PGNiG Profits Sink under Impairments in Q1
Proftis at PGNiG were down 29% year on year (yr/yr) in the first quarter as a result of impairments, the Polish gas firm reported on June 4.
Net income came to zlotys 779mn ($198mn), down from zlotys 1.1bn a year earlier, after PGNiG booked zlotys 561.6mn in impairment charges on domestic non-current hydrocarbon assets. It suffered a further zlotys 203.4mn in impairment losses on non-current hydrocarbon assets outside of Poland.
Revenues held relatively firm at zlotys 13.76bn, however, down 4% from year earlier. Core earnings (Ebitda) were zlotys 2.08bn, down 6% yr/yr.
“Our results for Q1 2020 show that PGNiG has stable business foundations. We delivered a good result despite the sharp decline in hydrocarbon prices, a relatively warm winter and the beginning of the coronavirus outbreak in Poland," CEO Jerzy Kwiecinski said. "With the strong foundations, we can further develop our business in Poland and abroad and work consistently on updating the PGNiG Group's strategy."
Revenues from PGNiG's exploration and production activities fell 26% yr/yr to zlotys 1.3bn, with the company pointing to a 20% decline in the price of Brent oil and a 40% slump in gas prices at the Polish power exchange. Production was flat at 1.16bn m3 of gas and 325,000 mt of oil.
PGNiG's trade and storage segment performed well operationally, with gas volumes increasing by 7% to 10.3bn m3. But revenues still dropped 6% to zlotys 11bn on weaker prices. The cost of buying gas, most of which comes from Russia, also fell, though, after an arbitration court in Stockholm ordered Gazprom to adjust the pricing formula for gas supplies to Poland.
Distributed gas volumes were up 2% yr/yr at 3.96bn m3, despite warm weather, with revenues remaining stable at zlotys 1.4bn. But at PGNiG's generation business increased revenues by 2% to zlotys 1bn, although higher temperatures led to a 5% decline in heat volumes and a 9% drop in electricity sales.