PKN ORLEN Capital Group
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PKN ORLEN Capital Group December 2012 1 Agenda PKN ORLEN – history and growth strategy Refining / Petrochemical / Retail – core business Upstream / Energy – growth segments Summary 2 From domestic leader to international player Domestic Business to 2002 „Internationalization” 2002-2005 Regional Business 2006+ Estonia Estonia Estonia Latvia Latvia Latvia Lithuania Lithuania Lithuania Poland Poland Poland Germany Germany Germany Czech Republic Czech Republic Czech Republic 1999 2002 2006 + PKN was created as a merger of Expansion into German retail market. Acquisition of Lithuanian refinery - Mazeikiu Nafta (from 2009 ORLEN Lietuva). Petrochemia Plock (Polish largest Joint venture with Basell Orlen refinery) with CPN (Polish largest Polyolefins. Implementation of segmental management. retailer). Implementation of two-tier branding IPO on Warsaw Stock Exchange and strategy in retail in Poland and the Czech London Stock Exchange - 30% equity. Republic. 2005 Introduction of the new brand ORLEN. CAPEX, OPEX, working capital and Acquisition of majority stake in Unipetrol headcount optimization. (Czech holding). 2000 Launch of petrochemical PX/PTA complex. Implemantaion of PKN ORLEN Retail Strategy of ORLEN Capital Group for 2013- Second public offering on WSE and Sales Development Plan for Poland. LSE increasing free float up to 72%. 2017. 3 Leading refining & petchem company operating in the biggest market in CEE PKN ORLEN – POLISH KEY PLAYER IN CEE LEADING DOWNSTREAM COMPANY Strategic location: on key pipeline network with an access to the crude oil sea terminals in Gdańsk (Poland) and Butinge (Lithuania). 7 refineries: Poland (the largest and highly advanced in Plock), Lithuania and the Czech Republic. Processing REBCO crude oil (the most economic), but capable to process any kind of crude oil in all refineries. Petrochemical assets fully integrated with the refining. Ca. 2 700 filling stations: Poland, the Czech Republic, Germany and Lithuania. SHAREHOLDERS STRUCTURE KEY DATA State Treasury OPERATIONAL (mt/y): Throughputcapacity ca. 31.0 27,52% Petrochemical production ca. 6.5 FINANCIAL (PLNbn): 2010 2011 9M12 Revenues 83.5 107.0 88.9 72,48% Free float EBITDA 5.5 4.4 4.4 EBIT 3.1 2.1 2.7 Net profit 2.5 2.0 2.6 4 PKN ORLEN vision Upstream Energy Downstream PKN ORLEN in 2008… … 2012… … 2017… … and in 2022 5 Pillars of PKN ORLEN strategy 2013 - 2017 Shareholders Value creation up to 5% over 40% Systematic dividend yield increase Cash flow from operations increase* Financial standing below 30% Maintaining gearing at safe level ORLEN. Fuelling the future. *Increase in average cash flow from operations in 2013-2017 comparing to 2008-2012 6 Agenda PKN ORLEN – history and growth strategy Refining / Petrochemical / Retail – core business Upstream / Energy – growth segments Summary 7 Refining HIGH-CLASS ASSETS COMPETITIVE ADVANTAGES Refinery in Plock classified as a super-site (acc. to WoodMackenzie) considering the volume and depth of processing, integration with petrochemical operations. Modernized refining assets in Lithuania and in Litvinov. Prepared for regulatory and market trends changes thanks to investment projects execution. KEY DATA UTILISATION RATIO % Processing capacity: 31.0 mt/y (Plock refinery – 16.3 mt/y, ORLEN Lietuva – 10.2 mt/y, Unipetrol – 4.5 mt/y). 96 88 89 Market share*: gasoline (PL: 60%, CZ: 37%, LT: 91%) ; diesel (PL: 54%, CZ: 31%, LT: 95%). Flexibility to process many kinds of crude oil. Ca. 90% of processed crude oil in 2011 was REBCO. Fuel production in line with 2009 Euro standards in all refineries. 2010 2011 9M12 * Data as of 30.09.2012 8 Petrochemical INTEGRATED ASSETS COMPETITIVE ADVANTAGES The largest petrochemical company in Central Europe*. New units, including PX/ PTA, polyolefins, butadiene. Integration with refinery giving a good position on the cost curve. KEY DATA ANWIL – CHEMICAL COMPANY PKN ORLEN production capacity: 6.5 mt/y (Plock – 3.1 mt/y, Unipetrol – 3.4 mt/y). Depending on the product we have 40% up to 100% market share in domestic consumption. Fertilizers and PVC producer. Polyolefins sales within Basell network. PKN ORLEN S.A. has 100% stake in Anwil S.A. Launch in 2Q11 the most advanced in Europe petrochemical complex PX/PTA with 600 kt/y of PTA production capacity. Limited synergies with refining activity. Analysis of potential business lines split. * Poland, Lithuania, the Czech Republic 9 Retail ASSETS COMPETITIVE ADVANTAGES The largest retail network ~2 700 of fuel stations in Central Europe. Leader on the retail market in Poland , strong position in the Czech Republic and regionally in Germany. ORLEN brand – strong, recognizable and the most valuable in Poland (PLN 3,8 bn). Successful rebranding of fuel stations strengthening increase of market share. Implementation of modern concept of Stop Cafe and Bistro Cafe. Confirmed by consumer research the highest quality of service among fuel stations customers in Poland in 2012. KEY DATA EBIT (PLN m) Market share (%) - 47% No of filling stations*: Poland - 1759, Germany - 566, the Czech Germany Czech Rep. Republic - 335, Lithuania - 35. 825 Lithuania Poland 439 550 6 Market share*: Poland - 34%, the Czech Republic - 13%, Lithuania - 5 5 4 4 4 4%, Germany - 6%. 2010 2011 9M12 14 14 13 The largest group of loyal customers in Poland - 2,5 m of active Sales volumes (kt) customers VITAY and FLOTA programs. + 5% 31 32 34 7 025 7 345 5 600 * Data as of 30.09.2012 2010 2011 9M12 2010 2011 9M12 10 Agenda PKN ORLEN – history and growth strategy Refining / Petrochemical / Retail – core business Upstream / Energy – growth segments Summary 11 „Multi-utility” is a foundation for further PKN ORLEN value growth STRATEGIC RATIONALES CONCEPT OF „MULTI- UTILITY” PKN ORLEN faces serious barriers for the further dynamic growth in the oil sector... Upstream (E&P) New The dynamic growth through acquisitions and segments geographic expansion in 2002-2006 Electric power Focus on organic development and efficiency generation improvement Strong competitive pressure and high volatility in Refining margins …hence the perceived growth opportunities Petrochemicals Current PKN in the new areas of growth… ORLEN’s Higher profitability areas of Logistics Stable cash flows activities Operational synergies and diversification of activities Sales of fuel and PKN ORLEN’s security petrochemicals Integrated fuel - energy company 12 UPSTREAM Conventional and unconventional projects ASSETS COMPETITIVE ADVANTAGES Organic projects in exploration phase. Stable geopolitical regions: focus on Central Europe and optionally North America. Potential strategic partnerships. Access to production assets through optional M&A projects. Advanced unconventional gas project on ‘Lublin Shale’ concessions. KEY DATA 10 unconventional gas concessions on the area of ca. 9 th km2 Status of projects: 4 wells completed (3 vertical and 1 horizontal) Next horizontal one in progress. 101010 999 3 conventional projects (crude oil and gas) in Poland and Latvia (off-shore). Status of projects: 1 appraisal drill completed (Polish Lowland). * Data as of 30.09.2012 13 ENERGY New projects and improvement of efficiency of held assets ASSETS COMPETITIVE ADVANTAGES Power plant in Plock (345 MW, 1970 MWt) – the biggest industrial block in Poland. Heating oil, refining gas and natural gas - fuels used for energy and heat production in Plock and Wloclawek plants. PKN ORLEN the biggest gas consumer in Poland and active participant for natural gas market liberalization. Favorable perspectives for energy market eg. increase of electricity demand not addressed by new projects, increasing supply-demand gap resulting from closures of old units and low- emission of gas. KEY DATA Building a gas fired power plant 463MWe in Wloclawek Plans for blocks closures # block as a % of total, 2012-2040 Start-up in 4Q15. CAPEX PLN 1,4 bn. 78% Energy produced in cogeneration with steam also for Anwil Group 80 and PKN ORLEN needs. 43% 29% 50% of energy will be sold on the market. 24% 44 30 Concept of building CCGT plant in Plock 25 Concept analysis of the selected option was finished. Feasibility study of the selected option (450-600 MWe) completed. 2017 2025 2030 2040 * Data as of 30.09.2012 14 Agenda PKN ORLEN – history and growth strategy Refining / Petrochemical / Retail – core business Upstream / Energy – growth segments Summary 15 PKN ORLEN competitive advantages Refining Integrated, high-class assets and strong position on competitive market Petchem New units and attractive portfolio of products offered on developing markets Retail Modern and the largest sales network in the region with strong and recognizable brand Energy Best locations and synergies of gas-fired power generation with other segments Upstream Perspective licenses and advanced unconventional gas projects Further PKN ORLEN growth 16 Mission and Corporate Values „We discover and process natural resources to fuel the future” RESP ONSIBILITY We respect our customers, shareholders, the natural environment and local communities PROGRESS We explore new possibilities PEOP LE We are characterized by our know-how, teamwork and integrity ENERGY We are enthusiastic about what we do DEPE NDABILITY You can rely on us 17 Thank You for Your attention For more information on PKN ORLEN, please contact Investor Relations Department: telephone: + 48 24 256 81 80 fax: + 48 24 367 77 11 e-mail: [email protected] www.orlen.pl 18 Agenda Supporting slides 19 Supply Routes Diversification Sea Oil Terminals in Gdansk