OREANDA-NEWS. During the first half-year 2013, LOTOS put down solid foundations for its ambitious 'Efficiency and Growth 2013-15' programme.

Q2 2013 saw a noteworthy achievement with the improvement of the Company’s liquidity position and reduction of its overall debt level, which fell by more than PLN 1bn year on year.

At the close of H1 2013, LOTOS posted revenue of nearly PLN 13.3bn, down by 18% year on year. Top-line performance was affected by a number of factors, including lower sales volumes due to the scheduled maintenance shutdown of the Gdansk refinery, as well as a further decline in domestic fuel consumption.

The over one-month long shutdown was successfully completed on May 10th 2013 at a direct cost of PLN 92.1m, a large part of which reduced the second quarter performance. Another consequence of the shutdown was a drop in production, which went down 29% quarter on quarter in Q2 2013 and 17% year on year in H1 2013.

Following the Spring 2013 shutdown, LOTOS plans to extend the time interval between overhauls from four to five years, which should work to the benefit of its financial performance.

According to the Polish Organisation of the Oil Industry and Trade (POPiHN), in the first half of 2013 the consumption of liquid fuels in Poland fell 6.9% year on year (3% in the case of gasoline and 8% in the case of diesel oil), due mainly to an expanding grey market, which may have accounted for 10%-12% of total diesel oil sales in January-June 2013, according POPiHN’s estimates. By comparison, in Q1 2013 POPiHN estimated its share in diesel oil sales at just 9%.

Moreover, the macroeconomic landscape in Q2 2013 was less favourable than in the first three months of the year. The model refining margin fell to USD 4.08/bbl (-37.4% y/y and 8.5% q/q). The Brent/Ural differential stood at USD 0.73 (-65.5% y/y and -58% q/q). 

The falling margin and differential weighed down on LOTOS’ operating result. At the end of Q2 2013, the Company reported PLN -101m and PLN -126m in operating and net result respectively. At the end of H1 2013, its consolidated EBIT was PLN -126m, while the net result came in at PLN -273m.