Orlen (PKN) Q3 2024 earnings summary

Executive summary

• Solid operational results in Q3 2024 despite challenging macroeconomic conditions, with revenue declines mainly from lower refining margins, gas segment performance, and weaker product prices.

• EBITDA (excluding one-offs) reached PLN 8.1 billion in Q3, down only PLN 0.5 billion year-over-year, reflecting resilience; EBITDA LIFO for 9M 2024 was PLN 22,296m, down PLN 18,840m year-over-year.

• Strong operating cash flows supported by improved working capital management and absence of gas levy write-offs in Q3; net cash from operating activities for 9M 2024 was PLN 26,205m, down PLN 10,579m year-over-year.

• Major impairment losses in 2024, including PLN 16 billion in Q3 and PLN 4,763m for 9M 2024, mainly in Refining and Petrochemical segments.

• Continued focus on community outreach, sports programs, biodiversity initiatives, and integration of recent acquisitions.

Financial highlights

• Q3 2024 revenues: PLN 67.9bn, down from PLN 79.5bn in Q3 2023; 9M 2024 revenues: PLN 219,778m, down PLN 54,536m year-over-year.

• EBITDA (excluding one-offs) at PLN 8.1bn in Q3; EBITDA LIFO at PLN 8.8bn in Q3; 9M 2024 EBITDA: PLN 17,306m.

• Net result for Q3 2024 was PLN 188m, significantly down from previous year; 9M 2024 net profit was PLN 3,012m, down PLN 17,034m year-over-year.

• Capex in Q3 was PLN 6.8bn, down from PLN 7.9bn last year; 2024 CAPEX plan reduced by PLN 5bn to PLN 33bn.

• Net debt/EBITDA improved to -0.09x in Q3 2024; net financial indebtedness at PLN 820m as of 30 September 2024.

Outlook and guidance

• Expectation of continued normalization in refining margins, with $8 per barrel likely to be maintained through year-end.

• Retail and energy segments expected to deliver comparable results; refining and upstream segments anticipated to improve due to margin normalization and macro environment.

• Persistently tough market environment for petrochemicals; energy segment to benefit from regulatory improvements.

• Planned 2024 CAPEX reduced by PLN 2bn to PLN 33bn, with a total reduction of PLN 5bn versus the original plan.

• Future results will be influenced by geopolitical risks, energy carrier prices, inflation, and regulatory interventions.