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06.11.2015 PGNiG Group delivers stable financial performance driven by oil production

In Q1−Q3 2015, the PGNiG Group posted almost PLN 2.16bn in net profit, similarly to the corresponding period in 2014, despite lower prices of crude oil and natural gas. This strong performance was attributable chiefly to the consistent pursuit of the Efficiency Improvement Programme in all Group companies.

The savings generated across the Group by the end of Q3 2015 represented 84% of the full-year target. The PLN 472m permanent reduction in costs since 2014 has been a part of the Company’s ongoing effort to restructure the Group, which produces visible effects. Following the identification of new areas with a material optimisation potential, reduction in costs will go up from the initially planned PLN 800m to PLN 937m in 2014−2016.

PGNiG Group’s revenue in Q1−Q3 2015 went up year on year to ca. PLN 26.7bn (or 17%), from PLN 22.8bn in 2014. This growth was driven in particular by a 29% increase in revenue from sales of high-methane gas, to PLN 21.1bn, with the sales volume rising by 4.6bcm, to 15.5bcm. The revenue growth was achieved despite lower revenue from sales of crude oil and condensate − down PLN 633m.

The Group’s EBITDA improved by 6%, to PLN 5.3bn, compared with PLN 4.9bn in 2014. With a 44% share, the Exploration and Production segment was the largest contributor, followed by Distribution with a 34% share, and the Trade & Storage and Generation segments, accounting for 14% and 8% of the total, respectively.

In Q3 2015, the Group reported PLN 292m in net profit (down 53%), compared with PLN 616m in the same period of the previous year. In the quarter, revenue fell 2% year on year, to PLN 6.3bn, with a 14% drop in EBITDA, to approximately PLN 1.3bn. The factors that contributed to the Q3 performance included lower revenue from sales of crude oil and, primarily, one-off items such as an impairment loss of PLN 51m on shares in EuRoPol Gaz, and a PLN 190m effect of income tax on net profit, attributable to high nominal tax rate in Norway.

Exploration and Production segment – the effect of low crude prices

Revenue from the Exploration and Production segment in Q3 2015 came in at PLN 1.2bn, which is a year-on-year decrease of 18%, and EBITDA fell 23% year on year, to PLN 767m. The segment’s performance was affected by lower revenue from sales of crude oil and condensate (down PLN 0.12bn year on year), with oil prices in PLN down over 41% and sales volumes up 36%, to 356 thousand tonnes. Another material factor was a PLN 134m decrease in revenue from geophysical and drilling services, to PLN 67m.

Small margin on gas sales

In Q3 2015, the Trade and Storage segment’s performance was driven, among other things, by increased revenue from sales of natural gas − up to PLN 4.9bn, with shifts in the sales structure and prices (exchange sale requirement), and by growth in the share of PST in gas sales revenue, to PLN 0.57bn relative to PLN 0.35bn in 2014.

In Q3 2015, high-methane gas was sold at a margin of 5%, compared with 8% in the same period of 2014. The margin in Q1−Q3 2015 stood at 7%, relative to 9% in the corresponding period of 2014.

The PGNiG Group’s gas sales rose to 3.9bcm on 3.6bcm in Q3 2014. By customer groups, larger gas volumes were sold on the Polish Power Exchange (TGE), to the customers of PGNiG Sales & Trading, to power plants, CHP plants, as well as customers in the retail, services and wholesale sectors.

PGNiG Group’s performance in Q1−Q3 2015 (PLNm)

  Q1−Q3 2014 Q1−Q3 2015 Change
Revenue 22,817 26,695 17%
Operating expenses (excl. D&A) (17,831) (21,386) -20%
EBITDA 4,986 5,309 6%
EBIT 3,084 3,236 5%
Net profit 2,136 2,157 1%

 

PGNiG Group’s performance in Q3 2015 (PLNm)

  Q3 2014 Q3 2015 Change
Revenue 6,436 6,305 -2%
Operating expenses (excl. D&A) (4,917) (4,992) 2%
EBITDA 1,519 1,313 -14%
EBIT 915 627 -31%
Net profit 616 292 -53%

 

Distribution segment’s solid performance

In Q3 2015, the Distribution segment’s revenue was up 16% year on year, to over PLN 1bn. In Q3 2015, gas distribution volume rose by 6% to 1.7bcm.

Stable performance of the Generation segment in the weakest quarter in the seasonal cycle

In Q3 2015, the Generation segment saw an 18% fall in revenue, to PLN 239m, compared with PLN 291m in the corresponding period of 2014. This was primarily attributable to a 4% decrease in revenue from sales of heat, with volumes down 6%, and a 34% decline in revenue from sales of electricity due to reduced trading in electricity purchased from other parties.

Sales of electricity from the Group’s own generation sources fell 15%, to 328 GWh, in Q3 2015, while sales of heat were at 2.7 PJ, down by 6%.

Utilisation of gas storage capacities

As at the end of September 2015, the Group held 2.77 bcm stocks of high-methane gas in its underground storage facilities, relative to 2.72 bcm in September 2014.

 

 

Dorota Gajewska

Press Officer, PGNiG SA

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