ORLEN Spolka Akcyjna · GPW:PKN
ORLEN Spolka Akcyjna — PKN Orlen — Q1 2005 Earnings Presentation
32 slides from ORLEN Spolka Akcyjna's earnings presentation, May 16, 2005
Slide 1: Consolidated financial results of PKN ORLEN S.A. Q1 2005 (IFRS)
Consolidated financial results of PKN ORLEN S.A. Q1 2005 (IFRS) Implementation of strategy initiatives progress Igor Chalupec, CEO Paweł Szymański, CFO 16 May 2005 1
Slide 2: Agenda
Agenda Summary of financial results and macroeconomic environment Strategy update Financial results Q1’05 Supporting slides 2
Slide 3: Financial results Q1'05
Financial results Q1’05 Key financial data Q1’05 1 Operating data Q1’05 z ROACE2 20.5% z Cost cutting5 PLN 216 m z EBITDA PLN 1,087 m 3 z Wholesale volume sales6 + 5.7% z Net profit PLN 631 m Q1’05/Q1’04 z Operating cash flow PLN 574 m z Retail volume sales7 - 0.8% Q1’05/Q1’04 z Gearing4 2.6% z Util
Slide 4: EBITDA and ROACE Q1'05 vs Q1'04
EBITDA and ROACE Q1’05 vs Q1’04 Comparison based on 20041 average market environment EBITDA (m PLN) ROACE (%) 1 176 25.0 1200,0 20.7 22.3 1 065 1000,0 20.0 800,0 15.0 600,0 10.0 400,0 200,0 5.0 0,0 0.0 Q1 2004 Q1 2005 Q1 2004 Q1 2005 Financial assumptions for 2005 - delivery on track Item Delivery a
Slide 5: Macroeconomic environment in Q1'05
Macroeconomic environment in Q1’05 Exchange rates average in Q1’05 Refinery margin $3.6/b average in Q1’05 Decrease of 14% Q1’05/Q1’04 5,0 PLN/USD PLN/EUR 1kw '2005 8 PLN/USD 2005 E PLN/EUR 2005 E 1kw 2004 7 2005 E 4,5 6 4,0 5 4 3,5 3 2 3,0 1 2,5 0 03 January 31 January 28 February 28 March 03 Janua
Slide 6: Agenda
Agenda Summary of financial results and macroeconomic environment Strategy update Financial results Q1’05 Supporting slides 6
Slide 7: Strategy update: Unipetrol
Strategy update: Unipetrol Unipetrol acquisition and integration with PKN ORLEN Schedule Actions 20 April 2005 z European Commission approval of z Preparation and delivery of MTO1 process in PKN ORLEN taking control of accordance with Czech capital market requirements Unipetrol z Management of integ
Slide 8: Strategy update: Unipetrol
Strategy update: Unipetrol Intellectual capital dedicated to the Unipetrol project Nearly 150 specialists are dedicated to the Unipetrol integration process. Over 60% of the team consists of PKN ORLEN employees, the remaining are legal and financial advisors as well as PR specialists. PKN ORLEN empl
Slide 9: Strategy update: Efficiency Improvement
Strategy update: Efficiency Improvement Efficiency improvement in the Capital Group – new procurement programme z Cost optimisation through purchase process centralisation z New procurement structure supports the preparation of the new cost-cutting programme z New Procurement Office in control of pr
Slide 10: Strategy update: Management by Objectives
Strategy update: Management by Objectives Management by Objectives (MBO) Programme Implementation Basic information about the project Programme assumptions z System MBO1 was prepared implementation, starting z Personnel are, in accordance with the new system, from 1 July 2005, in the whole company a
Slide 11: Strategy update: Restructuring of regional corporate structure
Strategy update: Restructuring of regional corporate structure Key restructuring goals include improved efficiency of back-office, decentralisation of sales management, and centralisation of back-office. Restructuring programme - rationale Actions to be taken Retail Retail z Shrinking of the market
Slide 12: Strategy update: Restructuring of regional corporate structure
Strategy update: Restructuring of regional corporate structure Voluntary Retirement Programme Professional Employment Package - possibilities Offer and the regulations z Acquisition of a service station by the employee z Self-employment – Authorised Distributor of Heating Oil 1. Finalization of empl
Slide 13: Agenda
Agenda Summary of Q1’05 financial results and macroeconomic environment Strategy update Financial results Q1’05 Supporting slides 13
Slide 14: Revenues by segment
Revenues by segment Dynamic increase has continued – refinery and petrochemicals are the leaders of improvement IFRS basis, PLN m Q1' 04 Q1'05 y/y Comment Revenue total 6 340 6 806 7% z Higher revenue was driven by of which growing product prices and Refining1)2) 2 724 2 990 10% increase in sales vo
Slide 15: Expenses
Expenses Operating costs grew by less than revenues IFRS basis, PLN m Q1'04 Q1'05 y/y Comment Raw m aterials and energy 2 595 3 269 26,0% z Increase in raw materials and Costs of goods for resale 2 260 2 197 -2,8% energy of 26% due to higher crude External services 390 370 -5,1% oil prices, volume p
Slide 16: Operating profit by segment
Operating profit by segment Visible improvement in results across all segments IFRS basis, PLN m Q1'04 Q1'05 change Comment Operating profit 527 808 53,3% z The significant increase in operating of which: profit was due to high refining margins, 1 Refining 429 562 31,0% the Brent/Ural differential,
Slide 17: Profit and loss account
Profit and loss account Record net profit reflected in the ROACE of 21% IFRS, PLN m Q1'04 Q1'05 change Comment Revenues 6 340 6 806 7,4% zReduction of operating costs caused by a Cost of sales -5 094 -5 325 4,5% decrease in distribution costs by 10% Distribution costs -544 -489 -10,1% z Increase of
Slide 18: Operating activity main driver of the net profit increase
Operating activity main driver of the net profit increase In m PLN Q1’04 Q1’ 05 800 36 22 700 41 (7) (7) (36) 600 (64) 280 500 Dividend of PLN 83 m from Polkomtel will be consolidated in Q2’05 (In 2004 400 dividend was paid in Q1) Favourable market environment for refinery and 631 300 petrochemical
Slide 19: Refining segment
Refining segment1) Increase in operating efficiency and exploitation of favourable macroeconomic conditions In m PLN Q1’ 04 1Q’ 05 900 22 21 800 (4) (7) 97 (10) 700 (28) 113 (48) 600 (114) 500 162 (71) Effective cost cutting 400 programme and sales increase in accordance with the plan 300 562 429 Se
Slide 20: Retail Segment
Retail Segment Improvement due to efficiency programme PLN m Q1’04 Q1’05 30 7 (7) 20 15 Cost cutting programme in (11) 10 accordance with the plan 25 (9) 4 0 After elimination of German activity the -16 effect is that retail segment results -10 increase to PLN 40 m -20 ∆ margin cost cutting other op
Slide 21: Petrochemical Segment
Petrochemical Segment Substantial performance increase due to petrochemical margin improvement Q1’04 Q1’05 PLN m 400 4 6 350 (5) 51 300 126 250 (64) 200 Very good petrochemical 330 150 market conditions 212 Exchange rates influenced 100 the operating result negatively 50 0 ∆ crude oil own consumptio
Slide 22: Cost Cutting Programme Results
Cost Cutting Programme Results Summary of Cost Cutting Programme effects – Q1’5 z Effects of initiatives realised in Q1’05 of PLN 216 m are Efficiency above target. improvement PLN 216 m Leader: Production. Logistics and Retail also contributed initiatives realised in accordance with the plan z Mana
Slide 23: ORLEN Deutschland
ORLEN Deutschland Price war damaging retail market Trends in Q1’05 z Strong competition and high crude prices in Q1 reduced the retail margin to the level of eurocent 2.7. A drop of 38% in relation to Q1’04. z Total volume sales of fuel increased in Q1’05 by 6% compared to Q1’04. There was a decreas
Slide 24: Agenda: Supporting slides
Agenda Supporting slides Summary of Q1’05 financial results and macroeconomic environment Strategy update Financial results Q1’05 Supporting slides z CAPEX in Q1’05 z Macroeconomic environment z Operating and financial data Q1’05 z Cost cutting settlement z ORLEN Deutschland 24
Slide 25: Investments in 1Q'05
Investments in 1Q’05 Focus on petrochemical activity CAPEX in Q1’05 PLN m 2004 2005 240 154 82 75 49 46 23 17 Production, Wholesale and Retail Petrochemicals Others Logistics 25
Slide 26: Macroeconomic environment in Poland
Macroeconomic environment in Poland Real GDP growth Comment 6.9% • Decrease of GDP points to slowdown of 6.1% economic trends. High unemployment 4.7% 4.8% 3.9% 4.0% 3.9% rate – 19.3% (increase by 0,2pp y/y) 3.0% 2.3% • Estimated decrease in new car sales of 33% (Q1’05 vs. Q1’04) 1kw '03 2kw '03 3kw
Slide 27: Operating highlights Q1'05
Operating highlights Q1’05 Operating data1 Q1'04 Q4'04 Q1'05 y/y q/q Total sales (tt) , of which 3 298 4 041 3 322 0,7% -17,8% - light products sales (tt) 2 2 238 2 754 2 311 3,3% -16,1% - other refinery products sales (tt) 447 618 395 -11,6% -36,1% - pet-chem sales (tt) 561 569 565 0,7% -0,7% - oth
Slide 28: Refining, wholesale and logistics
Refining, wholesale and logistics Q1’05 IFRS, PLN m Q1'04 Q4'04 Q1'05 y/y q/q Revenues 3 958 5 933 4 838 22% -18% Segment costs 3 529 5 392 4 276 21% -21% Segment profit 429 541 562 31% 4% Sales (tt) 1 933 2 519 1 960 1% -22% Changes Q1’05 vs. Q1’04 Product sales structure, volumes Increase in total
Slide 29: Retail
Retail Q1‘05 IFRS, PLN m Q1'04 Q4'04 Q1'05 y/y q/q Revenues 2 478 2 937 2 588 4% -12% Segment costs 2 494 3 003 2 584 4% -14% Segment profit -16 -66 4 n.a. n.a. Sales (tt) 752 852 746 -1% -12% Changes Q1’05 vs. Q1’04 Product sales structure, volumes Q1’04 Q1‘05 Decrease in fuel sales at CODO sites i
Slide 30: Petrochemicals
Petrochemicals Q1’05 IFRS, PLN m Q1'04 Q4'04 Q1'05 y/y q/q Revenues 1 285 1 496 1 495 16% 0% Segement costs - total 1 073 1 241 1 165 9% -6% Segment profit 212 255 330 56% 29% Sales (tt) 561 569 565 1% -1% Changes Q1’05 vs. Q1’04 Product sales structure, volumes Increase of segment result Q1‘04 Q1‘0
Slide 31: Production was front runner of the cost cutting programme in Q1'05
Cost cutting programme was undertaken by each segment of the company Production was front runner of the cost cutting programme in Q1’05 PLN m 40 43 216 36 97 Production Retail Logistics Others Total – after Q1’05 Effects of the programme realised in each segment in Q1’05 31
Slide 32: ORLEN Deutschland
ORLEN Deutschland Financial highlights Q1’05 vs. Q1’04 Financial highlights, PLN m Q1’2004 y/y Q1’05 Comment Total assets 1 662 -14% 1 432 zDecrease in equity connected with drop in exchange rate Equity 544 -15% 462 PLN/EUR PLN m z Visible decrease of PLN 20 m Revenue 1 928 -4% 1 844 in distribution