PKN Orlen Q4 net profit surges on takeovers, refining

PKN Orlen’s Q4 petrochemical operating profit dropped 76.9% to zlotych (Zl) 270m (USD60.5m) on lower margins plus higher overheads and labour costs amid an economic downturn, as per Reuters.

Orlen’s Q4 2022 model petrochemical margin fell 8.6% to EUR1,056/tonne from EUR1,155/tonne in the third quarter of 2022. Versus the fourth quarter of 2021, it declined 15.7% from EUR1,253/tonne.

Orlen’s Q4 petrochemical sales volume amounted to 1.1m tonnes, flat against the figure recorded for the third quarter of last year and 12% lower versus 1.3m tonnes in the fourth quarter of 2021.

For polymers, the sales volume declined 2% year on year to 161,000 tonnes in the fourth quarter of 2022 from 165,000 tonnes in the fourth quarter of 2021.

For purified terephthalic acid (PTA), sales rose 28% to 120,000 tonnes in the fourth quarter of 2022 from 94,000 tonnes in the fourth quarter of 2021.

For fertilizers, it declined 22% to 201,000 tonnes in Q4 2022 from 257,000 tonnes in the fourth quarter of 2021.
The group net result (as presented in the table above) does not include a one-off profit on what Orlen described as its “bargain purchase” of fellow state-controlled group PGNiG, which cost Zl 8.2bn.

Orlen said it expected its petrochemical model margin to be around EUR1,100/tonne as a result of a drop in demand for petrochemical products due to the economic slowdown and ongoing inflation.

We remind, PKN ORLEN, finalised a transaction to acquire a part of Poland’s largest plastics manufacturer, Basell Orlen Polyolefins, in which the ORLEN holds an equity interest. The acquisition was approved by the antitrust authorities in Poland and the Netherlands. The business segment, acquired by ORLEN, specialises in the production and sale of low-density polyethylene (LDPE) as well as customer service in the Polish market. It is a polymer commonly used to make consumer and industrial products, found in plastic films, bags, canisters, food packaging, as well as components of electronic devices, such as wires and cables.

mrchub.com

In 2023, PTT Plc's PTT Global Chemical Plc (PTTGC) aims to raise the production of petrochemical products by 15% to serve expanding demand after the pandemic, said the company.

Demand is predicted to return to levels observed before the pandemic. Additional output comes from the full operation of the oil refinery site of PTTGC, as well as plans to postpone plant closures for major maintenance. The firm also invested Baht 5.1 bn to increase the manufacturing capacity of the second unit of the olefin production site. The capacity growth is aligned line with the business strategic plan of PTTGC.

Operations at the new 250,000 tonnes/y polypropylene production unit are slated to begin in 4Q 2023. The project will raise polypropylene output to more than 1 M tonnes/y. Moreover, PTTGC is targeting to avoid fierce competition among petrochemical manufacturers by putting additional emphasis on the sales of high value-added polymers. Such products produce higher profit margins compared to that of commodity-grade petrochemical products. High value-added polymers are feedstocks for building materials, special textiles and automotive parts.

The firm intends to have high value-added polymers account for 56% of total sales by 2030, an increase from 36% in 2022, while the share of commodity-grade polymers will decline from 64% in 2022 to 44%. In 2023, PTTGC aims to assign capital expenditure of Baht 10 bn for the ongoing construction of a 75,000 tonnes/y polylactic acid (PLA) manufacturing site in Nakhon Sawan, Thailand. Its commercial operation is slated to begin in 2024. Moreover, the company intends to invest Baht 5 bn to support its carbon neutrality-related projects, including the usage of carbon-capture utilization and storage technology and reforestation, during 2022-2030.

As per MRC, Thai PTTGC is planning a capital investment of USD608 million over five years, including two start-ups this year. PTTGC's joint venture with Austrian packaging and recycling company ALPLA, called ENVICCO Ltd, is expected to produce recycled polymers at Map Ta Phut in Rayong Province. The ENVICCO plant, which can produce 30,000 tons per year of recycled polyethylene terephthalate (R-PET) and 15,000 tons per year of recycled low-density polyethylene (R-HDPE), is expected to enter commercial operation in the first quarter of 2022.

PTT Global Chemical (PTTGC) was founded on October 19, 2011 after the merger of PTT Chemical Company and PTT Aromatics and Refining Company to become the flagship of the PTT chemical group. As a result of the integration, the company's total capacity for the production of olefins and aromatics reached 8.2 million tons per year, and oil products - 280 thousand barrels per day, which makes it the largest integrated petrochemical and oil refining company not only in Thailand, but also in Asia.

mrchub.com

Fluor Corporation announced financial results for its year ended December 31, 2022. Revenue for 2022 was USD13.7 billion and net income from continuing operations attributable to Fluor was USD145 million, or USD0.73 per diluted share, said the company.

Consolidated segment profit2 for the year was USD427 million compared to USD415 million in 2021. Excluding the adjustments outlined in the reconciliation table at the end of this release, the company recognized adjusted earnings per diluted share2 of USD0.82 for 2022. Results for the year reflect an average tax rate of 70% due to the current mix of global earnings and losses in jurisdictions that provide no tax benefit.

“In 2022, we demonstrated our resilience, continued to grow and remained steadfast in taking actions to achieve positive results,” said David Constable, chairman and chief executive officer of Fluor. “With a renewed sense of confidence, I am excited about the opportunities in front of us and encouraged by our ability to deliver significant shareholder value now and in the years ahead."

Full year new awards were USD19.8 billion compared to $10.0 billion a year ago. Ending backlog for 2022 was USD26.0 billion compared to USD20.8 billion in the prior year. General and administrative expenses for 2022 were USD237 million compared to USD226 million a year ago. Fluor’s cash and marketable securities at the end of the year were USD2.6 billion, including USD338 million in cash and marketable securities held by NuScale.

We remind, Fluor Corporation announced that its Advanced Technologies & Life Sciences business was selected by Agilent Technologies, Inc., to expand its oligonucleotide therapeutics manufacturing facility in Frederick, Colorado, just north of Denver. Fluor is supporting engineering and procurement as part of the project. The total project value is USD725 million.

mrchub.com

Saudi Chemical Holding Co.’s (SCHC) subsidiary Saudi Chemical Co. Ltd., in partnership with a local company, received a gas allocation letter from the Ministry of Energy to establish a facility for the production of nitric acid and ammonium nitrate, said the company.

The facility’s annual production capacity for nitric acid will be 440,000 tons, and for ammonium nitrate will be 300,000 tons, SCHC said in a statement to Tadawul.

The project is the first of its kind in the region. It provides the raw materials required for several downstream industries in local markets, mainly civil and military explosives, fuel of missiles and rockets propellants, smelting salts used in the production of solar panels, in addition to some pharmaceuticals.

The financial impact of this announcement cannot be determined at present, the statement noted, adding that any future developments will be announced.

We remind, the Ministry of Investment of Saudi Arabia has inked an agreement worth $1 bn with UPL Ltd to produce specialized agriculture chemicals within the Kingdom.

mrchub.com

Occidental Petroleum Corp. (OXY) reported fourth-quarter earnings of USD1.93 bn, said the company.

The Houston-based company said it had net income of USD1.74 per share. Earnings, adjusted for non-recurring gains, came to USD1.61 per share.

The results did not meet Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of USD1.83 per share.

The oil and gas exploration and production company posted revenue of USD8.33 billion in the period, which also did not meet Street forecasts. Five analysts surveyed by Zacks expected USD8.67 bn.

For the year, the company reported profit of USD13.3 bn, or USD12.40 per share. Revenue was reported as USD37.1 bn.

We remind, Enterprise Product Partners and Occidental Petroleum plan to forge a carbon dioxide sequestration and transportation system that could sell carbon management services to emitters along the Texas Gulf Coast, they said in a statement. They plan to combine the pipeline company’s transportation network with carbon sequestration hubs under development by Oxy, an oil producer expanding into the carbon management business. The idea is to focus initially on capturing emissions along the industrial corridor from Houston to Beaumont and Port Arthur.

mrchub.com