PKN Orlen reports drop in net profit
The Warsaw Stock Exchange (WSE)'s TechWIG index, after poor second-quarter showings throughout the IT sector two weeks ago, continued its downward slide but enjoyed modest recoveries at week's end.
The overall index, after losing more than 10% two weeks ago, was down only 1.77%, but some issues continued falling after already considerable share-price declines. Notable were computer systems integrator Optimus, down 2.41% for the week to zl. 162 after losing 11.5% during the previous week and Prokom, down 9.22% to zl. 187 per share.
Leading off telecom-related losses in the index, "Netia hit its lowest point since it debuted on the stock exchange," said Pawel Zach, senior research analyst at Citibank (Poland). Poland's largest private fixed-line operator saw share prices fall 14.02% last week to zl. 92.
Telekomunikacja Polska (TPSA) was up 1.95% to zl. 31.3 on the heels of 9.4% losses proceeding its privatization announcement two weeks ago. It lost 2.8% on Friday, however, Zach said, when analysts having scrutinized the agreement's details discovered restructuring would not match earlier expectations.
The broad-market WIG index was also down 1.59% to 18,795 points and saw volume plummet 13.35% to zl. 578.6 million ($134 million).
"Domestic investors who closely watch U.S. markets are negative about the short-term outlook on the WSE," Zach said.
The glad-not-to-own-it stock of the week, he said, was Ocean, a textile-oriented trading company that trades on the WSE's main market. In the last 12 days, the stock free fell 78% from zl. 16.9, he said. In weekly terms, it was down 48% to zl. 3.02.
"This is a good example how painful it can be holding a stock of a company that (reports) financial difficulties," Zach said.
Meanwhile, Polski Koncern Naftowy Orlen (PKN) was down 1.9% on the week finishing at zl. 21.10 after the company announced a drop in net profit in the second quarter of the year. PKN Orlen's net profit for the quarter stood at zl. 126 million ($28.6 million), 4.7% lower than the first quarter's net profit, which amounted to zl. 132 million ($30.7 million).
"PKN's results were different from what we expected," said Monika Cebula, analyst with COK Banku Handlowego. The primary reason for that was the creation of a zl. 40 million ($9.3 million) reserve for a fine levied last month by the antimonopoly watchdog UOKiK.
But the reserve wasn't the only factor that impacted PKN Orlen's net profit performance.
"The costs of integration also appeared," Cebula said, referring to the integration of Centrala Przemyslu Naftowego (CPN) and Petrochemia Plock, which merged in the second half of last year. "Also the market was more open due to the lower fuel duties."
According to Rafal Jankowski, analyst at CDM Pekao Securities, there were a number of reasons for the drop, but the most important one was "the higher financial costs (related to company debt)," he said. He said that huge fluctuations in the share price, which appeared in the second quarter, particularly influenced net profit.
In other news late Friday, software integrator Softbank and media conglomerate Agora cancelled their letter of intent to start a financial portal due to their incompatible visions for the internet project, Reuters reported. Each company, however, intends to launch its own financial internet site. Softbank will launch its site in October, while Agora did not state a specific starting date, the report said.
Softbank and Agora signed the preliminary agreement for the joint venture in late March, but scant details were provided. Wanda Rapaczynski, the president of Agora, previously said that details about the site would be released 90 days after the signing when the companies were supposed to finalize their plans.
Roseanne Gerin and Justyna Wrobel contributed to this article
