PGNiG profits slump on high gas costs

Core earnings (Ebitda) at Poland's state gas supplier PGNiG was down 31% year on year in the first nine months of 2021 at 7.39bn zlotys ($1.77bn), the company reported on November 25, blaming the decline on low gas prices.

Revenues were up 37% at 37.49bn zlotys, but costs also surged as gas prices on European hubs quadrupled over the period. PGNiG won a court case last year for its long-term contract for Russian gas to be amended to take into account European hub prices, which at the time were very low. Previously the price it paid was indexed only to oil. Following a surge in hub prices to unprecedented highs during autumn, PGNiG requested a price cut from Gazprom in late October.

PGNiG also secured a one-off payment of $1.5bn last year from Gazprom, which had been ordered by a Stockholm court to compensate the Polish company for previously overcharging for gas. And this contributed to the decline in PGNiG's income this year. The company's EBIT was down 42% at 4.82bn zlotys, while net profit was down 49% at 3.1bn zlotys in January through September.

Earnings from PGNiG's upstream segment was up 128% year on year at 7.03bn zlotys, and income from the company's distribution and generation businesses were also up. But Ebitda at its trade and storage division swung to negative 0.64bn zlotys, owing to higher gas import costs.

"The negative EBITDA performance of the trade & storage segment is illustrative of the challenges faced by gas traders," PGNiG CEO Pawel Majewski said in a statement. "However, seeing that its business is well diversified, the PGNiG group is able to deliver positive results even amid market headwinds, primarily on the back of consistent efforts to grow the exploration & production business, especially on the Norwegian market."