25.05.2017 PGNiG delivers impressive results in first quarter 2017
In the first quarter of 2017, PGNiG reported a record-high EBITDA of PLN 2.77bn, up 16% year on year. During the period, PGNiG's revenue came in at PLN 11.65bn, up PLN 672m (6%) year on year. The Group also reported a strong increase in volumes of natural gas sales (up 11% y/y) and distribution (13% y/y).
"Our excellent performance in the first quarter of 2017 is a result of the effective roll-out of PGNiG's new Strategy, which will continue to support the Company's steady growth. We are also satisfied with the results reported by our segments, in particular the Exploration and Production and the Generation segments, both of which delivered very strong growth", emphasized Piotr Woźniak, President of the Management Board of PGNiG SA. "With new contracts in the pipeline, we are consolidating our position on Poland's gas market and expanding our foreign operations. We are also successfully diversifying the sources of gas supply to the country", he added.
Exploration and Production: growth of over 80%
The E&P segment's operating profit for the first quarter of 2017 was PLN 1.08bn, up PLN 492m (83%) year on year. Such a significant growth was delivered on the back of higher sales revenue, which stood at PLN 1.85bn, having increased by PLN 500m (37%) year on year, with operating expenses remaining largely flat.
Trade and Storage: solid sales supported not only by the winter season
In the first quarter of 2017, the Trade and Storage segment earned operating profit of PLN 308m. A PLN 312m increase in the segment's revenue (to PLN 9.93bn) was driven mainly by rising volumes of natural gas sales across the Group, up 11% year on year (to 8.9 bcm). Sales of gas to strategic and wholesale clients expanded by 17% year on year, while PGNiG Obrót Detaliczny, the segment’s retail arm, increased its sales volume by 6%.
Distribution: rising volumes and new organisational structure
In the first quarter of 2017, the volume of distributed gas increased by 13% year on year, while revenue from the distribution services went up PLN 90m (7% y/y). Faster gas network roll-out across Poland and new customers in the portfolio are among the first effects of changes in the organisational structure of Polska Spółka Gazownictwa.
Generation: last year's acquisitions driving up segment performance
In the first quarter of 2017, the Group's EBITDA in the Generation segment came in at PLN 409m (up 13% y/y), with EBIT increasing PLN 35m year on year, to PLN 301m.
Two subsidiaries, namely Przedsiębiorstwo Energetyki Cieplnej Jastrzębie and PGNiG Termika Energetyka Przemysłowa (formerly: Spółka Energetyczna Jastrzębie), with combined EBITDA of PLN 40m, were the main contributors to the segment's results. Another important factor was volume-driven growth of revenue on heat sales.
Key developments in the PGNiG Group in the first quarter of 2017
New PGNiG Strategy for 2017-2022
In March, the PGNiG Group announced a new strategy for 2017-2022, which provides for roll-out by PGNiG SA of a new strategic management system based on the Balance Scorecard methodology. The Company intends to focus on balancing its financial, operational and development objectives.
Under the new Strategy, PGNiG SA's capex will be PLN 34bn within the five-year period, with half of the amount to be spent on hydrocarbon exploration and production. Cumulative EBITDA is projected at PLN 33.7bn. The Group also plans to spend PLN 680m on research, development and innovation, add new production capacities in Norway, and sell more gas in foreign markets.
PGNiG Group's new contracts
Polskie Górnictwo Naftowe i Gazownictwo SA successfully delivers the strategy of diversification of gas supplies to Poland. The Company executed a Supplementary Agreement to the Long-Term Contract with Qatargas, which will come into force on January 1st 2018. Under the new contract, Qatargas, one of the world's leading LNG producers, will increase the volume of LNG supplied to Poland to 2.7 bcm per year.
As part of its efforts to expand the corporate portfolio, PGNiG signed a long-term contract for the supply of gas to the ArcelorMittal Group in Poland. The volume of gas to be supplied throughout the contract term may reach around 1.6 bcm in total, with the maximum contract price of approximately PLN 1.4bn.
PGNiG Obrót Detaliczny signed a new indefinite contract for the supply of compressed natural gas (CNG) to Miejskie Przedsiębiorstwo Komunikacyjne w Tarnowie, the leading provider of public transport services in the city of Tarnów. In the first phase of contract performance, the annual volume of CNG supplies may increase from 0.23 mcm to 0.6 mcm; in the second phase, the volume may be as much as 1 mcm per year.
More LNG in the pipeline
In February 2017, PGNiG opened its office in London, which handles short-term international LNG contracts.
PGNiG is also consolidating its position in the small-scale LNG segment. On March 20, 2017, PGNiG dispatched the thousandth tank car filled with LNG at the President Lech Kaczyński LNG Terminal in Świnoujście to the Group's customers.
New production licences in Norway and Pakistan
PGNiG Upstream Norway expanded its operations on the Norwegian Continental Shelf by acquiring shares in two exploration and production licences. In one of the licences the Company acquired a 40% interest and became its operator. PGNiG also secured a production licence covering the Rehman field in Pakistan. The Company estimates that once fully developed, the Rehman and Rizq fields may produce 2.5 mcm of gas per day.
New dual fuel package customers
The dual fuel (electricity and gas) offering is very popular among retail customers, having attracted nearly 30 thousand new contracts by the end of the first quarter of 2017. The advertising campaign of the PiG (dual fuel) package proved very effective in enhancing recognition of the PGNiG brand against competing electricity providers.
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PGNiG SA Public Relations Department
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