PKN: Conference call summary

PKN held a conference call yesterday. The major points discussed are as follows:
-An earlier crude oil delivery increased PKN’s working capital need and lowered operating cash flow in 1Q06 , which will be balanced out in the following quarter (April crude oil need arrived by the end of March instead of the usual beginning of month delivery time)

-Installations were not working properly at BOP, putting pressure on petrochemical profits in 1Q06 -Due to the harsh winter the own crude oil consumption was high, resulting in PLN60m additional costs

-Part of the Capex was postponed to the following quarters due to the harsh winter. Only PLN 264m was spent for capex versus the full year plan of PLN 2.7bn.

-The Company’s savings program OPTIMA is seen on the right track by the Company. Out of the targeted PLN 200m savings scheduled for 2006, PKN has already saved PLN 54m in 1Q06. OPTIMA targets PLN 600m savings until 2009

We reiterate our Buy recommendation on the stock and aour fair value estimate of PLN 70.5.