Unipetrol Doubles Q4 Net Loss After Taking Higher Charge
A deteriorating outlook pushed Czech downstream oil group Unipetrol to take new impairment charges for the fourth quarter, doubling its net loss to 6.25 billion crowns ($337 million) and hitting its shares.
The company, majority owned by Poland' PKN Orlen, has struggled to achieve stable profits in recent years and showed a loss in 2011 as a whole as weak margins and low demand hurt performance.
Unipetrol, which in February reported an unaudited 3.14 billion crown loss in the quarter, said an analysis carried out since then showed a bigger charge at its Paramo refinery of 1.72 billion crowns, up from 1.28 billion seen in February.
Unipetrol took a new charge for petrochemical assets of 2.93 billion crowns. The company had taken a 4.65 billion charge last year for impaired assets.
Its shares fell 3% in Prague, their biggest drop in more than a month, while the main index lost 1.4%.
Chief Operating Officer Mariusz Kedra said on a conference call market conditions were hurting Unipetrol's operating performance more than the company expected.
With the Czech economy falling into recession at the end of last year, Kedra said the outlook was difficult.
"Those two categories (operating performance and the economy), and especially the macro environment, is impacting our assessment of future cash flows, resulting in the final total impairment charges," he said.
Unipetrol said it planned to restructure its Paramo unit and was considering eliminating unprofitable crude processing at the refinery, which has capacity for 20,000 barrels a day.
Other activities in the unit would probably continue.
"The crude processing capacity is running at a minimum," Paramo chief Milan Kuncir said on the call. "Other segments such as lubricants particularly are in good shape and actually are developing strongly over the last two to three years."
The charges last year also more than doubled Unipetrol's fourth-quarter operating loss to 5.94 billion crowns.
For the full year it showed a 5.91 billion net loss.
Komercni Banka analyst Miroslav Adamkovic said the charges were negative for the stock. "On the other hand the company, thanks to low debt, should have space for changes not only in Paramo," he said.
