In H1 2012, the PGNiG Group recorded a PLN 17m loss, relative to a PLN 1bn profit reported for the corresponding period of the previous year.
The loss was incurred despite a 28% growth in revenue, to PLN 14.8bn. It was driven by factors over which the Company had limited control, including primarily the rising cost of gas imports, coupled with adverse movements in PLN exchange rates, which the tariff approved by the President of the Energy Regulatory Authority (URE) and effective since March 31st 2012 failed to offset.
The Group’s EBIT fell PLN 1.1bn in H1 2012, to PLN -53m, the main contributor being a PLN 1.4bn loss reported by the Trade and Storage segment, which reduced EBIT by nearly PLN 1.6bn year on year. The high cost of gas depressed the margin on gas sales to -11% in the first half of 2012. In Q2 2012, the gas sales margin was -13%, the worst result since Q4 2008.
The decline was chiefly attributable to the negative margin on sales of the main product, i.e. natural gas. Such a large loss in the Trade and Storage segment made the PGNiG Group recognise, for the first time in its history, impairment losses on stocks of gas held in the storage facilities, as the unit purchase cost of the gas was much higher than its realisable selling price.
“The poor performance of the PGNiG Group in the first half of 2012 is attributable to factors over which the Company has very limited control. Therefore, jointly with PGNiG employees, we have made a number of decisions with the aim of reversing the current trend. The arbitration procedure is under way to solve our dispute with Gazprom, and we believe that it will result in a reduction of the contractual gas prices, which are the key driver of our performance. We have initiated restructuring processes whose primary purpose is to prepare the Company for the challenges it is facing. These include in particular the imminent deregulation of the Polish gas market and the unavoidable emergence of real competition. Let me emphasise that the steps we are taking are not confined to cost-cutting — we are making an effort to generate additional income,” said Grażyna Piotrowska-Oliwa, CEO and President of the PGNiG Management Board.
1 Polish zloty = 0.307825 U.S. dollars
LNG World News Staff, August 23, 2012