April 1, 2023

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President Obajtek announces PKN Orlen’s strategy. Record dividend from record dividend

On Friday, February 24, the company announced that the Orlen Group (PKN Orlen, Energa, Lotos and PGNiG) collectively generated revenue of PLN 102.3 billion and net profit of PLN 8.1 billion in the fourth quarter of 2022. Over the course of the year, it amounted to Revenue is PLN 278.5 billion, net profit is PLN 21.5 billion. Including the acquisitions of Lotos and PGNiG, it amounted to PLN 35.46 billion.

However, the financial report of PKN Orlen with the best results in history was not received enthusiastically by investors who overvalued the company’s shares after the publication of the data by 2.55 percent. The share of PKN Orlen shares in the WIG20 is the largest of all portfolio components, which is why the company’s price is also important from the point of view of the most important index of the Warsaw Stock Exchange.

On the occasion of the publication of the report, the President of PKN Orlen, Daniel Obajtec, indicated that the profits made are being invested and that only in 2022. Implementation of the largest investment program in the history of the company A “record amount of PLN 19.6 billion” was allocatedAnd this year It will rise to PLN 36 billion..

Details of the investments under the new strategy, along with existing business goals and information about dividend and dividend payouts, were presented at Tuesday’s conference. Prior to the event, the company published an ESPI report with a description of its goals and assumptions. Strategy presentation is available on the company’s website in the About tab investor relations.

“This strategy is not only about development, but also about jobs, clean energy and economic alliances with regard to Poland’s security,” said Daniel Opajtek, President of PKN Orlen during the conference.

Dividend record

they Prepared a new dividend policy. Under the new rules, she will pay out a dividend of 40% of her net worth each year. Adjusted free cash flow.

The “guaranteed basic” dividend, the level of which is set at PLN 4.00 per share for the year 2022 and will gradually increase by PLN 0.15 each year, shall not be less than PLN 5.20 per share in 2030. This means an increase in the guaranteed basic dividend over a period contract by 49 per cent.

As part of the strategy update, the Board of Directors has decided to initially recommend the payment of a dividend out of profits made in 2022 in the amount of PLN 5.50 per share. – wrote in the statement.

If paid, it would be the highest earnings per share PKN Orlen shareholders will receive. Dividend rate. The exchange rate on Monday, February 27 will be 8.7 percent. In total, the Board of Directors wants to allocate PLN 6.4 billion for dividends for 2022.

“We share profits with shareholders and want to be an attractive company for investors,” said Daniel Opajtek, President of PKN Orlen.

“This year, because it was so good, we recommend paying a dividend of PLN 5.50 per share. This is a total of PLN 6.4 billion, and half of this amount will go to the state budget,” he added.

The final recommendation regarding the dividend for 2022 along with the proposed dates for the dividend day and the dividend date will be published by the Company on the day the Board of Directors makes a final decision on the matter, which will include approval of the Independent Annual Report.

Record investments and ambitious goals

The company assumes an increase in EBITDA in 2030 to the level of approximately PLN 60 billion from the level of approximately PLN 30 billion in 2021. On the other hand, the cumulative operating profit EBITDA in the years 2023-2030 will amount to more than 400 1 billion Polish zlotys, Orlin reported in the Strategy Update. PKN Orlen plans to allocate about PLN 320 billion for investments in the years 2023-2030, according to the updated Orlen strategy.

  • In the gas extraction and trading sector, capital expenditures planned until 2030 will amount to PLN 70 billion.
  • In the refinery sector, investments will reach PLN 60 billion, of which PLN 25 billion are for green investments, PLN 40 billion for petrochemicals, of which PLN 5 billion are for green investments.
  • In the conventional and grid energy sector, capital expenditures will amount to PLN 65 billion, including PLN 15 billion for green investments.
  • New energy and renewable energy sources – PLN 70 billion.
  • Investments in retail amount to PLN 15 billion, of which PLN 5 billion are green investments.

(Update of the Orlen Group Strategy 2030)

The strategy assumes the implementation of more than PLN 10 billion in synergies resulting mainly from acquisitions and mergers carried out by PKN Orlen, including the merger with Grupa Lotos and PGNiG and the acquisition of capital control of Energa.

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“Implementation of initiatives within the framework of the strategy will enable Orlen Capital Group’s EBITDA to double profits in 2030, reaching approximately PLN 60 billion from PLN” – it was written.

New targets for 2030 include processing capacity of operating refineries within the group at the level of about 42 million tons of crude oil per year, about 3.8 gigawatts of installed capacity in combined-cycle gas turbine units, a retail network of 3.5 thousand. Filling stations, more than 9 gigawatts of renewable energy installed, annual production of more than 3 million tons of biofuel and more than 1 billion cubic meters of biogas, more than 10 thousand. Charging points for electric vehicles in Central Europe, more than 12 billion cubic meters. Total gas production in Poland and abroad.

In addition, the strategy provides for more than 130,000 tons per year of renewable hydrogen production, about 300 megawatts of installed capacity in SMR nuclear reactors, the development of infrastructure for carbon dioxide capture. up to about 3 million tons annually.

Finance, debt and zero carbon

As mentioned, as part of the implementation of the strategy, the company will use various sources of financing, including green, sustainable and alternative financing sources.

“We want to finance investments with current money. We will manage the debt carefully, keeping the goal of not exceeding the net debt / EBITDA ratio (2-2.5x). We want to enter the bond markets, both domestic and foreign. We want to increase the share of green and sustainable financing “- he said. Michał Birlik, Executive Director of Financial Management at PKN Orlen during the conference.

“The maturity of Eurobonds worth 750 million euros is in June. We are considering refinancing them. If market conditions continue to improve as they have been so far, we do not rule out that this year we will issue an international bond issuance program worth 5 billion euros.” .

“It’s planned Maintain the net debt/EBITDA ratio at a maximum of 2.0-2.5x And focus on investment projects that guarantee ROACE double-digit interest in the strategic horizon. The strategy assumes that the financial capacity of the Orlen Capital Group will be more than PLN 575 billion by 2030.which will consist of the planned cumulative operating profit EBITDA in the years 2022-2030 at a level of more than PLN 400 billion, Additional debt capacity of about PLN 125 billion and alternative financing methods available of about PLN 50 billion“- it was written in the statement.

Strategy groups Carbon removal and carbon neutrality goals. By 2030, carbon dioxide emissions in the refinery, petrochemical and mining sector are expected to decrease by 25%. With regard to the base year 2019, reduce the emission intensity of the energy sector by 40% and, after 2030, end energy production from coal by 2035.

PKN Orlen saves PLN 120 billion in strategy update, so-called green investments by 2030

Obajtek announces a reduction in gas prices

The price of gas sold to so-called list prices to customers, including bakeries, increased by more than 50 percent from March 15. to PLN 353 from PLN 650 for one MWh – announced the head of PKN Orlen, Daniel Obajtek, during the press conference on Tuesday. It is set to cover about 130 thousand. users.

Obajtek explained that the gas price could not be lowered earlier, because the market prices were too high, and PKN paid up to PLN 1,500 for one MWh.

“Naturally we have to pass it on to the customer. We can’t afford a loss, but we proposed with our financiers a retail solution. Much lower prices,” Obajtek said.

Taxes, Russian oil and investor reaction

According to analysts citing “Business Pulse” An attempt to hedge against the possibility of taxation of windfall profits. Michał Kozak of DM Trigon believes Orlen’s investment budget is ambitious, but sees it mainly as a “precautionary plan” against the aforementioned “windfall profit tax”.

In the course of PKN Orlen, on Saturday, February 25, the market received information that Russia had stopped oil supplies through the “Friendship” pipeline. “Small but cheap – this was Orlin’s last contract to supply Russian oil to Poland. Russia cut off supplies, but patching the hole won’t be a problem. Orlin refineries in the Czech Republic continue to buy raw materials from Russia” – Magdalena Graniszewska wrote in “Puls Biznesu”.

Investors’ reaction to PKN Orlen’s presented strategy and President Obajtek’s words was positive. Almost even before the conference. On 13.10, the company’s price decreased slightly by 0.1 percent. With the second turnover in the market (25 million PLN). At 3.30pm Orlen shares were up 4.6 per cent. With a turnover of PLN 209 million.

The article will be updated