Szymański, CFO 16 August 2005 1) Excluding Unipetrol results 1
Slide 2: Agenda
Agenda Summary of financial results and macroeconomic environment Strategy update Financial results Q2’05 Supporting slides 2
Slide 3: Financial results Q2'05
Financial results Q2’05 PKN ORLEN Group consolidated (excluding Unipetrol) Key financial data Q2’05 1 Operating data Q2’05 z ROACE2 14.4% z Cost cutting5 PLN 210 m ROACE (without provision) 22.8% z Wholesale volume sales6 + 12% Q2’05/Q2’04 z EBITDA PLN 921 m EBITDA3 (without provision) PLN 1,297 m z
Slide 4: Agreements with Agrofert and ConocoPhillips
Agreements with Agrofert and ConocoPhillips Key facts and action taken Summary of key facts Steps undertaken by the present Management Within the years 2003 – 2004 the then Management of PKN ORLEN The present Management asked independent experts to analyse all reached a number of agreements resu
Slide 5: EBITDA and ROACE Q2'05 vs. Q2'04
EBITDA and ROACE Q2’05 vs. Q2’041 Good results of PKN ORLEN despite one-offs (provisions) EBITDA (PLN m) ROACE (%) (in comparable market enviroment)1 (in comparable market enviroment)1 25,0 1 269 1200,0 21 Without 20,0 1000,0 956 provision2 16.4 Without 15,0 provision2 800,0 600,0 10,0 400,0 892 5,0
Slide 6: Macroeconomic environment in Q2'05
Macroeconomic environment in Q2’05 Exchange rate averages in Q2’051 Refinery margin $5.5/b average in Q2’053 Decrease of 7% Q2’05/Q2’04 5,0 PLN/USD PLN/EUR 10 2kw '2005 PLN/USD 2005 E 2 PLN/EUR 2005 E 2 2kw 2004 2005 E 4,5 8 4,0 6 3,5 4 3,0 2 2,5 0 1 1kw Apr i 1 1maj May 31 31maj May 30Jun 30 cze 1
Slide 7: Agenda
Agenda Summary of financial results and macroeconomic environment Strategy update Financial results Q2’05 Supporting slides 7
Slide 8: Further steps in the Unipetrol integration process
Despite one-off provision made it does not change Management’s positive opinion regarding the company’s presence in the Czech market, or the chances of a satisfactory return on this investment Further steps in the integration process Execution of Mandatory Tender Offer (MTO) ¾ On August 12th, 2005
Slide 9: Restructuring of the regional corporate structure
The successful restructuring of the regional corporate structure will improve management and internal efficiency Key restructuring goals include improved efficiency of the back-office, decentralisation of sales management, and centralisation of back-office. Activities performed Actions to be taken
Slide 10: Basell Orlen Polyolefins
Expansion of polyolefin installations at BOP is in line with PKN ORLEN’s strategy regarding investment in middle distillates and petrochemicals In October, 2005 new Polyethylene HDPE and Capacity (tonnes per year) Polypropylene installations will be effectively launched Activity after launch of
Slide 11: Key facts on other major strategic projects
Key facts on other major strategic projects performed by PKN ORLEN management Series of efficiency-improvement projects launched Project Actions – results So far in 2005 divestment of 8 companies was performed, the merger or acquisition of additional 9 was conducted, launch of a further 9 was init
Slide 12: International ventures and Tupras privatization
Aiming to become the regional leader, PKN ORLEN is also involved in international ventures All capital investments in which PKN ORLEN decides to participate have to fulfil various financial-operational requirements. In order to be involved in the investment it has to be in accordance with PKN ORLEN’
Slide 13: Agenda
Agenda Summary of financial results and macroeconomic environment Strategy update Financial results Q2’05 Supporting slides 13
Slide 14: Unipetrol transaction presented in the financial statement
Unipetrol transaction1 presented in the condensed consolidated financial statement of PKN ORLEN on August 16th 2005 Methodology of presenting the transaction Result of the acquisition3 of Unipetrol assets Financial item Value in PLN bn Unipetrol transaction (acquisition of 62.99% stake in Unipetro
Slide 15: Revenues by segment
Revenues by segment Dynamic revenues increase in refinery segment IFRS basis, PLN m Q1' 04 Q1'05 y/y Comment Revenue total 7 473 8 400 12% zHigher revenues due to higher of which volume sales and increase in Refining1) 3 362 4 244 26% product prices Poland 2 880 3 730 30% Germany (without excise tax
Slide 16: Expenses
Expenses Operating costs grew by less than revenues IFRS basis, PLN m Q2'04 Q2'05 y/y Comment Raw m aterials and energy 2 967 3 600 21,3% 21.3% z Increase of raw materials and energy by Costs of goods for resale 2 652 2 530 -4,6% -4.6% 21% as a result of crude oil price increase of 21.6% and increas
Slide 17: Operating profit by segment
Operating profit by segment Visible improvement in results across all core business segments IFRS basis, PLN m Q2'04 Q2'05 y/y Comments Operating profit 587 640 9,0% 9.0% z The significant increase in operating of which: profit was due to efficiency activities and 1 Refining 563 778 38,2% 38.2% favo
Slide 18: Profit and loss account
Profit and loss account EBITDA margin increase, excluding one-off item Comments IFRS, PLN m Q2'04 Q2'05 y/y Revenues 7 473 8 400 12.4% 12,4% zCost cutting visible in decrease of administrative expenses of PLN34 m Cost of sales -5 940 -6 617 11.4% 11,4% Distribution costs -519 -537 3.4% 3,4% z Increa
Slide 19: Net profit bridge Q2'05
Operating profit increase in Q2’05 impacted by one-off item In m PLN Q2’04 Q2’05 Excluding provision1 58 1 000 11 11 7 +376 1,003 800 86 204 Mainly dividend from (199) 53 Polkomtel of PLN 83 m 600 (83) Excluding the provision relating to business risk1 Financial income due to operating profit would
Slide 20: Refining segment
Refining segment1) Increase in operating efficiency and exploitation of favourable macroeconomic conditions In m PLN 2Q’04 2Q’05 1200 35 20 58 1000 (6) (9) 180 (45) 800 (139) Result of light product 217 sales increase (96) 600 400 778 External environment 563 supports operating profit 200 0 ∆ inland
Slide 21: Retail Segment
Retail Segment Improvement due to efficiency programme and lower provisions In m PLN Q2’04 Q2’05 100 1 5 90 80 (4) 9 70 29 60 50 Focus on margin maximization (27) 40 62 30 61 Main reason for last year’s loss was 20 due to Orlen Deutschland’s net asset 10 revaluation attributed to other operating cos
Slide 22: Petrochemical segment
Petrochemical segment Profit increase despite planed stoppage of olefin unit (modernization) Q2’04 Q2’05 In m PLN 400 350 23 41 300 (5) 250 49 (27) 200 106 150 (122) 205 100 Mainly due to planned 143 Favourable environment. maintenance shutdown of Higher cracks on main the olefin unit 50 petrochemic
Slide 23: Unipetrol: financial highlights
Unipetrol: financial highlights Consolidated financial results 1H’05 vs. 1H’04 (IFRS) Comments Financial highlights, th CZK H1’2004 y/y H1’05 Total assets 71 706 745 9.2% 78 318 284 z Decrease of net debt to equity from 33.3% to 24.7% proves Equity 28 917 104 29.0% 37 289 760 balance sheet stabiliza
Slide 24: Cost Cutting Programme Results
Cost Cutting Programme Results Delivery on track Summary of Cost Cutting Programme effects – Q2’05 z Initiatives implemented create sufficient potential to meet target of PLN 800 m1 . Efficiency improvement PLN 210 m z PKN ORLEN is continuously looking for new initiatives realised solutions to incre
Slide 25: ORLEN Deutschland
ORLEN Deutschland Visible improvement in retail margin and financial results Trend in Q2 2005 z Dynamic increase of retail margin by 96% in Q2’05 vs. Q1’05 may be seen as an improvement of the business climate in the sector, and raises hopes for the second half of 2005, even though strong competitio
Slide 26: Legal disclaimer
Legal disclaimer This presentation of the consolidated financial and operating results (“Presentation”) has been prepared by PKN ORLEN (“the Company”). Neither the Presentation nor any copy hereof may be copied, distributed or delivered directly or indirectly to any person for any purpose without th
Slide 27: Contact
Contact For more information please contact our IR Office: Press Office: phone: + 48 24 365 33 90 phone: + 48 24 365 41 50 fax: + 48 24 365 56 88 + 48 22 695 34 57 e-mail: ir@ORLEN.pl fax: + 48 22 695 35 27 e-mail: media@ORLEN.pl www.orlen.pl 27
Slide 28: Agenda - Supporting slides
Agenda Supporting slides Summary of Q2’05 financial results and macroeconomic environment Strategy update Financial results Q2’05 Supporting slides z CAPEX in Q2’05 z Macroeconomic environment z Operating and financial data Q2’05 z Cost cutting settlement z ORLEN Deutschland 28
Slide 29: Investments in 2Q'05
Investments in 2Q’051 Focus on petrochemical activity CAPEX in Q2’05 272 259 2Q'04 2Q'05 PLN m 125 93 73 48 50 27 Production, Wholesale and Retail Petrochemicals Others Logistics 1)Refers to PKN ORLEN Group excluding Unipetrol 29
Slide 30: Macroeconomic environment in Poland
Macroeconomic environment in Poland Real GDP growth Comment 6.9% • Slight increase of GDP in Q2’05 – better 6.1% results in manufacturing, trade and 4.7% 4.9% 3.9% 4.0% 4.0% construction industry. Weak consumer 3.0% demand. Decrease in unemployment rate 2.3% 2.1% – 18.0% (decrease by 1.1pp y/y). Q1
Slide 31: Operating highlights Q2'05
Operating highlights Q2’05 Operating data1 2Q 04 1Q 05 2Q 05 y/y q/q Total sales 1 (tt) , of which 3 553 3 322 3 782 13.8% 13,8% 6,4% 6.4% - light product sales (tt) 2 2 426 2 311 2 611 13.0% 13,0% 7,6% 7.6% - other refinery products sales (tt) 587 395 693 18.1% 18,1% 75,4% 75.4% - pet-chem sales (t
Slide 32: Revenue by segment
Revenue by segment1 Dynamic increase has continued – refinery is the leader of improvement IFRS basis, PLN m Q1 05 Q2 05 q/q I-VI'04 I-VI'05 y/y Revenue total 6 806 8 400 23% 13 813 15 206 10% of which Refining2) 2 990 4 244 42% 6 086 7 234 19% Poland 2 546 3 730 47% 5 154 6 276 22% Germany (without
Slide 33: Expenses
Expenses1 Operating costs grew by less than revenues IFRS basis, PLN m Q1 05 Q2 05 q/q I-VI'04 I-VI'05 y/y Raw m aterials and energy 3 269 3 600 10,1% 10.1% 5 562 6 869 23,5% 23.5% Costs of goods for resale 2 198 2 530 15,1% 15.1% 4 911 4 727 -3,7% -3.7% External services 370 451 21,9% 21.9% 861 820
Slide 34: Operating profit by segment
Operating profit by segment 1 Visible improvement in results across all segments IFRS basis, PLN m Q1 05 Q2 05 q/q I-VI'04 I-VI'05 y/y Operating profit 791 640 -19,1% -19.1% 1 070 1 431 33.8% 33,8% of which: 2 Refining 579 778 34,4% 34.4% 982 1 357 38,1% 38.1% Retail 2 62 n.a. -28 64 n.a. Petrochemi
Slide 35: Profit and loss account
Profit and loss account1 Record net profit after H1’05 visible in level of ROACE IFRS, PLN m Q1 05 Q2 05 q/q I-VI'04 I-VI'05 y/y Revenues 6 806 8 400 23,4% 23.4% 13 813 15 206 10,1% 10.1% Cost of sales -5 341 -6 617 23,9% 23.9% -11 074 -11 958 8,0% 8.0% Distribution costs 489 537 9,7% 9.7% 1 063 1 0
Slide 36: Main results of the cost cutting programme by segment
Main results of the cost cutting programme by segment The leaders of the programme are the largest segments 78 426 PLN m 38 95 40 52 210 67 43 31 186 36 89 216 97 Production Retail Logistics Others Total - after Q2’05 Result Q1 Result Q2 Effects of the programme realised in each segment in Q2’05 36
Slide 37: ORLEN Deutschland
ORLEN Deutschland Financial highlights Q2’05 vs. Q2’04 Financial highlights, PLN m Q2 2004 y/y Q2 2005 Comment Total assets 1 640 -10% 1 476 zDecrease in costs of sales, distribution, and GA costs of Equity 533 -13% 465 PLN 10m due to PLN m implementation of efficiency programme Revenue 2 246 0% 2 2