Orlen Polish Refiner Loss Almost Triples as Oil Prices Slump

PKN Orlen SA, Poland’s biggest refiner, said its fourth-quarter net loss tripled from a year earlier after a 42 percent decline in oil prices cut the value of the fuel in its tanks.

The loss widened to 1.22 billion zloty ($325 million) from 421 million zloty a year earlier, the Plock, Poland-based company said in a regulatory statement on Friday. The loss was twice as big as the average estimate of 591.9 million zloty in a Bloomberg survey of 10 analysts.

Falling oil prices cut the value of Orlen’s inventories by 1.59 billion zloty, which resulted in the operating loss widening to 1.15 billion zloty from 488 million zloty a year earlier. Excluding the impact of weaker oil prices, the company would have posted an operating profit of 444 million zloty, the refiner said. The weakening zloty also increased the company’s financial costs to 265 million zloty from 10 million zloty.

Swings in oil prices will have a smaller impact on Orlen’s earnings as of this year after the government’s law will allow it to transfer 400,000 tons, or about 10 percent, of its inventories to a state company. The refiner sees a “temporary stabilization” of oil prices at current levels and a later increase due to economic growth, it said on its website.

Oil reserves will decline by about 700 million zloty and will be transfered in two tranches in the first and second quarters, Chief Financial Officer Slawomir Jedrzejczyk said at a conference call with analysts on Friday.

The company also wrote down 311 million zloty of the value of its Canadian oil producing unit TriOil Resources Ltd. because of the oil price slump.

Orlen shares declined 1.5 percent to 51.92 zloty at 9:19 a.m. in Warsaw, declining for a second day.

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