PKN Orlen headed by Piotr Kownacki won the game. The company earned in chemical and petrochemical sectors. These are assets Lotos and its CEO Pawel Olechnowicz do not have. But this is only partial explanation. Because Lotos was also adversely affected by… oil.
PKN Orlen improved both sales (19.7 percent) and net income (27.6 percent). The stock gained 3.8 percent to PLN 55 on the news. Grupa Lotos, Orlen’s main rival in Poland, had sales 6 percent lower than in the previous quarter and net income 16 percent lower. The shares lost 1.9 percent to PLN 47.1.
“You can explain a lot with the differences in the refineries’ businesses. Orlen’s good results were supported with petrochemical and chemical units. Lotos does not have them. Refining business worsened in both companies”, Ludomir Zalewski, DM PKO BP analyst commented.
He stressed that Orlen increases income on retail sales of fuel. “Unfortunately Lotos generates losses on selling fuel on gas stations”, Ludomir Zalewski said. He was surprised to learn that Mazeikiu refinery had operating income.
“Although it is still processing only two thirds of the amount before the fire, it managed to generate PLN 12m of operating income”, Piotr Kownacki, Orlen’s CEO commented.
Oil also influenced the results. “In the second quarter, one could get high commissions selling fuel. Orlen made use of it. Its rival is focused on diesel production and could not increase gasoline production. Besides, Orlen is consequently implementing its cost cutting program”, Ludomir Zalewski added.
Grupa Lotos disappointed with its exploration business. The company explains that it has not managed to produce oil explored by its subsidiary Petrobaltic. Lotos was testing different oil kinds, including Brent and the one from Kuwait, which was more expensive than using Russian oil. Lotos giant investment plants did not influence second quarter results.
“But they will in the future”, Kamil Kliszcz, DI BRE Bank analyst commented.