A significant decline in Orlen’s profits in 2024
When publishing the consolidated periodic report, Orlen reported that “after taking into account income tax in the amount of PLN 4,561 million, the net profit of the Orlen Group for 9 months of 2024 reached PLN 3,012 million and was lower by PLN 17,034 million year-on-year.” .
Sales revenues of the Orlen Group for the third quarter of this year amounted to PLN 67,936 million and was lower by PLN 11,521 million year on year. The company noted that the decline in sales revenues concerned the refining, energy and gas segments and was partially mitigated by an increase in revenues in the petrochemicals, retail and mining segments.
Referring to the profit or loss account for the third quarter of this year, Orlen calculated that “after taking into account tax charges in the amount of PLN 1,787 million, the net result of the Orlen Group reached PLN 188 million and was lower by PLN 4,368 million year on year.”
Operating profits
In a press release, the company noted that the Orlen Group ended the third quarter of this year “with a very good EBITDA LIFO operating profit”, despite a significant deterioration of the macroeconomic environment, including a decline in the refining margin by 65%. year to year.
“The result adjusted for the impact of one-off events and regulations amounted to PLN 8.1 billion and was similar to the result recorded a year ago, PLN 8.6 billion,” the information emphasized. Orlen added that the company made further write-downs on fixed assets in the amount of PLN 3.5 billion, “mainly related to the investment decisions of the previous management board”.
Orlen’s investments in modernization and energy transformation
At the same time, the company pointed out that during 9 months of this year, the Orlen Group allocated PLN 22.1 billion for investments supporting the modernization of assets, energy transformation, and increasing Poland’s energy security.
“Last quarter, we launched the largest-ever investment program for the modernization of the energy network in northern Poland. We also completed a significant part of the work enabling the connection of the Baltic Power farm with the mainland,” emphasized Orlen’s president, Ireneusz Fąfara, quoted in the company’s press office release.
Fąfara also mentioned that regardless of current implementations, the process of performing tests and write-offs was continued “to authenticate the value of the Orlen Group”. “They revealed multi-billion losses as a consequence of the low quality of management in previous years,” he said.
“Despite unfavorable macroeconomic conditions, we achieved financial results comparable to last year,” added the president of Orlen.
Factors affecting Orlen’s financial results
The company reported that in the third quarter of this year, cash flows from operating activities amounted to PLN 8.6 billion, compared to PLN 6 billion in the same period last year. It was also calculated that the costs of corporate functions were limited to PLN 394 million.
Orlen estimated in a press release that the EBITDA LIFO operating profit of the Orlen Group’s refinery segment – at the level of PLN 520 million in the third quarter of this year – in addition to the decline in refining margins, was also influenced by the strengthening of the Polish zloty against the dollar.
The company noted that it maintained a high level of refining capacity utilization, reaching 94%. The Orlen Group’s refineries in Poland, the Czech Republic and Lithuania processed 10.1 million tons of crude oil during this time. In Poland, the result was 6% higher. year-to-year fuel yield as a result of a lower share of sulfur-laden crude oil in the processing structure.
Referring to LIFO EBITDA in petrochemicals, which amounted to minus PLN 118 million, Orlen explained that the result of this segment, despite a slight increase in sales by 3%, remains under pressure due to unfavorable market and macroeconomic factors.
Increase in installed capacity and electricity production
In turn, in the case of the result of the energy segment, the company assessed that it confirmed “the validity of the Group’s strategic development in this direction” – in the third quarter of this year, this segment recorded LIFO EBITDA of PLN 949 million, “resulting from higher margins on distribution and sales energy and lower CO2 emission costs.
The total installed capacity in the Orlen Group was 5.6 GWe. During this time, 3.4 TWh of electricity was produced, 9% more. year to year. According to Orlen, this is the result of the recognition of new wind farms. The company also mentioned that currently 77 percent electricity in the Orlen Group is generated from renewable sources and in gas-powered units.
LIFO EBITDA of the retail segment amounted to over PLN 1.07 billion, and this result – as the company noted – was achieved, among others, thanks to 8% higher sales as a result of an increase in the number of gas stations and normalization of fuel margins compared to last year.
Development of the retail network and alternative refueling
The Orlen Group’s network of stations expanded by 358 stations during the year, with a total of 3,511 stations in seven European countries. Orlen pointed out that it “consistently invests in alternative refueling stations” – the number of these outlets increased by 131 year-on-year, to 832. As stated in the information, the number of non-fuel sales points is also growing – currently there are 2.7 thousand of them.
According to Orlen, the lack of an allowance for the Price Difference Payment Fund, as well as the increase in the scale of operations in Norway, allowed it to generate PLN 3.3 billion of EBITDA in the mining segment. The company also indicated that by consolidating the assets of the acquired company KUFPEC in Norway, it increased hydrocarbon production by 22%. year to year, to the level of approximately 190 thousand. boe/day (barrels equivalent – PAP).
Profits in the gas and mining segments
An EBITDA profit of PLN 3.4 billion was recorded in the third quarter of the Orlen Group’s gas segment. The company explained that this result was achieved with lower year-on-year commercial margins and a negative macro impact. At the same time, as Orlen reported, higher gas sales and the lack of a write-off for the Price Difference Payment Fund were beneficial for this segment’s result.
Gas imports were 11% lower at that time. year to year. LNG accounted for 51 percent. delivered volume. Gas storage supplies in Poland and abroad – as calculated by the company – at the end of the quarter amounted to 25.8 TWh, i.e. 98 percent. stock levels.
Net debt at a minimum level
“In a negative macroeconomic environment, we have shown that we can not only achieve very good results, but also maintain a stable financial situation and fulfill our obligations to shareholders,” said Magdalena Bartoś, Orlen’s vice-president for finance. She recalled that in December, Orlen’s dividend for the past year would be paid in the total amount of PLN 4.8 billion.
“At the same time, the conclusions from the review of investment projects allow us to optimize our portfolio and rationalize expenses, which will amount to approximately PLN 33 billion by the end of the year. This is approximately PLN 5 billion less than estimated at the beginning of the year,” Bartoś added. She emphasized that the Orlen Group is focusing “on the most promising investments that will actually contribute to the increase in the group’s value.”
In the third quarter of the Orlen Group, the net debt to operating result EBITDA ratio at the end of the last quarter was 0.04x. “This means that the company’s net debt is at the level of the annual EBITDA profit. This is one of the lowest ratios among companies in the entire sector, confirming the financial security of the Orlen Group and at the same time reflecting the high potential for implementing transformational investments,” the company noted.
At the same time, he recalled that Orlen maintained the highest ratings in history – A3 by Moody’s Investors Service and “BBB+” by Fitch Ratings. (PAP)
