Orlen Sa

We are sitting here in Orlan headquarters in a meeting room to discuss Q3 and nine months of 2025, ending September 30th, financial and operating results. We are here in the room with Sławomir Jędrzejczyk, Group CFO, Damian Wieczorek, and my name is Jakub Fejlin, I'm Head of Investor Relations. Please don't please mind that we're doing it old school without video, so this is not a malfunction or technical problem. We would like to keep it that way for the time being and maybe further. So we will kick off. We're still having some joiners coming in, but since this is five past already, we'll be kicking off. And now I'll hand over to Swagomir, please.

Thank you, Jakub. So good morning, ladies and gentlemen. Let me start only by saying it's good to be back. Well, welcome to everyone. It's my pleasure and privilege to present Orlan's quarterly results. I would like to start with the highlights. First of all, macro environment and mixed views on that. First of all, lower oil and gas prices. So as you know, that impacted our upstream business. However, very good refining environment, very high margins. In petrochemicals, still we see market pressure, both in terms of margins and volumes. Electricity, stable prices. And in terms of retail, fuel retail, we observe lower fuel consumption, especially in diesel. And let's look at operations. And this is very positive news, I believe. We deliver very good results. Results in operations, higher gas production distribution and sales, higher throughput and wholesale fuel sales, however, lower sales in petrochemical, as I said, higher electricity production and higher non-fuel sales in retail. So, as a result, if we look into the financials, we delivered very solid EBITDA, close to 9 billion polis lottes, very high cash flow from operations altogether for the first nine months, ...of 2025, 34.4 billion polis lotis, and we managed to continue our CAPEX program. Altogether, we spent 21.1 billion polis lotis for the first three quarters, and we pay record high dividend of 7 billion. So, as a result, we managed to decrease our debt level by 6 billion polis lotis in 2025. So now let's move to slide number four, which is highlights, financial results highlights. As you can see, revenue dropped to 61 billion in the third quarter. However, that was due to the fact that oil and gas prices were lower. Then very solid EBITDA, close to 9 billion polis lotes altogether, close to 30 billion polis lotes in the first three quarters. Very good cash flow from operations, as I said, although in the third quarter, slightly lower than in past quarters due to the fact that we increased our working capital by $2 billion in the third quarter due to the fact that the prices increased and the volume increased. CapEx, we continue. Our CAPEX program, our budget was 35, so currently after three quarters, 21.1. I will come back to this in the slide dedicated to CAPEX. And as a result, free cash flow close to 1 billion polis lotis and very, very safe net debt position and net debts to EBITDA of 0.14. So now let's move to EBITDA delivered by segments. As you can see, we delivered... Good results in all the segments, upstream and supply 3.3, downstream 2.4, energy 2.2 and customer and products 1.6. So altogether 8.9 billion. And what's very interesting, I believe, is that the bottom is a change year on year. So in upstream is minus 3.2. But I would like to pay your attention that basically the results of 24 were, let's say, inflated. 1.8 billion out of these 3.2 is basically higher guys prices we achieved in 24 due to the fact that we contracted 24 based on 23 prices. 0.8 is basically a purchase price allocation that inflated results in 24. So you may say that this drop is of course due to the fact that there were lower prices of oil and gas. However, please bear in mind that 24 is not comparable due to those two one-offs, let's say. In downstream, 1.9 billion higher results, which is, I believe, great due to fantastic macro environment in refining. From the refining margin point of view, very solid results in energy and consumer end products. Corporate functions increased by more than 200 million. 100 is, you may say, phasing, and 100 is due to the fact that we increased our labor and general expenses by a few percentage points year on year. Now let's move to slide number six, where we present our operational results. And this is evidence, what I said, that from operations, it was a very good quarter. So we increased production and wholesale gas sale in upseam and supply. We slightly increased crude oil throughput and wholesale fuel sale by one percentage point. However, you can observe here a minus 16% drop in petrochemicals, and this is clear evidence that petrochemicals are under huge pressure, both from a petrochemical margin perspective as well as volumes. In energy, steady growth in almost all areas, gas distribution plus 3%, heat generation plus 5%, electricity generation plus 7%, and what's very important, renewables generation increased by 43%. So what I can say is that currently in the electricity generation, renewables constitute 17%. This is 4% increase as compared to last year. As regards consumer and products, very good results in retail gas and electricity sale. However, we see some pressure on the consumption of of fuel in Poland, especially diesel. That's why you can see that our retail fuel sales dropped by two percentage points. Now let's move to each segment where we elaborate more. So let's start with page number seven, upstream and supply. We managed to produce up to 200,000 BOE per day. Majority of this, more than half of this is of course Norway, but then we have Poland and the remaining amount is Canada and Pakistan. Majority of this is gas production. And if you can see The result is lower by 3.2 billion, but as I explained, Poland and upstream international, this huge negative impact of lower gas and oil prices was to some extent, or even a big extent, offset by higher production both in Poland and Norway. And this 2.8, as I explained before, basically this is lower realized gas sale price. So you may treat it as a kind of one-off from 24. And negative impact of the settlement of PPA, this is 0.8 billion coli zlotys, again, from 2024. So now let's move to downstream. And definitely... High refining margins help us a lot. So in the third quarter, that was almost doubling, 15.2 US dollar per barrel. However, petrochemical margin is under pressure, 16% drop to 168 euro per tonne. But it was very good. I believe crude oil production improved by 1%. So utilization of our Polish operations was basically 100%, whereas Lithuania, 94%. And in Czech Republic, that was lower utilization, 75% due to plant. and unplanned shutdowns. So there was a failure in Litvinov, so that's why we produced less petrochemical products. So as you can see on this slide, petrochemical is minus 92 million contribution to Evita-LiFo. However, if it hasn't been for Litvinov failure, I believe that would be kind of slight plus in the petrochemical business as well. However, we all know that we are looking at downstream business from the whole value chain perspective. So, of course, great refining is offset by weak petrochemical business. However, altogether, I believe downstream delivered very solid results of 2.4 billion. Now let's move to energy. Improvement, higher results by 500 million, basically, and the biggest improvement is in distribution networks of 318 million polyslotters, and that was basically due to increasing gas distribution volumes and higher gas and electricity distribution tariffs. In all other areas, as you can see, heating, conventional energy, new energy, and electricity trading, we delivered positive results as well. Now let's move to consumer and products. Very stable result in retail, fuel and shops. And we see some pressure on the consumption and on the volumes. That's why it was a slight drop in that area. However, we managed to regain that drop from the non-fuel sale. We continued our promotions during summer periods, so that decreased the margins. However, we managed to regain that from the non-fuel sale. And this increase of 300 million is basically retail electricity in gas. But please bear in mind that high part of this increase was again a kind of one-off from 24. That was positive impact of the settlement of PPA. roughly 100 million, so slightly inflated the results. Altogether 1.6 billion EBITDA, very good result in consumer and products. Now let's move to CAPEX. So you can see the split of CapEx, our budgeted CapEx for 25, 35 billion. And that's almost evenly spread across upstream supply, downstream and energy. However, in the past quarters, we indicated that our CapEx program is roughly between 33 and 35 billion. So looking at utilization of CapEx or realization of CapEx for the first three quarters, probably we may expect to be closer to the lower end of this range. However, we'll see how this develops in the fourth quarter. Of course, we continue our projects in upstream supply to increase our production according to our strategic goals. In downstream, of course, we have three areas of projects. One is enlarging value chain, which is new chemical project. Then we improve our product slate, and this is the construction of, for example, hydrocracking unit in Możejkaj or hydrocracking oil block in Gdansk. And of course, we are doing projects that create biocomponent, second generation biocomponent, like retention on all bioethanol in Jedlice. In energy, Of course, we all know that energy transformation is not only renewable energy, but we need to absolutely enlarge and modernize distribution networks. So that's why you can see expansion and modernization of power grid and gas distribution network. And our key projects in these renewables energies, of course, Baltic Sea. So we continue this project. And we target in the second half of 2026 to have this farm fully operational. We continue as well our CCG project. And Ostroenka and Grudion, second half of 2026, should be operational. And, of course, we started the new projects like CCGT, Grudion's the second plant, and in Gdańsk. As regards consumer and products, we expand and modernize and rebrand our fuel network stations and we build alternative fuel stations networks. So this is ongoing tasks and we allocate sufficient capex for that project. So now let's move to our liquidity position. On slide number 12, we present the waterfall. So we delivered 34.4% operational cash flow. That was, of course, inflated by a working capital decrease, 4.8 billion altogether for the first three quarters. However, the third quarter itself was a kind of minus 2 billion. So we observed this effect of increasing oil and gas prices and volumes increased. So we spent investment cash flow 21.9, that includes our leasing cash out, and managed to pay record high dividend of 7 billion, so altogether we decreased our debt by 6 billion polizloty. So we are in a very good financial position for the next years to come. We all know that we have quite significant capex program for the next three years. So this safe debt position is very helpful. Maturity, this is very important as well. Average majority, we have like 20... the 2020, 32 and 33, so like seven years, six, seven years of average maturity. So to finalize outlook, which is probably the most interesting slide in my presentation, because here we present how we see the macro environment and our operations. So we believe that we see fourth quarter so far at least 25 as compared to third quarter 25, positively in upstream and energy segments, more or less stable in downstream and lower due to seasonality in customer and products. If we deep dive a little bit in all the segments, So enough cement supply, higher production, because we don't have any significant maintenance works. We expect higher gas prices due to seasonality and higher sales volumes as well. However, lower oil prices that can, of course, impact us in business as well. But altogether, we believe it can be, at least as I said so far, good quarter for us. From the energy point of view, again, seasonality, so higher production sales and distribution, higher heat production, higher electricity quotations, and higher gas prices may affect slightly negatively, of course, the energy segment, however, altogether positive as well. And mixed views in downstream, of course, refining is absolutely great, as we know, so this continues to be great. However, we may expect a little bit lower throughput, lower fuel wholesale volumes due to seasonality, and, of course, challenging environment in petrochemical business. So that's why, all in all, probably a kind of stable situation is the most probable outcome in downstream. And consumer and products. Due to seasonality, we expect lower fuel sales and energy and gas negative as well. Of course, higher gas sales volumes, but we expect a negative impact of electricity tariff reduction and maintained frozen prices for households. So that concludes my presentation. So we are ready now for Q&A. Thank you very much.

As usual, I would like to take your questions by saying who raised their hand first. And surprisingly, but not so much to ourselves, it's Anna from UBS who's going to be asking the first question. Please go ahead. Anna, we can't hear you.