Profits Fall More Than Expected at Polish Gas Group PGNiG
WARSAW, Nov 6 (Reuters) – Poland's biggest gas distributor PGNiG on Friday raised its 2015 core profit target thanks to cost cuts and increased production after it reported a bigger than expected 53 percent fall in third-quarter net profit.
The state-controlled group now expects to end this year with earnings before interest, taxes, depreciation and amortisation, at 6.3 billion zlotys ($1.61 billion), or 8.6 percent higher than it earlier estimated.
But PGNiG's shares fell more than 5 percent because the increase in the forecast was lower than expected by analysts.
"The board has raised the EBITDA forecast, but it is still lower then what analysts expect so we do not pay much attention to it," Beata Szparaga, analyst at Vestors DM, said.
Lower gas import costs and higher production from its fields off the Norwegian coast were behind the forecast increase.
But low oil and gas prices contributed to the big drop in profits in the quarter to 291 million zlotys. This compared with analysts expectations for a third-quarter net profit of 515 million zlotys.
The low prices also prompted PGNiG to cut its 2015 revenue target by 9 percent to 37.1 billion zlotys. PGNiG plans to reduce costs, including via job cuts, by 937 million zlotys in 2014-2016.
The group is also continuing gas price negotiations with its major supplier, Russia's Gazprom. It has managed in the past few years to reduce its reliance on gas from Gazprom and has been increasing imports from other directions, mainly from Germany.
But the company's efforts have been hampered by a delay to the completion of Poland's first liquefied natural gas (LNG) terminal on the Baltic Sea.
PGNiG has a LNG contract with Qatargas and at one stage faced the prospect of paying for gas it would not actually receive because of the delay to the Baltic terminal.
But in October the companies said they would extend an agreement made last year under which PGNiG covers the difference between the agreed LNG price and the price Qatargas would get for selling the gas originally destined for PGNiG to other markets. ($1 = 3.9070 zlotys)
(Reporting by Agnieszka Barteczko; Editing by Adrian Krajewski and Jane Merriman)