Unipetrol announced it has shut down the cracking unit at Ceska Rafinerska’s (its 51% owned subsidiary) Kralupy refinery to repair the turbine, which might take for 2-3 weeks. Unipetrol could not provide estimate for the financial impact of the shutdown before resuming the production – Bloomberg reported.
Our view:
We see the news negatively as we see this unplanned shutdown could lower Unipetrol’s 4Q06 net profit by roughly CZK 100-150m. We beleive the financial impact of the current shutdown could be somewhat smaller than CZK 400m, which was reported by Unipetrol to be the impact of a 2-weeks maintenance shutdown at Ceska Rafinerska this October. Our assumptions were the following:
1) Current shutdown concerns only one of Ceska Rafinerska's refineries, whereas in October both Kralupy and Litvinov refineries were stopped for synchronizing their production.
2) Kralupy refinery has lower capacity (3.4mtpa) than Litvinov (5.5 mtpa), thus besides similar capacity utilization, the shutdown of Kralupy could have lower financial impact.
3) Majority of profit generated by Kralupy is expected to be lost for the period of shutdown since the cracking unit is responsible for the production of high margin motor fuels.