Unipetrol’s main subsidiaries reported their Q3 results yesterday. Apart from Spolana, which posted a larger-than-expected loss, the results were marginally better than we had expected.
Ceska rafinerska (51%-owned refinery) remained under pressure due to weak refinery margins, and the negative pressure was compounded by the Czech crown’s strengthening against the US dollar. Lower sales to Chemopetrol (100% owned by Unipetrol) in terms of volume and prices had a negative impact, too, as well as a production interruption due to the summertime flooding. Efforts to increase market share on domestic and foreign markets led to increased volume sales (16% y-o-y), but also result in lower pricing power.
Chemopetrol (100% owned) suffered from rising input prices and weak output prices (demand for petrochemical products lags behind the supply on European markets); lower supplies to flood-damaged Spolana (82% owned by Unipetrol) took a toll as well.
Benzina (94%), a fuel retailer, realized lower average fuel prices, while keeping the volume sales at approx. the same level.
Paramo (73%), a small refinery, reports pretty good results after one year of restructuring despite the negative impact of crude-oil prices.
Spolana (82%) PVC, and special. chem. producer, still has plenty of room for the restructuring of its operations, it was also hit hard by the August floods.
Chemopetrol Kaucuk
Q3 2002 Q3 2001 change Q3 2002 Q3 2001 change
Revenues 13,039 17,539 -26% Revenues 5,588 6,091 -8%
EBITDA 629 1,464 -57% EBITDA 584 819 -29%
EBIT -110 666 -117% EBIT 140 316 -56%
Pre-tax Income -109 367 -130% Pre-tax Income 146 169 -13%
Net Income -60 367 -116% Net Income 141 162 -13%
Benzina Ceska rafinerska
Q3 2002 Q3 2001 change Q3 2002 Q3 2001 change
Revenues 9,623 10,731 -10% Revenues 29,475 36,136 -18%
EBITDA 657 736 -11% EBITDA 85 1,257 -93%
EBIT 307 382 -20% EBIT -811 622 -230%
Pre-tax Income -32 44 -172% Pre-tax Income -1,049 569 -284%
Net Income -32 45 -171% Net Income -831 432 -292%
Paramo Spolana
Q3 2002 Q3 2001 change Q3 2002 Q3 2001 change
Revenues 3,480 4,293 -19% Revenues 3,028 5,132 -41%
EBITDA 226 496 -55% EBITDA 292 460 -36%
EBIT 115 363 -68% EBIT -118 18 -748%
Pre-tax Income 101 142 -29% Pre-tax Income -213 -149 43%
Net Income 101 142 -29% Net Income -213 -149 43%
We believe that a new Unipetrol tender sale will likely be called by the government soon, following the recent withdrawal of Agrofert, the tender winner, from the late stages of the current tender. Apart from the increasing weight of Unipetrol fundamentals, the prospect of the entry of a credible strategic investor into the holding is likely to drive the stock now. Consequently, we have revised our short- and long-term recommendations for Unipetrol stock from hold to accumulate, with a target price of CZK 93 per share.
Jiri Soustruznik