ORLEN Group

consolidated financial results

3Q23

31 October 2023

#ORLEN3Q23@GrupaORLEN

01

KEY FACTS

02

MARKET

ENVIRONMENT

03

FINANCIAL AND OPERATING RESULTS

04

FINANCIAL

SITUATION

05

OUTLOOK

01

Key facts

2

Key facts 3Q23

Revenues

75,4 PLN bn

EBITDA LIFO

8,2 PLN bn

Cash flows from operations

7,2 PLN bn

CAPEX - cumulative for 9 months 2023

20,4 PLN bn

3

TRANSFORMATION PROJECTS

  • OFFSHORE: final investment decision for Baltic Power, construction of the installation terminal.
  • Conditional agreement for purchase of wind farms in Poland with capacity of ca. 60 MW.
  • CCS: partnership with Horisont Energi to explore potential collaboration on one of the most advanced CCS initiatives on the Norwegian Continental Shelf.
  • Synthetic fuels: cooperation agreement with Yokogawa to develop cutting-edge integrated production system.
  • Biofuels: UCO FAME installation launching to produce II generation biocomponents from cooking oils.
  • H2: tests of the company's first publicly available hydrogen station in Poland.

RETAIL

  • Entering the Austrian market: EC consent to purchase 266 fuel stations.
  • Finalisation of rebranding of 90 fuel stations in Slovakia.
  • The next stage of rebranding in Germany: 100 ORLEN stations till the beginning of 2024.

CRUDE THROUGHPUT AND UPSTREAM

  • Finalisation of the third nitrogen fertilizer production line.
  • Start of production from the Tommeliten Alpha by PGNiG Upstream Norway.

ORGANISATION

  • Starting the process of taking control of the Transit Gas Pipeline System.
  • Agreement for the construction of a modern oil pressing plant in Kętrzyn.
  • The first hydrogen locomotive in ORLEN's fleet.
  • Conditional share purchase agreement in ENERGOP, pipelines producer, e.g. for refining and petchem sectors.

DIVERSIFICATION OF DELIVERIES

  • Expansion of Underground Gas Storage in Wierzchowice, the biggest investment in domestic gas storage facilities started.
  • Reservation of regasification capacity at Floating Storage Regasification Unit (FSRU) to be built in the Gulf of Gdansk in 2028.
  • Two LNG carriers Święta Barbara and Ignacy Łukasiewicz in ORLEN fleet.

01

KEY FACTS

02

MARKET

ENVIRONMENT

03

FINANCIAL AND OPERATING RESULTS

04

FINANCIAL

SITUATION

05

OUTLOOK

02

Market environment

4

Macroeconomic environment 3Q23

3Q22

2Q23

3Q23

∆ (y/y)

Brent crude oil

USD/bbl

101

78

87

-14%

Model refining margin1

USD/bbl

13,8

21,9

34%

16,4

Differential2

USD/bbl

7,4

1,8

-1,0

-114%

Natural gas price TTF month-ahead

PLN/MWh

965

158

152

-84%

Natural gas price TGEgasDA

PLN/MWh

954

176

172

-82%

Electricity price TGeBase

PLN/MWh

1 067

527

504

-53%

Refining products4 - crack margins from quotations

Diesel

USD/t

328

134

243

-26%

Gasoline

USD/t

287

304

325

13%

HSFO

USD/t

-325

-164

-138

58%

Petrochemical products4 - crack margins from quotations

Polyethylene5

EUR/t

471

433

353

-25%

Polypropylene5

EUR/t

460

429

345

-25%

Ethylene

EUR/t

639

664

547

-14%

Propylene

EUR/t

598

554

421

-30%

PX

EUR/t

586

481

419

-28%

Average exchange rates6

USD/PLN

USD/PLN

4,71

4,17

4,14

-12%

EUR/PLN

EUR/PLN

4,75

4,54

4,50

-5%

  1. Model refining margin = revenues (93,5% Products = 36% Gasoline + 43% Diesel + 14,5% HHO) - costs (100% input: Brent crude oil and other raw materials). Spot quotations. (valid till 31.07.2022) Model refining margin = revenues (93,6% Products = 33% Gasoline + 48% Diesel + 13% HHO) - costs (100% input: 98% Brent crude oil + 2% natural gas). Spot quotations. (valid from 01.08.2022)
  2. Differential calculated on the real share of processed crude oils. Spot quotations.

5 (4) Margin (crack) for refining and petrochemical products (excluding polymers) calculated as difference between a quotation of given product and a quotation of Brent DTD crude oil.

  1. Margin (crack) for polymers calculated as difference between quotations of polymers and monomers
  2. Average exchange rates according to the data of the National Bank of Poland.

Significant increase of fuel consumption in Poland and Czechia (y/y)

GDP1

Change % (y/y)

Poland 4,1

Lithuania

Fuel consumption2

mt

Poland +11%

Lithuania

+2%

-0,6-0,4

3Q22 2Q23 3Q23

Czechia 1,4

-0,1

-1,1

3Q22 2Q23 3Q23

Slovakia 1,5 1,5 1,3

3Q22 2Q23 3Q23

2,2

0,7

0,0

3Q22 2Q23 3Q23

Germany 1,2

-0,6-0,8

3Q22 2Q23 3Q23

Hungary 4,3

-0,9-2,4

3Q22 2Q23 3Q23

6,7

6,1 6,0

3Q22 2Q23 3Q23

Czechia +9%

1,73 1,79 1,89

3Q22 2Q23 3Q23

Slovakia -5%

0,69 0,66 0,65

3Q22 2Q23 3Q23

0,54 0,55 0,55

3Q22 2Q23 3Q23

Germany

-2%

13,7

13,5

12,8

3Q22 2Q23 3Q23

Hungary +6%

1,39 1,30 1,48

3Q22 2Q23 3Q23

6 1 3Q23 - own estimates based on bank's projections

2 3Q23 - own estimates based on: Poland (ARE), Lithuania (Statistical Office), Czechia (Statistical Office), Germany (Association of Petroleum Industry), Slovakia and Hungary (Eurostat)

01

KEY FACTS

02

MARKET

ENVIRONMENT

03

FINANCIAL AND OPERATING RESULTS

04

FINANCIAL

SITUATION

05

OUTLOOK

03

Financial and operating results

7

Financial results

PLN ~ 75 bn of revenues

PLN m

3Q22*

2Q23

3Q23

9M22*

9M23

+ 2,5 bn

+ 84,1 bn

72 915

74 621

75 424

260 315

Revenues

176 166

- 2,7 bn

+ 12,1 bn

10 939

8 703

8 220

34 076

21 929

EBITDA LIFO

- 0,9 bn

+ 8,9 bn

10 386

8 319

9 503

33 804

24 871

EBITDA

- 2,7 bn

+ 4,4 bn

6 205

4 544

17 112

3 459

Net result

12 733

Revenues: increase by 3% (y/y) due to higher sales volumes and higher quotations of refining products at lower quotations of petchem products and hydrocarbons.

EBITDA LIFO: decrease by PLN (-) 2,7 bn (y/y) due to negative impact of lower volumes effect, lower differential, lower trade margins, lower petchem margins, hedging, strengthening PLN/USD, lower fuel margins in retail, lower margins in upstream as well as higher overheads and labour costs.

Abovementioned effects were limited by positive impact of consolidation of PGNiG Group results, higher refining margins, higher non-fuel margins in retail, lower provisions for CO2 emissions as well as usage of historical inventory layers.

LIFO effect: PLN 1,3 bn impact of changes in crude oil prices on inventory valuation.

Financial result: PLN (-) 0,6 bn as a result of negative impact of net FX differences at positive impact of net interests.

Net result: PLN 3,5 bn of net profit.

8 Operational results before impairment of assets: 3Q22 PLN (-) 53 m / 2Q23 PLN (-) 77 m / 3Q23 PLN (-) 1086 m / 9M22 PLN (-) 2940 m / 9M23 PLN (-) 1692 m

  • Operational results for 3Q22 and 9M22 do not include profit on bargain purchase of Lotos Group in the amount of PLN 8546 m recognised in 3Q22

EBITDA LIFO

PLN 4,8 bn of positive impact of consolidation of PGNiG Group results

Segments' results

PLN m

5 200

8 220

-431

-17

1 349

601

-212

1 866

-136

Refining

Petchem

Energy

Retail

Upstream

Gas

Corporate

Adjust-

EBITDA

functions

ments

LIFO

3Q23

Refining: lower by PLN (-) 5,5 bn (y/y) due to negative macro impact, lower sales volumes, lower result of Lotos Group, lower trade margins as well as higher overheads and labour costs at positive impact of usage of historical inventory layers.

Petchem: lower by PLN (-) 0,8 bn (y/y) due to negative impact of macro, lower sales volumes and lower trade margins.

Energy: lower by PLN (-) 0,3 bn (y/y) as a result of negative impact of macro, negative impact of payments to the Price Difference Payment Fund and provision created in ENERGA Group due to one-off reduction in electricity bills for households at positive impact of consolidation of PGNiG Group results.

Retail: lower by PLN (-) 0,3 bn (y/y) as a result of negative impact of lower fuel margins and higher costs of running fuel stations at positive impact of higher sales volumes and higher non-fuel margins.

Change in segments' results (y/y)

PLN m

-2 719

10 939

5 200

8 220

-114

-12

-5 453

-834

-258

-255

-993

EBITDA

Refining

Petchem

Energy

Retail

Upstream

Gas

Corporate

Adjust-

EBITDA

LIFO

functions

ments

LIFO

3Q22*

3Q23

Upstream: lower by PLN (-) 1,0 bn (y/y) due to negative macro impact, lower sales volumes, negative impact of write-off for the Price Difference Payment Fund and higher labour costs at positive impact of consolidation of PGNiG Group results.

Gas: higher by PLN 5,2 bn (y/y) as a result of positive impact of consolidation of PGNiG Group results.

Corporate functions: higher costs by PLN 0,1 bn (y/y) due to increase in the scale of ORLEN Group's operations.

9 Operational results before impairment of assets: 3Q22 PLN (-) 53 m / 2Q23 PLN (-) 77 m / 3Q23 PLN (-) 1086 m / 9M22 PLN (-) 2940 m / 9M23 PLN (-) 1692 m

  • Operational results do not include profit on bargain purchase of Lotos Group in the amount of PLN 8546 m recognised in 3Q22

Refining - EBITDA LIFO

Negative impact of macro, lower volumes effect, lower result of Lotos Group and higher costs (y/y)

EBITDA LIFO

Model refining margin and differential

PLN m

USD/bbl

differential

margin

11 032

-2,9 USD/bbl

7 319

23,8

20,9

5 485

7,4

15,6

4 656

1,8

2 112

2 536

1 866

16,4

21,9

13,8

1 198

900

-1,0

3Q21

4Q21

1Q22

2Q22

3Q22

4Q22

1Q23

2Q23

3Q23

3Q22

2Q23

3Q23

EBITDA LIFO - impact of factors

∙ Positive EBITDA LIFO of all refineries in 3Q23.

PLN m

exLotos

∙ Negative macro impact (y/y) as a result of significantly lower differential by (-) 8,4 USD/bbl

-5 453

(y/y) due to changes in the structure of processed crudes, negative impact of hedging and

7 319

strengthening of PLN vs USD. The above effects were limited by positive impact of higher

refining margins, lower costs of CO2 provision and the positive impact of the valuation of

CO2 contracts.

-1 497

∙ Negative volume effect (y/y) due to decrease in sales volumes in Poland by (-) 7%, in the

Czech Republic by (-) 18% and in Lithuania by (-) 37% as well as changes in the structure

of processed crude oils, i.e. limitation of REBCO processing and replacing it with more

-2 230

1 866

expensive grades of crude oil.

In Poland, there is a visible negative impact of maintenance shutdowns (Hydrocracking /

-1 726

1 645

FCC II / H-Oil / Hydrogen Plant) on higher share of heavy fractions in the sales structure.

221

∙ Others include negative impact of lower result of Lotos Group by PLN (-) 0,8 bn (y/y), lower

EBITDA LIFO

Macro

Volumes

Others

EBITDA LIFO

trade margins and higher overheads and labour costs at positive impact of usage of

3Q22

3Q23

historical inventory layers.

10

Operational results before impairment of assets: 3Q22 PLN (-) 3 m / 3Q23 PLN 0 m

Macro: margins PLN 1574 m, differential PLN (-) 1256 m, exchange rate PLN (-) 424 m, hedging PLN (-) 1557 m, valuation of CO2 contracts PLN 97 m, CO2 provision PLN 69 m

10

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Orlen SA published this content on 31 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 October 2023 06:35:53 UTC.