Financial results in Q12014 compared to Q12013:
• Lower revenues from product sales by 43 per cent;
• EBITDA LIFO down by USD 60m (better EBITDA LIFO by USD 27m);
• Lower total sales volume by 40 per cent.
Unfavorable macroeconomic conditions and the impact of heavy pressure on margins in the whole European oil refining industry continued to affect ORLEN Lietuva’s performance in 1Q2014. Striving to minimize the influence of the market-driven unfavorable conditions, refinery’s throughput has been limited to a necessary minimum, that is to 60 per cent of its nameplate capacity. As a result, the Company’s revenues decreased by 43 per cent, compared to the same period of 2013. EBITDA LIFO in 1Q 2014 amounted to USD -21 m, which is by USD 60m lower than in 1Q 2013; however this indicator was better by USD 27m than in 4Q 2013.
“During the 1Q2014 negative macroeconomic climate for refining sector continued to influence results of ORLEN Lietuva. Consequently we were forced to reduce throughput of the Mazeikiai refinery to necessary minimum of 60 %. Moreover high logistic costs significantly weakened the Company’s financial performance. Even though we carried out a number of restructuring initiatives, net result of ORLEN Lietuva in 1Q2014 was negative and by USD 41 m worse than in the same period of previous year. Such change perfectly shows that internal potential for further improvement is now exhausted and for that reason we seek the support of Lithuanian authorities, especially with regard to reducing rail freight tariffs,” said Ireneusz Fąfara, ORLEN Lietuva general director.
In order to secure further operation of the Mazeikiai refinery, concrete solutions in the area of logistics are absolutely necessary. Therefore ORLEN Lietuva expects immediate decisions aiming at reduction of the railway freight tariffs for its products. Today, they are higher than t tariff rates offered to the Company’s competitors from Belarus or Russia.
The unfavorable situation on the Latvian and Estonian markets caused lower sales by 11 p.p. (1Q14 /1Q13).
Reduced throughput resulted also in the increase of the Refinery’s internal usage, i.e. fuel and losses, by 1.4 p.p. 1Q14/1Q13.