Poland's largest fuels group Polski Koncern Naftowy Orlen (PKN Orlen) said last week that its second-quarter net profit fell 43% year-on-year to zł. 115 million ($28 million), when the company was hit by thin refining margins and weaker fuel prices.
The results, compiled under international accounting standards (IAS), came in below a market consensus forecast of zł. 175 million ($43 million). But earnings forecasts from analysts ranged widely from zł. 111 million ($27 million) to zł. 290 million ($70 million).
PKN Orlen - Eastern Europe's largest refi-ning group by capacity - also said its operating profit slumped 34% year-on-year to zł. 206 million ($50 million).
Analysts said that the weaker operating and bottom-line results were chiefly due to slimmer refining margins - a key indicator for the group that controls three quarters of domestic refining.
"The year-on-year difference in refining margins was a key factor behind the weaker result, and the weaker performance was to be expected," said Rafał Jankowski, a sector analyst at Bank Pekao in Warsaw.
Zbigniew Wróbel, PKN's chief executive officer, said he expected the effects of weak refining margins to continue into the third quarter, but to be partially offset in overall earnings by a cost-cutting program and higher retail margins. "We do not really expect miracles in the third quarter, but we believe that we will buck the trend," he said.
PKN shares, already under selling pressure after the company reported poor second-quarter results, according to Polish accounting standards last Wednesday, shed 3.2% of their value last Tuesday, closing at zł. 15.3.
- Reuters
