WSJ:PGNiG Hit By Norway Writedown, Russian Gas Price
--Consolidated net loss of PLN19.7 million substantially short of market expectations
--Write-down on its Norwegian upstream unit weighed on earnings
--Oil & Gas Services unit saw sales rise 30% as oil majors search for shale gas in Poland
(Adds detail, analyst comment.)
By Marynia Kruk
Of DOW JONES NEWSWIRES
WARSAW (Dow Jones)--Polish natural gas monopoly Polskie Gornictwo Naftowe i Gazownictwo SA (PGN.WA) Wednesday swung to a consolidated net loss in the second quarter after a write-down of its Norwegian upstream operations and as the cost of Russian gas outpaced the price at which the company sells to its domestic customers.
The state-controlled company's quarterly net loss was 19.7 million zlotys ($6.84 million), below the PLN184 million in net profit forecast in a Dow Jones Newswires survey of seven analysts and below the PLN5 million profit it eked out a year ago.
"Higher costs in its distribution segment, a 12% rise in the cost of gas imported from Russia, and a drop in sales volumes" also contributed to a disappointing result which was worse-than-expected in every segment, said Pawel Burzynski, an analyst at BZWBK.
Sales were up 8.2% to PLN4.48 billion, boosted by the higher price of crude oil PGNiG extracts and sells on the unregulated market. Analysts were expecting sales of PLN4.45 billion.
Revenue from PGNiG's Oil & Gas Services segment jumped over 30% on the year, the company said, as the search for shale gas in Poland ramps up and the company does a brisk trade in geological and seismic reaching consulting. PGNiG enjoys a near monopoly in this business.
PGNiG also had a PLN76 million writedown related to its Norway concession. Arkadiusz Chojnacki, an analyst at IPOPEMA in Warsaw, described this as "unexpected" and said the company's profit from hedging was also lower than expected.
Shares in PGNiG dropped as much as 4.5% in early trade, and at 0752 GMT were down 4.1% at PLN4.01. Warsaw's large-cap WIG20 index was up 0.8%.
-By Marynia Kruk, Dow Jones Newswires; +48 22 447-2431; marynia.kruk@dowjones.com
