Orlen posts quarterly profit beat as Iran war boosts refining margins
Orlen's First-Quarter Financial Performance and Market Impact
Quarterly Profit and Market Expectations
May 28 (Reuters) - Poland's largest energy group Orlen reported a 22.8% rise in first-quarter adjusted core profit on Thursday, beating market expectations as the outbreak of the Iran war drove a surge in refining margins.
LIFO-Based Earnings and Analyst Consensus
Its LIFO-based earnings before interest, taxes, depreciation and amortisation, a measure excluding impairment losses and inventory valuation changes, reached 14.07 billion zlotys ($3.85 billion) in the quarter, topping a 13.2 billion zloty consensus compiled by Orlen.
Refining Margins and Market Conditions
Increase in Model Refining Margin
The company's model refining margin, which measures the profit made from converting crude oil into refined products, rose to $17.0 per barrel in the quarter from $8.9 a year earlier, it said.
Weather-Driven Demand
Earnings were also supported by cold weather that boosted demand for electricity and natural gas in January and February.
Impact on Energy Segment
The higher volumes lifted Orlen's energy segment, helping to offset a negative impact from lower domestic gas and electricity distribution tariffs.
Impairment Charges and Investment Updates
Non-Cash Impairment Charges
The company's unadjusted earnings were hit by non-cash impairment charges of 1.11 billion zlotys, tied largely to its downstream segment including the revised "New Chemistry" petrochemical project, which Orlen had flagged earlier in May.
Investment Budget and Project Timeline
In April, Orlen's supervisory board approved an updated 35.8 billion zloty budget for the investment, which is now expected to reach full start-up in 2030.
Additional Information
($1 = 3.6549 zlotys)
(Reporting by Rafal Nowak in Gdansk; Editing by Jacqueline Wong and Milla Nissi-Prussak)
