Czech Unipetrol dividend remains possible despite August accident

Unipetrol still sees a chance of paying a dividend from this year's profit, although this option appeared unrealistic after the accident at its Záluží plant. Unipetrol last paid a dividend in 2007.

Despite the August accident, Unipetrol still sees a chance of paying a dividend from its 2015 profit

Czech petrochemical company Unipetrol, 63% owned by Poland's PKN Orlen, still sees a chance of paying a dividend from its 2015 profit, although it is still too early for a final decision.

Unipetrol's situation was complicated by an explosion and subsequent fire on 13 August at the polyethylene and polypropylene plant in Záluží, Litvínov. The shutdown of feedstock production units is affecting the volume of crude processed at the entire Litvínov refinery.

Unipetrol CEO Marek Świtajewski said in an interview with Reuters on Wednesday that the company had tried to shorten the shutdown in Litvínov, but the previously stated timeframe for the ethylene unit outage until July 2016 remains realistic.

Last month, Unipetrol said it had lost around 1.6 billion crowns in the third quarter due to the accident and subsequent shutdown, although it is insured against future losses.

Management expects to return to profit this year.

„Had this accident not happened, the possibility of paying a dividend would have been very high, but it is now too early to decide. There is still a chance that Unipetrol will pay a dividend for 2015.“
Unipetrol CEO Marek Świtajewski

The company decided not to pay a dividend for 2014 due to an uncertain macroeconomic outlook and future investments. In September, Unipetrol launched an 8.5 billion-crown investment in a new polyethylene unit, while uncertainty over the cost of repairing the damage caused by the August accident also played a role.

Świtajewski said that investments such as April's acquisition of full ownership of the country's only two refineries enable the company to remain profitable even when margins fall sharply. Similarly, hundreds of smaller operational projects added more than 1 billion crowns to EBITDA in 2014. It will be the same or even better in 2015, he added.

According to Świtajewski, margins should also normalise in 2016.

„I am afraid refinery margins will not be as outstanding as they were this year … I think they will normalise somewhere between $2 and $4 per barrel“