said first-quarter profit rose as Poland’s second-largest oil refiner benefited from climbing crude prices, the strengthening zloty and an increase in capacity.
Net income jumped to 635.2 million zloty ($233 million) from 22.9 million zloty a year earlier, the Gdansk-based company said in a regulatory statement today. That beat the 512.1 million-zloty mean estimate of seven analysts surveyed by Bloomberg.
A 17 percent rise in the oil price during the quarter raised the value of crude in Lotos’s tanks, contributing 278.1 million zloty of its 412.6 million-zloty earnings before interest and taxes. Lotos and larger rival PKN Orlen SA want the government to reduce the amount of oil they’re required to hold as strategic reserves, to reduce the volatility of earnings.
Lotos this year completed a 5.6 billion-zloty investment that boosted capacity at its refinery by 75 percent to 10.5 million tons a year. The company refined 2.22 million tons of oil in the first quarter, compared with 1.61 million tons a year earlier, helping push sales up 67 percent to 6.52 billion zloty.
Lotos borrowed dollars to fund the investment, and the Polish currency’s gains during the quarter cut the zloty- denominated value of this debt, increasing income from financial operations to 335.3 million zloty, compared with a loss of 131.2 million zloty last year.
The start of production from Lotos’s Yme Norwegian offshore field, in which it holds 20 percent, will be delayed to the end of the year, the company said, confirming a report by operator Talisman Energy Inc. (TLM) Lotos had forecast it would extract about 100,000 tons of oil a quarter starting in July.
Lotos’s management proposed that shareholders pay themselves no dividend from last year’s profit.
To contact the reporter on this story: Maciej Martewicz in Warsaw at mmartewicz@bloomberg.net;
To contact the editor responsible for this story: James Gomez at jagomez@bloomberg.net
