PGNiG Group results First quarter 2016 May 9th, 2016
12 495 10 980 10 169 8 587 2 326 2 393 1 662 1 721 1 244 1 386-1 -2-4 -6 High sales volumes in all segments while decline in the price of oil and natural gas Revenue Operating expenses EBITDA EBIT Net profit -12% -16% 3% 4% 11% 0% -3-5 2 1Q2015 in PLN million 1Q2016-7
Performance drivers Stronger USD i EUR against PLN yoy 9-month average of crude oil prices down by 44% yoy and 6% qoq PLN 4,5 4.19 4.36 +4.1% 96 USD/bbl 100-44% 4,0 3.96 80 3.73 +6.2% 54 52 60 3,5-37% 34 40 Quarterly average USD/PLN exchange rate 3M moving average of Brent oil price in USD Quarterly average EUR/PLN exchange rate 9M moving average of oil price in USD 3,0 20 04'14 06'14 09'14 12'14 03'15 06'15 09'15 12'15 03'16 04'14 06'14 09'14 12'14 03'15 06'15 09'15 12'15 03'16 3
Performance drivers Average tariff price of gas fuel in Poland and the price of gas on the PPE PLN/MWh 120 110 117 115 112 106 105 102 100 90 80 70 60 PPE (day ahead market) Average regulated price of gas sold by the PGNiG Group in Poland 50 01'14 02'14 04'14 05'14 07'14 08'14 09'14 11'14 12'14 02'15 03'15 05'15 06'15 08'15 09'15 11'15 12'15 02'16 03'16 Notice: Price in the chart is calculated on the combined tariff-price sales of PGNiG SA and PGNiG Retail to customers in Poland. It excludes transactions on the Polish Power Exchange, discounts, and gas sold directly from the fields. The largest volumes of gas were traded on the PPE and other gas exchanges under contracts with maturities of a quarter, season (summer/winter) and gas year, with the spot market playing a complementary role in gas trading. 4
Segments results
Results of Exploration and Production segment under the pressure of low crude oil prices 1 217 1 045 339 426 878 619 561 333-2 -6 Crude oil sales yoy 348 / 398 ths. tonnes +14.4% Natural gas production yoy 1.2 / 1.2 bcm no changes Revenue Operating expenses EBITDA EBIT -14% 26% -29% -41% 0% -1-3 -4-5 6 1Q2015 1Q2016 in PLN million -7
Rebates policy and lower tariff responsible for lower Trade and Strorage revenue 11 190 9 619 10 571 8 959 619 660 579 599-1 -3-4 -5 Natural gas sales yoy 7.7 / 8.0 bcm +3.9% Gas inventory levels yoy 1.25 / 0.91 bcm -27.2% Quarterly opertaing margin yoy Revenue Operating expenses EBITDA EBIT 4% / 2% -2 p.p. -14% -15% 7% 3% 0% -2-6 7 1Q2015 1Q2016 in PLN million -7
1 316 1 397 795 639 521 758 302 533-3 -6 Operationally good result of Distribution segment without one-off events Gas distribution volume yoy 3,260 / 3,490 bcm +7.1% Revenue Operating expenses EBITDA EBIT 6% -20% 45% 76% 0% -1-2 -4-5 8 1Q2015 1Q2016 in PLN million -7
688 742 378 380 310 362 227 266-1 -4-6 Higher sales volumes supported very good results of Generation segment Heat sales yoy 15,055 / 16,152 TJ +7.3% Electricity sales yoy 1,349 / 1,390 GWh +3.0% Revenue Operating expenses EBITDA EBIT 8% 1% 17% 17% 0% -2-3 -5 9 1Q2015 1Q2016 in PLN million -7
Falling commodity prices and cost efficiency improvement positively impacted Q1 results 10 833 9 258 8 206 6 993 664 672 698 545 1 266 1 049-3 -4-5 Total operating expenses Cost of gas sold Depreciation and amortisation Employee benefits expenses Other -15% -15% 1% -22% -17% 0% -1-2 -6 10 1Q 2015 1Q 2016 in PLN million -7
Questions & Answers
Appendix
Results of E&P and T&S segments under the pressure of low crude oil prices Major share of Distribution in EBITDA. Segment s contribution to PGNIG Group s EBITDA Heat and Power Generation 15% 13% Q1 2016 Q1 2015 Expoloration and Production 26% 38% 22% 27% Distribution 32% Trade and Storage 28% 13
2 326-259 +41-3 2 393 +237 +52 Impact of the segments operating results on PGNiG Group s EBITDA EBITDA Q1 2015 E&P T&S Distr. Gen. Other EBITDA Q1 2016 in PLN million 14
Operating data 1,6 1,2 0,8 0,4 0 Gas output and crude output bcm 000 tonnes 600 1.1 1.1 1.1 1.2 1.2 1.2 1.1 1.1 450 386 367 310 304 317 358 348 300 271 150 Natural gas (left axis) Crude oil and condensate (right axis) 0 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 bcm 10 7,5 5 2,5 0 Gas sales volume and gas inventory levels PGNiG Group's gas sales volumes Gas inventory levels 3.3 2.05 3.6 2.72 6.8 7.7 2.06 1.25 4.8 3.9 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 1.80 2.77 6.5 1.74 8.0 0.91 Gas distribution volume PGNiG Group gas sales volumes by customer group mcm 4000 3,490 3,260 2,890 2,860 3000 2,020 1,880 2000 1,590 1,680 1000 0 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 15 * PGNiG SA, PGNiG Obrót Detaliczny, PST Polish Power Exchange (TGE) PST customers Refineries and petrochemicals Power and heat plants Nitrogen processing plants Retail, services, wholesale Other industrial customers Households 0.32 0.27 0.38 0.28 0.54 0.76 0.52 0.49 0.68 0.61 0.66 0.95 1.36 1.45 2.94 3.45 Q1 2015 Q1 2016 0,0 2,0 4,0 bcm
EIP- Over 35% planned gains for 2016-2018 achieved in Q1 2016 The Programme aims to permanently reduce the manageable cost base across core PGNiG Group segments Programme objectives: To set efficiency improvement targets for the individual segments and entities within the PGNiG Group and to define related benefits to quality improvement. To define the scope of action and to assign specific tasks to individual business segments based on identified areas for improvement. To implement initiatives designed to improve the PGNiG Group's operating efficiency by the end of 2018. PLN 114m cost savings in Q1 2016 PLNm Planned gains (accumulated) Achieved gains (accumulated) Operating expenses covered by the EIP 1200 1000 +8% 925 Other OPEX 24 Total OPEX PLN 29bn in 2013 Manageable OPEX 5 Key cost items (excluding PPE): Gas purchase costs Other fuel purchase costs Transmission service costs Depreciation and amortisation expenses 800 600 400 200 0 313 564 +5% 289 726 612 612 260 275 275 2014 2015 2016-18 16