PKN Orlen (WSE: PKN / FRA: PKY1): Russian Oil Sanctions Bite But Looks to Expand in Germany Plus Pays Record Dividends

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Poland’s state-controlled oil company Polski Koncern Naftowy ORLEN Spólka Akcyjna (WSE: PKN / FRA: PKY1) is a multinational oil refiner and petrol retailer providing energy and fuel for more than 100 million Europeans. According to the Financial times, the ban on Russian crude oil is costing the Company millions of dollars a day as it struggles to find alternative supplies for its Czech refinery:

  • Russian oil ban costs Polish oil company PKN Orlen millions a day, says boss (State-controlled group still uses Russian oil piped through Druzhba network not covered by sanctions)
    • Daniel Obajtek, chief executive of PKN Orlen, described losing Russian oil as a forfeit of about $27mn a day because of the price difference of about $30 per barrel between the cheaper Russian oil and alternative supplies.

Nevertheless, PKN Orlen is looking to further expand it’s existing operations in Germany, is focused on “energy transition” activities, and is paying record dividends.

OVERVIEW:

Shareholders Structure
  • Russian oil ban costs Polish oil company PKN Orlen millions a day, says boss(FT) May 2023
    • Orlen dominates the market in Poland and also has refining operations in Lithuania, but Obajtek said that he saw the potential to expand abroad, notably in Germany.
    • “We are very interested in the German market, particularly since we know it. We have already 600 stations there and we do not intend to stop there, but we can also offer a kind of diversification alternative for the German refinery sector.”
  • Poland’s PKN Orlen Q4 net profit surges on takeovers, refining (Reuters) Feb 2023
    • The results include its Lotos business and partial PGNiG earnings after Orlen took over its peers in line with the government’s drive to tighten control over the economy and create “national champions”.
    • “Fourth quarter results show unequivocally that the merger between PKN Orlen, Grupa Lotos and PGNiG made sense and is already giving tangible results,” CEO Daniel Obajtek said in a statement.
  • PKN Orlen recommends record dividend for 2022 (Reuters) Feb 2023
    • The distribution amount will be no less than the base guaranteed dividend, which has been set at 4 zlotys per share for 2022, and will be raised each year by 0.15 zloty until it reaches 5.2 zlotys per share in 2030.
    • This means the base dividend will rise by as much as 49% over the decade.
    • Following its shift to an energy company, less narrowly focused on fossil fuel, PKN Orlen announced more ambitious renewable energy targets and envisages spending about 120 billion zlotys on green projects – or 40% of its planned capital expenditure – by 2030.
  • P/E (Google Finance): 2.17 / Trailing P/E (Yahoo! Finance): 1.55 (no forward P/E)
  • Dividend Yield (Google Finance): 8.78% / Forward Dividend & Yield (Yahoo! Finance): 8.78%

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