Czech petrochemicals group Unipetrol, the country’s largest oil refiner, expects to post a worse operating profit (EBIT) in the second quarter than the Kč 571 million ($33.55 million) reported in 1Q11 following a drop in refining margins, the Prague-listed company said on its website on Tuesday. It reports quarterly results on Aug. 5.
“We believe this is yet another unimpressive trading update. The margins data were published previously, whereas the volumes came in weaker than our estimates for the period (with the exception of the healthy refinery throughput),” Wood & Co. analysts said in a note Tuesday.
Unipetrol, which is controlled by Poland’s PKN Orlen, said margins in refining “collapsed quarter-on-quarter” while in the petrochemical margins they reached the mid-600 euros level. It added that CO2 allowance operations had a positive impact on the operating level of Kč 200 million but that this would be largely offset by foreign exchange rates developments.
“The indicated inventory loss is somewhat surprising given the higher crude and product prices in 2Q11. We also believe that it may be taken negatively that Unipetrol expects weaker EBIT qoq despite an unexpected Kč 200 million gain from CO2 trading and that the net financials may be hit by derivatives losses of Kč 150 million,” Wood & Co. said.
Unipetrol had reported a 10 percent rise in 1Q11 operating profit after higher oil prices boosted the value of its feedstock reserves, and the crude price strengthened more in the second quarter, it said.
Unipetrol reported for fiscal year 2010 operating profit of Kč 2.209 billion. According to Reuters Estimates, analysts are expecting the company to report EBIT of Kč 2.667 billion for fiscal year 2011.