Unipetrol’s Q4 loss higher than expected

Unipetrol warned that Q4 2010 losses would be worse than Q3 losses, and they were more right than anyone expected

foto: © UnipetrolČeská pozice

Prague-listed Czech petrochemical group Unipetrol announced its fourth quarter 2010 results on Feb. 10 and showed a higher than expected net loss of Kč 68 million. Market expectations had been for a net loss between Kč 30 million–40 million.

Unipetrol, 63 percent owned by Poland’s PKN Orlen, had returned to profitability in early 2010 after a period of losses, but then went back into the red in the second half of the year due to worsening market conditions. At the end of January 2011 the company warned that Q4 operating profits (EBIT) would be lower than the previous quarter, and the refining segment’s Kč 27 million loss in EBIT that was largely due to the unplanned shutdown of one of their two refineries in Litvínov, which according to Jan Tomanik, analyst at Wood & Company Financial Services in Prague, in comments related to the announced results, cost Unipetrol Kč 70 million.

Questions remain though, and Tomanik stated that the question of whether the Litvínov closure was the sole cause of the refining segment’s losses will be addressed to management during a conference call later in the day. Overall, Tomanik’s assessment of the Q4 results was neutral, as various costs, such as the company’s Kč 169 million financial costs, had already been indicated in a previously published trading statement.

“Despite the marginally higher net loss for Q4 2010, we believe that the weak quarter was already priced in following the detailed guidance in the company's earlier published trading statement,” Tomanik commented.