Orlen's lean quarter

The largest domestic oil company, PKN Orlen, posted a 2006 Q1 net profit of zł.365 million, 45 percent below the company's performance in the same period last year.

"The reason for this was the unfavorable macroeconomic environment. The most painful was the fall in refinery margins and unfavorable price differences between Ural and Brent oil. During the three months our operating results were also affected by limited gas supplies due to the very severe winter," Igor Chalupec, PKN Orlen CEO, said at a conference.

"The announcement is a big disappointment and looks like the strongest-ever profit warning issued by the company. No one had expected that their results would be so weak," Sebastian Siejko of CA IB Securities told Reuters.

The company estimates that because of adverse weather conditions its EBIT fell by zł.110 million. The operating result was also affected by Ural-Brent crude price differentials and refinery margins, which were almost 30 percent lower compared to Q1 2005. The falls cost Orlen zł.138 million and zł.133 million respectively.

Even though the year-on-year results showed a decrease in net profit, the figure grew by almost 16 percent over Q4 2005, when the company posted a net profit of zł.314 million. Orlen is also sticking to its annual market prognosis, stressing that the growing sales volume in almost all areas of the group's operations show that prospects are good under the more favorable macroeconomic conditions of Q2 2006.