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16.08.2016 PGNiG Group: nearly PLN 1.3bn in net profit in H1 2016

In H1 2016, the PGNiG Group earned net profit of nearly PLN 1.3bn, which is PLN 594m less than a year earlier. The Group's revenue was PLN 17.3bn, down PLN 3bn year on year, and operating expenses fell by PLN 2.2bn. EBITDA was PLN 3.1bn, having decreased by PLN 865m on H1 2015.

In H1 2016, the PGNiG Group earned net profit of nearly PLN 1.3bn, which is PLN 594m less than a year earlier. The Group's revenue was PLN 17.3bn, down PLN 3bn year on year, and operating expenses fell by PLN 2.2bn. EBITDA was PLN 3.1bn, having decreased by PLN 865m on H1 2015.

PGNiG Group: nearly PLN 1.3bn in net profit in H1 2016

In H1 2016, the PGNiG Group earned net profit of nearly PLN 1.3bn, which is PLN 594m less than a year earlier. The Group's revenue was PLN 17.3bn, down PLN 3bn year on year, and operating expenses fell by PLN 2.2bn. EBITDA was PLN 3.1bn, having decreased by PLN 865m on H1 2015.

Production and sales volumes remained stable in H1 2016 across all operating segments of the Group. However, the financial performance was affected, among other things, by macroeconomic factors, particularly the falling crude oil prices on global markets, as well as by the reduction of tariffs in recent months and the discount policy.

PGNiG Group's key financial results in H1 2015 and H1 2015 (PLNm)

Exploration and Production

Revenue of the Exploration and Production segment in H1 2016 came in at PLN 2.1bn, having decreased 16% year on year despite a 2% increase in the volume of crude oil sold. The segment's EBITDA was PLN 495m, down 68% year on year, and operating loss was PLN 80m.

The weaker operating performance by the segment was an effect of lower prices of hydrocarbons, a drag on the segment's sales revenue. In addition, impairment losses recognised on assets and dry wells and seismic surveys written off totalled PLN 739m, having doubled year on year.

Trade and Storage

Revenue of the Trade and Storage segment was PLN 14.9bn in H1 2016, down 17% year on year. The segment's operating profit was PLN 646m and was PLN 95m lower than in the corresponding period of 2015.

To proactively respond to the changing market conditions in 2015 and 2016, PGNiG SA and PGNiG ObrĂ³t Detaliczny reduced their tariffs several times during the period. As a result, the average prices of gas fuel was approximately 12% lower in H1 2016 than in H1 2015. The Group companies also offered attractive discount schemes to their largest customers. However, by bringing down gas procurement costs, the margin on sales of high-methane gas in H1 2016 was maintained at +1%, i.e. close to the margin reported the year before.

Distribution

Operating profit of the Distribution segment for H1 2016 increased 24% year on year, to PLN 968m. At PLN 1.4bn, EBITDA was PLN 205m higher year on year. The increase was achieved mainly due to a consistent cost-cutting policy. In H1 2016, costs decreased by PLN 121m (8%) year on year. The decrease is attributable, among other things, to lower employee benefits which were reduced as a result of workforce streamlining efforts as part of the Voluntary Redundancy Programme. Revenue increased by PLN 68m (3%) year on year following a 5% increase in the volume of distributed gases.

Generation

The segment's operating profit in H1 2016 was PLN 274m, having increased by PLN 23m year on year. EBITDA reached PLN 450m and was PLN 38m (9%) higher compared with H1 2015. The improvement was driven in particular by higher volumes of heat sales (up 3% year on year), accompanied by higher tariff prices of heat and lower coal procurement costs.

Segments' contribution to EBITDA of the PGNiG Group

Segments' contribution to EBITDA of the PGNiG Group excluding impairment losses

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