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Unipetrol Reports Fourth-Quarter Loss on Low Crude Price

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Jan. 24 (Bloomberg) -- Unipetrol AS, the largest Czech refiner, reported its fifth consecutive quarterly loss after the price of crude oil fell and output was hampered by a refinery outage.

The loss for the three-month period through December narrowed to 690 million koruna ($34 million) from a 2.78 billion-koruna loss a year earlier when Unipetrol incurred large impairment costs, the Prague-based company said in an e-mailed statement today.

Unipetrol has struggled with low demand and unplanned production outages at aging refineries that curbed sales volumes. Fourth-quarter output was again affected by the scheduled outage of the Kralupy refinery, stopped in September and October for maintenance and upgrade.

“The results reflect extremely difficult macroeconomic conditions, especially in the refinery segment,” Chief Executive Officer Marek Switajewski said at a press conference in Prague. The market is beginning to improve this year, he said.

The Czech economy is struggling to revive growth after exiting an 18-month recession in the second quarter of 2013 and years of austerity efforts by the previous administration. Unipetrol will aim for a positive operating profit in 2014 as conditions on the Czech market improve following a new law targeting fuel tax evaders, the CEO said.

‘Clear Disappointment’

“The results are a clear disappointment,” Komercni Banka AS analyst Miroslav Frayer said in a note today. “The economic revival will be very gradual and it remains to be seen whether the legislative chances will have a significant impact on the company’s profits.”

Unipetrol reported a 396 million-koruna loss before interest and tax in the fourth quarter, while revenue dropped 5 percent to 25.07 billion koruna during the period.

The refining unit, the company’s largest revenue source, posted an operating loss of 391 million koruna as trading environment remained “very tough,” the company said.

The petrochemical unit posted a 514 million-koruna operating profit. The retail unit reported an operating profit of 173 million koruna as sales improved and new Czech legislation curbed illegal fuel trade, the company said.

Unipetrol is planing to grow “significantly” in the retail sector through buying gas stations, the CEO said. The company will analyze any potential acquisitions, he said.

Unipetrol shares fell 1.6 percent to 159 koruna today in Prague. PKN Orlen SA, Poland’s largest refiner that owns 63 percent of Unipetrol, reported a net loss of 422 million zloty ($138 million).

To contact the reporter on this story: Ladka Bauerova in Prague at lbauerova@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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