UPDATE 2-Czech group Unipetrol to invest $1 bln over five years

Tue Jun 11, 2013 7:25am EDT

Related Topics

* Sees cumulative EBITDA of CZK 25 bln in 2013-2017

* Majority of capex to go to petrochemical segment

* No official talks with the state, Shell about refineries (Adds CEO comments on dividend, Rafinerska)

By Jan Korselt and Jason Hovet

PRAGUE, June 11 (Reuters) - Czech downstream oil group Unipetrol plans to invest 19 billion crowns ($976 million) over the next five years under a new strategy to help it return to profit, the company said on Tuesday.

Unipetrol said it was now aiming for cumulative earnings before interest, tax, depreciation and amortisation (EBITDA) of 25 billion crowns over the next five years. That compares to a combined 8.963 billion crowns from 2008 to 2012.

The company, majority owned by Poland's PKN Orlen, posted net losses in 2011 and last year, hit by a downturn in European markets that has squeezed margins for refiners and left the industry with excess capacity.

"We believe that our competitive advantage mainly lies in further integration of the refining and petrochemical segments," Chief Executive Marek Switajewski said in a statement.

"It will facilitate further growth of the petrochemical segment, where we plan to make the largest capital expenditure."

Unipetrol plans to direct 45 percent of its investment to growth-oriented projects and the rest to plant upgrades.

By 2017, Unipetrol wants to have increased the capacity utilisation of its petrochemical steam cracker unit by 13 percentage points and increase sales of petrochemical products by 11 percent, to 1.4 million tonnes.

In the refining segment, Unipetrol wants to boost internal demand and increase production to 4.1 million tonnes in 2017 from 3.8 million in 2012. It also aims to increase its share of the retail fuel market to 20 percent by 2017 from 14 percent.

The company's shares showed little reaction to the plans, rising 0.7 percent, while Prague's main share index fell 0.7 percent.

Unipetrol, which made another net loss in the first quarter because of weakness in refining and retail, has already begun restructuring its business. It ended crude processing at a smaller refinery a year ago.

The company is also majority owner of the country's main refinery, Ceska Rafinerska, and has said it would look at boosting its stake if minority shareholder Royal Dutch Shell decides to sell out.

The government said in April that Shell had offered to sell its ownership to the state. Unipetrol has a right of first refusal, but company officials told reporters on Tuesday that no offer had yet been put on the table.

The company wants to boost cash flow and executives said it could use the extra cash to invest more or pay a dividend - something it has not done since 2007, the only time it has in the past 15 years. But it said all options were open and there was no fixed plan to distribute excess cash.

($1 = 19.4748 Czech crowns) (Reporting by Jan Korselt and Jason Hovet; editing by Greg Mahlich)

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