Overall, the 9M figures somewhat outperformed our expectations on the operating level, while they were neutral on net level. The y-o-y performance comparison of most of the companies in the group is influenced by (i) the changed market conditions (especially oil market development with a consequent impact on the downstream market segments) and (ii) increased operating efficiency in some of the influenced companies (iii) a new operating model for Ceska rafinerska (51% owned by Unipetrol), for which Unipetrol rafinerie (100% owned by Unipetrol) has been carrying out sales and marketing activities on behalf of Unipetrol since August 2003.
Ceska rafinerska now posts stable revenues and stronger margins (it collects a pre-defined refining fee), its product structure is shifting from end products towards petrochemical inputs (the QIII accounting figures were also influenced by receivable and inventory value adjustments). In Paramo, a small refinery, the post-acquisition restructuring is reflected in its performance; y-o-y development is, similarly as in the rest of the companies, largely influenced by the feedstock price increase driven by the oil market and the sensitiveness of the output prices to this factor.
The new arrangement enables the highly leveraged fuel retailer Benzina to increase volumes sold, especially on the low-margin wholesale market; its profitability remains poor though, largely reflecting intensive competition from the other retailers (its QIII profits were also hit by the creation of a reserve related to an anti-trust fine of CZK 98m, currently being legally challenged by the retailer).
The plastics producer Kaucuk reports a y-o-y rise in sales and profits, reflecting strong demand for its products, which is enabling the company to reflect rising input prices in the prices of its products and keep capacity utilization at high levels. The similar holds for Chemopetrol (olefins, polyolefins), its y-o-y performance improvement also being driven by increased volumes sold (PE, PP) and overhead savings. Operational restructuring is strongly reflected in the results of Spolana (PVC).
The results are mostly relevant for those investors who do not want to excise a post-privatization buy-out option. Still, since this would be done with the intention of getting exposure to operational and ownership restructuring of Unipetrol group under the management of PKN Orlen, current quarterly results are of limited importance even to them.
Tomáš Gatěk, Patria Finance