PKN and Lotos posted high quarterly earnings

Poland's two refiners, PKN Orlen and Lotos posted quarterly earnings beating forecasted figures due to high crude oil prices and increased refining volumes.

PKN profits jumped 46 percent to zł.1.67 billion from forecasted zł.1.27 billion, while Lotos earnings increased by 66 percent to zł.395 million from projected zł.278 million, as expected by analysts and Reuters poll, respectively.

"The results are much better, so despite yesterday's gains both stocks should outperform the market today," said Pawel Burzynski, analyst at BZ WBK brokerage to Reuters.

Orlen's profits benefited from zł.845 million in inventory revaluations due to crude oil prices, while Lotos benefited zł.211 million. Lotos also benefited from hedging against the strengthening złoty, which helped the company adjust its refining margins.

Crude oil prices have reached an all time high last month and the recent reversal may affect future profit, but analysts said that the falling crude oil prices may help companies with core refining operations.

"We are not concerned about the negative effect of the recent drop in the oil price," Deutsche Bank analyst Gergely Varkonvi wrote in a note to client. "Potential inventory losses in the third quarter should be offset by positive changes in the cost of refinery fuel, petrochemical and retail margins," he said.

Source: Reuters