The ORLEN Group ended the third quarter of 2024 with a very good operating profit EBITDA LIFO, despite a significant worsening of the macroeconomic environment, including a 65 percent drop in refining margin (y/y). The result, corrected for the influence of one-time events and adjustments, amounted to PLN 8.1 billion and was close to the one recorded a year ago (PLN 8.6 billion). However, the group made further write-downs updating the value of fixed assets by PLN 3.5 billion, mainly related to the investment decisions of the previous management board. In the first nine months of this year, ORLEN Group allocated PLN 22.1 billion for investments supporting asset modernisation, energy transformation and enhancing Poland’s energy security.
“In the past quarter, we launched the largest investment program in history to modernise the power network in northern Poland. We also completed a significant part of the work allowing the Baltic Power farm to be connected to the mainland. Regardless of this, we continued the process of testing and write-downs to substantiate the value of the ORLEN Group. They revealed multi-billion losses, resulting from low quality management in previous years. Despite unfavorable macroeconomic conditions, we achieved financial results comparable to the previous year,” says Ireneusz Fąfara, CEO of ORLEN.
In the third quarter of 2024, ORLEN Group achieved:
– Revenues of PLN 67.9 billion
– EBITDA LIFO of PLN 8.8 billion
– Cash flow from operating activities of PLN 8.6 billion
– Corporate function costs were limited to PLN 394 million
The negative macroeconomic environment, including a 65% drop in refining margins (y/y) and a strengthening of the Polish zloty against the dollar, primarily affected the operating profit EBITDA LIFO of the refinery segment in the third quarter, which amounted to PLN 520 million. The refineries in Poland, the Czech Republic and Lithuania processed 10.1 million tons of crude oil during this time.
EBITDA LIFO of the petrochemical segment amounted to (-) 118 million PLN. Despite a slight increase in sales by 3 percent, the segment’s result remains under pressure due to unfavorable market and macroeconomic factors.
In the third quarter, the energy segment posted an EBITDA LIFO of PLN 949 million, influenced by higher distribution and energy sales margins and lower CO2 emission costs. Currently, 77 percent of the ORLEN Group’s electricity is generated from renewable sources or in gas-powered units.
The retail segment generated an EBITDA LIFO of PLN 1,077 million, mainly due to an 8 percent increase in sales as a result of the increase in the number of petrol stations and the normalization of fuel margins compared to last year. The ORLEN network has increased by 358 petrol stations over the year, bringing the total number of ORLEN petrol stations to 3,511 across seven European countries.
In the extraction segment, a profit of PLN 3.3 billion was made possible by the lack of write-offs for the Fundus Wypłaty Różnicy Ceny (Price Difference Payment Fund) and the increase in business scale in Norway. The company increased hydrocarbon production by 22 percent (y/y), to approximately 190 thousand boe/d.
The gas segment made an EBITDA profit of PLN 3.4 billion in the third quarter, achieved at lower (y/y) trading margins and a negative macro impact. Gas imports were 11 percent lower than in the same period of the previous year, with LNG making up 51 percent of the delivered volume.
“In a negative macroeconomic environment, we showed that not only can we achieve very good results, but also maintain a stable financial situation and meet our obligations to shareholders. In December, a dividend will be paid for the past year totaling PLN 4.8 billion. At the same time, the results of 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 about PLN 5 billion less than estimated at the beginning of the year. We focus on the most promising investments which will tangibly contribute to the increase in the company’s value,” says Magdalena Bartoś, Vice President of ORLEN for Finance.
In the third quarter of 2024, ORLEN Group generated PLN 8.6 billion in cash flows from operations, PLN 2.65 billion more (y/y), and the net debt to EBITDA operating result ratio at the end of the last quarter was at 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, while also reflecting the high potential for carrying out transformative investments. ORLEN maintained the highest historical rating assessments – A3 granted by Moody’s Investor’s Service and “BBB+” granted by Fitch Ratings Agency.
Last quarter, the group focused on carrying out significant investments and development projects. As a result of these activities, the ORLEN Group will implement a strategic investment program for the development of the energy distribution network in northern and central Poland. The European Investment Bank will provide funding for this purpose, granting the group PLN 3.5 billion for this purpose. One of the largest transactions on the Polish renewable energy market was also finalized to increase production capacity from renewable sources by over 300 MW. There are plans for the sale of HVO100 fuel to start in the first quarter of 2025 in the Czech Republic. Meanwhile, in Poland, an installation for its production is being created in Płock, pending regulations in this area.
As part of efforts to strengthen energy security, gas extraction in Norway was increased by more than 45 percent (y/y). The company also received its 300th shipment of liquefied natural gas. Since the launch of the terminal in Świnoujście, nearly 24 million tons of raw material have arrived this way. ORLEN also entered into a five-year agreement with Lithuanian KN Energies (previously Klaipedos Nafta) for the exclusive use of the small scale LNG reception and transshipment terminal in Klaipeda. The gas received at this terminal will supply consumers in north-east Poland and will also reach the Baltic country markets.
Source: https://managerplus.pl/grupa-orlen-w-iii-kwartale-2024-roku-osiagnela-wyniki-zblizone-do-iii-kw23-r-34640