* Net profit hit by low refining margins, but tops forecast
* PKN wants to expand in upstream
* Eyes more takeovers in North America
(Adds comments, releads)
By Adrian Krajewski and Marcin Goclowski
WARSAW, April 24 Poland's largest oil refiner
PKN Orlen may buy more oil producing assets in an
attempt to increase profitability squeezed by low refining
margins in Europe, it said on Thursday.
PKN said its first-quarter net profit fell 57 percent
year-on-year to 64 million zlotys ($21 million). That beat
analysts' forecast for earnings to be wiped out, thanks largely
to higher profits at its retail and chemicals businesses.
For the first time, PKN booked a profit from its own oil
producing - or upstream - operations, while its Canadian unit
TriOil Resources, which it bought last year, made core
earnings of 37 million zlotys.
While that was just 5 percent of the group's total
first-quarter earnings before interest, tax, depreciation and
amortisation (EBITDA) of 776 million zlotys, PKN said more
upstream purchases were on the cards.
"We treat Canada as a platform for further growth," finance
chief Slawomir Jedrzejczyk told a news conference. "We analyse
projects concerning further non-organic growth, but we will
communicate that once we are ready."
TriOil produced 330,000 barrels of oil equivalent in the
Some analysts have expressed doubts about PKN's strategy of
building an integrated oil company, which runs counter to the
prevailing trends in the United States.
PKN has been trying to build its upstream potential in shale
gas in Poland, for example, but its efforts - despite being
costly - have so far not resulted in commercial gas production.
PKN's shares have fallen 8 percent over the last 12
months as it struggles with refining overcapacity in Europe and
weak margins, compared with a 20 percent rise in Warsaw's main
stock index. At 1410 GMT, PKN shares were up 0.8 percent.
The firm, which imports most of the oil it refines from
Russia, said the Ukrainian crisis has not impacted its business
as it does not rely on exports either to Russia or Ukraine.
PKN said it could buy the remaining 32.4-percent minority
stake in its Czech unit Ceska Rafinerska from Italy's Eni
, but that talks were not at an advanced stage.
Rafinerska, with a market capitalisation of $1.25 billion,
booked a profit in the first quarter after five consecutive
quarters of losses, though mainly thanks to a one-off item.
PKN said it was assessing the future of its loss-making
Lithuanian unit Orlen Lietuva, which owns the Mazeikiai
"We do not exclude any steps, including the most drastic
ones," chief executive Jacek Krawiec said, when asked about the
possible sale of the Lithuanian unit.
PKN's Jedrzejczyk was quoted by state news agency PAP on
Thursday as saying the firm might revise its long-term strategy
in the second half of the year as it was "too ambitious".
The current strategy envisages an average annual EBITDA of
6.7 billion zlotys over 2013-2017. PKN's normalised EBITDA last
year stood at 3.2 billion zlotys.
($1 = 3.0307 Polish Zlotys)
($1 = 0.7231 Euros)
(Writing by Marcin Goclowski and Marcin Goettig; Editing by