PKN Orlen enjoyed very good macroeconomic conditions in 2Q12 (probably unsustainable in 2H12) although the result in the period is likely to be marred by the LIFO effect and the weaker Polish zloty, CFO Slawomir Jedrzejczyk told reporters yesterday.
Mr Jedrzejczyk’s comment simply reiterates the words of CEO Jacek Krawiec from last week. In our view, the market is generally aware that underlying earnings will be superb for refiners in 2Q12 due to the prolonged refinery turnaround period and the falling crude oil price (both positive for margins). Admittedly, however, analysts’ estimates for fullyear 2012 have yet to reflect these positive developments. As Mr Jedrzejczyk highlighted, the firm’s reported earnings will be slapped by massive revaluation losses on FX loans (i.e. the weak zloty) and inventories (i.e. falling crude) in 2Q12. PKN will likely publish its usual monthly operating update for June next week, which will provide solid guidance for how good 2Q12 has been for the company.