PGNiG released disappointing results

Polish gas concern PGNiG released disappointing second-quarter earnings due to rising import prices forcing the company to cut its production plans.

PGNiG asked Poland's energy regulator to allow a second price increase this year, and the company has also decided to cut its output in order for the firm's bottom line to improve. On Wednesday, PGNiG's stock has fallen to three-week low.

Analysts said that the two decisions are likely related since lower domestic extraction would force the company to rely on imports, which in the end would help its results.

"The market expects that the cut in production plans may hit the company's earnings this year," said Kamil Kliszcz, analyst at BRE Bank brokerage to Reuters.

PGNiG cut this year's gas expectation for production from deposits in Poland to 4.2 billion cubic meters from 4.6 billion. The company also scaled down 2009 plans by 8 percent. The gas monopoly buys 70 percent of Poland's 14.3 billion cubic meters of annual gas consumption from abroad, mainly Russia and sells it below cost.

The company said that it paid zł.400 million more for imports than last year because crude oil prices have reached an all-time high last month.

Source: Reuters