Dear Ladies and Gentlemen,
In the past year the global economy again faced major challenges. This was also a particularly difficult period for Europe, affected by a slowdown and instability. Despite unfavourable macroeconomic environment PKN ORLEN achieved in 2011 good financial results, while optimising costs, reducing debt and improving the liquidity situation. This was possible due to consistent implementation of the Company’s development strategy – the strategy that in another consecutive year works well during the market boom, as well as during a slowdown.
PKN ORLEN closed the year 2011 with net profit of PLN 2 billion and operating profit of about PLN 2.1 billion. The major determinants of good results were proceeds from divestments, including successful sale of Polkomtel, revaluation of crude oil stocks and larger sales volumes across all segments. It should be noted that in 2011 the Company achieved the highest total sales volumes in its history at the level of nearly 35.5 million tonnes and all-time high sales revenue of nearly PLN 107 billion.
The strategy adopted by the Company in 2008 provides not only for cost optimisation but also funding for investments necessary to ensure stable development of PKN ORLEN. In mid-2011 the Company launched the most efficient PX/PTA facility in Europe, which has led to a significant increase in profits in the petrochemical sector.
The Company also continued investments constituting one of the elements of the second part of the strategy aimed at creation of a multiutility company. Activities undertaken by PKN ORLEN in this area covered the power generation sector and the upstream segment. In 2011 the Company performed advanced preparatory works to construct CCGT unit in Włocławek and continued modernisation works on the CHP plant at the Production Plant in Płock. These activities were complemented by analyses regarding the possibility to build another power unit in this city.
Another direction on which PKN ORLEN concentrated its attention in 2011 was exploration of hydrocarbons. Particularly large capital expenditure was earmarked for appraisal of unconventional gas deposits in Poland. In accordance with the plan the Company completed two first drillings in the Lublin region. Currently the Company is preparing for new drillings. The Company also continues exploration of conventional deposits in the region, as well as in the Latvian shelf and in the Sieraków field.
Activities conducted by foreign companies of PKN ORLEN Capital Group were primarily concentrated on optimisation of the operations of the refineries in the Czech Republic and Lithuania, and of our retail network in Germany. In 2011 the Company managed again to improve the performance of the German assets and the profitability of the refinery in Mažeikiai. A particularly important success on the Lithuanian market would not be possible without successful negotiations with Klaipedos Nafta, the owner of a cargo terminal, which allowed to reduce costs of crude oil shipments by sea. In the months to come the Company plans to renegotiate the charges for railway transport in Lithuania.
In 2011 the opinion of PKN ORLEN, the biggest Polish company, was attentively considered in strategic issues regarding the future of Poland and Europe. Representatives of the Company participated in debates and discussions concerning economics, economy and energy sector. The Company also initiated numerous activities to support Polish sport, culture and education. These were repeatedly appreciated by the public and awarded in independent competitions and rankings.
As a result of activities undertaken in 2011 the position of PKN ORLEN is stable and the Company may continue its consistent development. I hope that this year will bring improvement of the macroeconomic environment, allowing for even more dynamic growth of PKN ORLEN.
Chairman of the Supervisory Board of PKN ORLEN
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