Adverse external microeconomic circumstances, such as decrease of the world crude oil and petroleum products prices in the 2nd half of 2008 as well as associated depreciation of crude oil and petroleum products inventories, had a material negative influence on AB Mazeikiu Nafta financial results of the year 2008.
Though under consolidated financial statements of PKN Orlen (based on the fair market value of assets acquired) the losses incurred by AB Mazeikiu Nafta in 2008 amounted to USD 258.8 million, nevertheless AB Mazeikiu Nafta Group consolidated net profit (taking into consideration the historical value of the assets) for the year 2008 reaches LTL 55 million (or USD 23 million).
Despite of the complicated situation on the global markets, the Company managed to achieve the throughput being the highest from its privatization in 1999. During twelve months of the year 2008 AB Mazeikiu Nafta refined 9.595 million tons of feedstock, including 9.241 million tons of crude. The volume of feedstock refined during the same period of 2007 was 5.816 million tons, including 4.741 million tons of crude.
Light petroleum products yield in the year 2008 reached 72 percent and was higher by 3.4 percent in comparison with the year 2007. Volume of petroleum products exported by the Company amounted to 7.1 million tons, i.e. by 3.2 million tons higher than in the year 2007.
During the 4th quarter of 2008, the volume of feedstock refined amounted to 2.463 million tons, including 2.463 million tons of crude, and this is higher by three times than for the same period of 2007 (737 thous. tons) when the Company was carrying out the turnaround. The light petroleum products yield during the last quarter of 2008 reached 71.8 percent, and was higher by 9.4 percent in comparison with the same period of 2007.
AB Mazeikiu Nafta Group operating profit (EBIT – earnings before interest and taxes) under International Financial Reporting Standards (taking into consideration the historical value of the assets) for twelve months of the year 2008 was positive despite of the negative market trends associated with depreciation of inventories. EBIT for the year 2008 reached LTL 93.9 million (USD 40 million) and was higher by 31 percent if compared to the year 2007.
AB Mazeikiu Nafta Group earned LTL 55 million (USD 23 million) of consolidated net profit for the year 2008. EBIT and net profit indicators have been positively influenced by the third insurance payment of USD 63 million received by the Company for the Vacuum Distillation Unit damaged by fire in October 2006, as well as recovery of LTL 32 million (USD 13.3 million) fine imposed by the Competition Council in 2005. Successful completion of the 2007 turnaround, and Vacuum Distillation Unit restarted in January 2008 also had a material impact on the performance results.
In the year 2008, the Company continued implementation of the projects under Modernization Program and invested USD 241.7 million. The major projects of the last year were modernization of Diesel Hydrotreatment Unit and construction of the new Hydrogen Generation Unit. Modernization of Diesel Hydrotreatment Unit ensured production of low-sulfur diesel fuel allowing the Company to maintain its sales level on the European Union markets after enforcement of new requirements at the beginning of this year.
In the year 2008 AB Mazeikiu Nafta continued its restructuring activities, optimization of workforce, reduction of operating costs, and increase of productivity as well as implemented the projects related to the improvement of the Company’s management processes. OHSAS 18001 certificate granted to the Company evidences high quality of AB Mazeikiu Nafta management systems in the area of occupational health and safety, while ISO 14001 certificate is a testimonial of high quality management systems in the environmental area.
The Company also significantly improved its efficiency in 2008. However, in comparison with the similar refineries of the Central and Eastern Europe, more accomplishments are necessary. AB Mazeikiu Nafta will further continue improvement of its operational and investment efficiency, and adjust its investment plans in case logistics-associated decisions being beneficial for the Company are not made.