Orlen S.A. (PKN) Earnings Call Transcript & Summary

[Interpreted] Good morning. We welcome you during the presentation of the financial results of ORLEN Group after the first quarter of 2025. As usual, we are in the Oslo Stock Exchange. We are welcoming Jakub -- Ireneusz Fafara; Magdalena Bartos. I'm Jakub Frejlich, the Director of Investor Relations Office. At the very beginning, I would like to invite you to watch a short video. We are talking about megawatts barrels of oils, liters, but we would like to show you practically how our investments translates to our everyday lives. After that, we will invite the President to present the strategy. And the Vice President will talk about the financial results of the first quarter of this year. And after that, we will have a Q&A session. Thank you very much. Please do enjoy the video. [Presentation]

[Interpreted] Good morning. We are meeting you here yet again to talk about the results of the first quarter of this year. We are very proud. In the name of the -- all employees, I can say that it was a very good quarter both when it comes to finances and operational activities. It was one of the best quarters for our shareholders. On the 9th of January, we introduced a new strategy. In this time, the market, that is investors and shareholders, gave us a lot of trust. The prices grew for 50%. Is it -- the highest in the history. Thank you very much for your trust. Thank you to the investors and shareholders. We are working -- thinking about the shareholders, but first of all, thank you very much to the whole team, to 68,000 employees of ORLEN. With their daily work and sacrifices at times helped us to achieve this success. It is your success. Thank you very much. We are working in a way that ORLEN is becoming a company with solid fundaments that is a pride of Polish economy. We are working in a way in which we can claim that we are the leaders of the Polish economy. This is our goal. And now let's go back to the data. EBITDA LIFO grew by 40%. For us as managers, this is the most important index assessing the functioning of the company. [ Net debt ] grew by 60%. The debt fell down. 1/3 of our profit comes from our activities abroad. The prices of oil dropped. As a result, the prices of fuel dropped as well. And margins -- we can say with satisfaction that the prices of fuel dropped as well. As a result, the incomes of the company dropped by 10%. It doesn't really matter a lot when it comes to our financial results, though. And now I think that we can talk about all of the 4 segments which we talked about in our strategy. However, comparing the segments in a way that we -- in which we compared them previously, it wouldn't be effective. This new system is different. So we will have to talk about our internal successes and challenges in specific segments of the company. Let's start with upstream and supply. This was the most important segment in our activity in the first quarter. It helped the most when it comes to our financial results. What's important for us and what we mentioned in the strategy is that we decided to follow other companies and to start strategic cooperation with big players on the market to develop business, to develop new competencies, new contacts, new relations. What's incredibly important is that we signed an agreement about cooperation with Naftogaz in Ukraine. We are supplying American LNG through the port in [indiscernible] Klaipeda. We've already realized a few supplies. The next one is currently ongoing to Klaipeda. We want to be the next element in the supply chain of gas. And in the future, I really do hope in the reconstruction of destroyed Ukraine. With Equinor, that is the biggest Norwegian company, we started cooperation when it comes to the identification of potential about capture of CO2 both in the Northern Sea and also, what is important for us, in our region of the Baltic Sea and in Poland. As a result, we are developing our own exploitation. We've got 2 oil fields in Wielkopolska, 50 -- 500 million of cubic meters. We started exploitation. In Norwegia, we are starting new exploitation in our new deposits. In the biggest deposits [indiscernible] we started exploitation of that and we are preparing 5 new contracts. There are 5 new possibilities of gas extractions. We do hope that we will be able to start works on these fields. Our retail competencies grew as well when it comes to gas. We acquired 2 new gas carriers in Korea. They will support our possibilities of gas supply to our customers as well our possibility in trading of gas in Europe. And what is important, what we've been observing for a long time, we started supplies of LNG from the contract Venture Global. One gas carrier came to us. The second one is still ongoing. We are expecting the next supplies from this client. It is incredibly important that we started. However, this doesn't change our approach to the solution of the debate from the past. The arbitrage is ongoing, and we will demand that the gas that wasn't supplied will be treated within the contract. And to finalize this segment, I would like to say a few words about our Polish gas company. Gas is an incredibly important part of the company. It brings a lot of contribution to our financial results. All of that wouldn't be possible without work and capabilities of the former Polish oil mining and gas extraction company. I think it has never been said by the President of ORLEN, but I would like to thank these people, that they've joined us, that they are with us, that they are bringing a lot to our work. I would like to say that we are proud that they are a part of ORLEN. Thank you for that. Segment downstream. This is a challenge for everybody, not only for us. First of all, macro is very bad for this segment, especially petrochemical margins. They are in a historical low. However, apart from that, there are also challenges when it comes to regulations, as well as technical -- technological pressure that is the need to lower emissions. However, the operational results in ORLEN are very good. They show our competencies and skills, management; and we are very happy about that. However, the financial results, because of macro, doesn't really follow, but taking that into account, we started works in the whole group to diminish the influence of downstream on the environment. We started a cooperation with Hystar, a Norwegian company. They are producing hydrolyzers for zero-emission hydrogen. We believe that we will be able to produce a lot of hydrogen. And as a result, we will significantly lower production of hydrogen as well as lower the cost of production of our refineries. The same fund, invested in technology of cleaning artificial products. This will be an important part of our functioning in the future. I can't say more today, but it looks like that our analyses indicate that this is a highly advanced technology. It will help us to recycle plastics in such a way that they will be able to be used later also in transportation. They've got high requirements for the raw materials. Within these works -- with these conceptional works about changes in technology and lowering of our emission footprint, we started a cooperation with the Polish technical university -- and when it comes to synthetic biofuels supporting decarbonization of our fuels. We'll be working on new ideas, looking for funds as well as building necessary infrastructure. We've also started talks with the market. That is the potential producers; institutions, research institutions. We want to introduce the technology of [indiscernible], which would support the works in [indiscernible] in Wloclawek. At the same time, it would help us to produce cheaper hydrogen. The next segment which is very important when it comes to our financial results, it's energy. And here, 2 days ago, as you well know, we noticed important things when it comes to construction of our farm Baltic Power, which we are building together with Northland. We introduced a installation base in Leba. It will be overseeing maintenance when it comes to building of the 76 piles and wind turbines. 14 monopiles are already installed. Turbines as well as other piles will be installed this year. We are convinced that, the farm, we will start its operations in the first half year of the next year. We are also starting the project Baltic East with the power of 1 gigawatt. We are currently working when it comes to environmental agreements. What is super important for us is that we started talks with potential suppliers of technologies as well as products supporting the development of this farm. We want the local content that is Polish products, when it comes to Baltic East, will be at the level of 40%, 50%. It will be an important increase compared to Baltic Power. In Baltic Power, the local content is at the stage of 21%. Apart from these works, we also want to say that what is important is the way of supplying this energy to our clients. This is the task that will be realized by group ENERGA in the Northern Poland. As you know, we signed a contract within the national recovery plant (sic) [ National Recovery Plan ]. We received around PLN 7 million (sic) [ above PLN 7 billion ]. It will help us to modernize the network of distribution of electricity to the consumers. This is an enormous task. Grids in Poland are not very well taken of, especially in the Northern Poland. I think it will -- the value of the project will be 14 million -- [ PLN 40 million ]. We've already started them this year. And we joined 300 kilowatts from National Recovery Plan. We also joined 12,000 new consumers. We really do care about this project. And I hope that it will serve both the consumers; and ENERGA, the listed company. And it will build its value. And the fourth segment, the most visible for the consumers, consumer products. It is calculated a little bit differently than in the past. We've also added here gas and electricity consumers to this segment. That's why comparing that to the previous periods wouldn't really give us the proper results. We really do care about the development of this segment, especially when it comes to electromobility. In Germany, we started cooperating with a company, thanks to which, we will build 200 quick charging points, which will increase our influence on the market, but the most important part for us is the VITAY program. It is a platform of relation that we have with our clients, the retail clients, those who buy gas or electricity. This is developing incredibly quickly. We've got 200,000 new consumers when it comes to VITAY. When it comes to gas and electricity consumers, this number grew by 20,000. And this is our core business, but ORLEN is the biggest Polish company. It's the biggest company in the Central Europe. It also has different goals and aims which are also very important, social gains, goals that serve to create closer links with the countries and communities in which we operate. And the social goals are no less important than our other goals. As you know, since the first conference, the situation in our refining plants is very important. I can say that the index that is called LTIFR is very complicated. We won't go into details. In the past, it was [ 1 42. ] And this year, it was [ insignificantly ] lower. I'm very proud of that because it shows the scale of involvement of management; and our care that everybody is safe, that everyone can go safely home and feel comfortable in the company. We've also started the ORLEN transition plan. It shows in what way we will lower our carbon footprint and negative impact on the environment. We will publish it soon. Hopefully, it will be a topic of debate in the future with those to which the project is directed to. We are open to feedback and also critical voices. In the first quarter, we also achieved a high assessment organized by rating -- CDP. This result was possible because of the implementation and reporting of our emissions when it comes to climate policy, but ORLEN is also about social problem -- social projects, with such one of them in the last quarter. It is incredibly important for us, and we are very proud that we take part of it. We are engaged in actions to support climate, but it also shows our willingness to cooperate with science. I'm talking about Antarctica. Polish researchers from chemistry and biochemistry from Polish science academy, together with ORLEN, started works in Antarctica. Their goal is to create a new bio reserve in Antarctica. As to now, only 0.2% of Antarctica is protected. That's why the development of these areas is incredibly important. It also show the competencies of our scientists in this field. It also shows the willingness of Poland to protect the global heritage of nature. Internally, we started a program, about which we haven't really talked a lot about publicly. From my observation and talks within the company, it seems that the program really worked out. It's really important and moving. It's applying to sensitivity of our employees, especially our female employees. We would like our company to be more inclusive. We hope that this initiative that was created with an aim to develop talent but also a platform to develop talents internally, especially of our female colleagues -- we hope that they can develop as leaders in the company but also that they can develop as female employees. We hope that they can also develop [ the ] private goals -- will also support the company. I would like to thank all my female colleagues. Magda, it's also thanks to you. When it comes to science university in Silesia, together with them, we've opened a new university degree. It will start this year. I hope that, thanks to this and also together with our colleagues from energy companies, we can count on the fact that we will have new employees skilled and taught by this university. And the last thing from this category, a cultural program worth 20 -- PLN 12 million, support for cultural classes for children in small towns. We are very proud. And the last thing: We've been talking about this previously, but now we can say it publicly, a program of support of firefighters, especially when it comes to buying new equipment, as well as special workshops. All of that grew by 50%, and the project will be worth [ PLN 20 billion ]. Ladies and gentlemen, we are changing ORLEN. As we said on the 19th -- 9th of January, the base of this change is honesty, engagement as well as trustworthiness. This is the base of our relationships with clients, with stakeholders, with shareholders, with the NGOs environment. Based on these fundaments, we are building the new company and we are changing the company. I hope that it is well visible in the results of the first quarter. I would like to ensure you that the big challenge that is ahead of us will be realized by us. And we are only at the beginning. Thank you very much. Magda, now it's your turn.

[Interpreted] Good morning, ladies and gentlemen. I'm very happy to see you here and to welcome you during the presentation of the financial results of the first quarter of 2025. I will start with something that [ Irek ] already mentioned. That is the fact that we've changed the way in which we present our segments. I'm sure that you've noticed that. Those of you who already looked our info pack already noticed this change, but we will also see that on the slides. We've changed the way in which we present the results and we've changed the segments. That's something that we've already mentioned during the presentation of strategy 2023 (sic) [ 2035 ]: The Energy of Tomorrow Starts Today. These new segments reflect our strategy. We've talked about the fact that our strategy is about an integrated ecosystem, and that's how we manage our company on the daily basis. We will be also presenting our operational results in this way. What is important, all of the information that I will be showing you today are things that we can compare. That is we've transformed the data [ word ] from the last year to the same structure. As a result, you will see data that can be compared to each other. Why are we changing the structure of our presentation? And the changing of management. We want to reflect this integrated character of our business. As a result, we also want to show the changeability of the market. We will have a dedicated slide that will present this changeability. It will show how we build resilience of the company and our financial results. This integrated cyclical model is today -- very important today. That is in the moment in time, the historical moment in time, where changeability in the market is very high. We are continuously working in the situation of a big unknown. I can say that the only thing that we can be sure about is that the future will be still very much changeable and unknown. This integrated system gives us a sense of stability. That was just a few words of introduction. Now let's focus on the most important: financial results and operational results. [ Irek ] mentioned that this quarter was very good. Opening the discussion, I would like to say that yet again it was a very important quarter with a lot of work and good results. Income resulted to more than PLN 73 billion. It's PLN 9 billion lower than last year, but what's important, it doesn't really influence the possibility of ORLEN. ORLEN is influenced by the global market. This is how we shape prices to our consumers. What does influence the business is volumes, operational activities, the real effects of work of our employees. Let's focus on the income [ for EBIT ]. What influenced smaller income? Lower prices of petrochemical and refinery product as well as lower prices of gas and fuels. We also had lower sales volumes when it comes to downstream and consumers and products. It was compensated to a certain degree by an increase of sales of gas as well as distributed volumes in energy. What is still the most important index when it comes to profitability and what was marked by [ Irek ] is EBITDA LIFO. In our segment -- in our sector, this is the index that tells us what the profitability is. Even though the macro environment was very changeable, we worked out PLN 11.6 billion of EBITDA. That is 40% increase. This is the best reflection of the integrated business model and the fact that it really supports us when it comes to the situation on the market. We've been talking a lot about the fact that this integrated model helps our resilience. This is how EBITDA builds our resilience. The segments that contributed the most to the increase of -- that supported the result of EBITDA in this quarter's are segments energy and consumers and product. They noted very solid operational results. They are partially restricted by downstream because of lower refining margins. However, what was an important support for our financial results was the result of regulations. That is the fact that we didn't have to support the final consumers. Last year, I will just remind you, in the first quarter, we've paid 7.7 billion to support our final consumers of energy. This year, the results of upstream and supply, which last year was influenced by this support -- this year, it's PLN 5.5 billion. Our cash inflow grew by more than PLN 4 billion. This was supported by a lesser engagement of cash in the capital. At the end of the first quarter, our debt is around 0. However, I have to be more careful. And I have to say that, together with the [ combination ] of dividend and our ambitious investment plan, this situation will be changing during the year. Let's take a look at these results. Let's focus on the materials and model margins. That is our macroeconomic environment. This macroeconomic environment was very changeable. We can see that on these few diagrams that are presented here. I will just comment certain indexes as they relate to our operational segments. Segment upstream and supply, especially extraction, both in Poland and abroad, mainly in Norway. It was supported by higher gas prices. Gas prices year-on-year were higher by 54%. This result was restricted by lower prices of oils. I would just remind you that 75% of our activity is related to gas, and 1/4 is about oil. However, the increase itself influenced negatively when it comes to our financial results. In the segment -- downstream segment, what is the most important one -- most important thing is the lower refining margin, which is lower by 46% year-on-year. This is a result of normalization of refining margin. They are at a very high, healthy level. What we've observed during the previous quarters that is very high levels, in 2022 and 2023, was mainly linked to problems of the market after the pandemic as well as the Russian aggression on Ukraine. These lower levels of margins, both refining and petrochemical, will have their consequences in the results of downstream segment. The petrochemical segment and margins which are lower by 31%, these are also results of a very hard market environment in the petrochemical segment. Here we have a very high supply of products imported from the United States and Asia. Energy. Here we can observe a positive impact of the prices of electricity. They grew by 38%. However, we have to remember that the price for the final consumers is still limited within the regulations. Let's take a look at EBITDA. As we said, this is the most important index. It is really worthwhile to focus on its development in this quarter. Taking into account this changeable environment that we've mentioned and market trends, the results of each of our segments are very good. The 2 most contributing segments are upstream and supply as well as energy. The higher part of our slide shows you the contributions of each segment to the result of EBITDA. At the very bottom, you can see the changes year-on-year. Now very shortly, I would like to tell you about the key elements that influenced these changes. When it comes to upstream and supply: lack of gas write-down; higher sales volumes; and negative macro environment, especially influencing gas trading; as well as lower spreads. Downstream: normalization of margins, something that we've looked at a second ago; maintaining market pressure in petrochemistry; as well as lower sales volumes. Energy. Here the most important factor was sales volumes as tariffs, both for gas and electricity. Consumers and products: Here I'll just remind you this is an important change to our way of thinking. Since this year, we are introducing in consumers and products both sales of fuels and electricity and gas to our final consumers. Here the change year-on-year is the effect of a good results of gas trading, supported by higher sales volumes. And now going to the details for the -- of the segments, we will have 4 slides and we talk about the details. Upstream and supply. Here we have EBITDA LIFO of PLN 5.4 billion, and it is higher than last year. We are presenting you the results of this segment split into geography in Poland; and abroad, mainly in Norway. Both of these markets, Poland and Norway, are responsible for 90% of our exploitation volumes. That's why they are the most important for us both in our daily work as well as in communication of our results. It is worth to notice that. Here you can see that, 75%, we are exploiting gas; and only in 25% oil. The daily average of exploitation is 210 KBOE. And this is a little bit lower than last year. It's a natural consequence of the finishing of the reserves as well as failure in one of the reserves. What is important, our team in Norway very actively answered to the failure by increasing exploitation of other reserves. In Poland, we exploited 9.6 -- or we produced [ 9.6 ] terawatt hours and [ 1.7 million ] of DOE (sic) [ BOE ]; in Norway, 12 terawatt of -- terawatt hour and [ 2.8 ] BOE. And it gives us EBITDA at the level of PLN 2.2 billion in Poland and PLN 2.7 billion of exploitations in Norway. What was important and what we've seen in the previous slide, that something that supported the results of the exploitation segment are gas prices which grew by more than 50%. They were limited [ in -- by 3% ] when it comes to lowering of the gas as -- prices as well as strengthening zloty against Norwegian krone. Gas is more than 4 billion EBITDA. And here we've got the adjusted effect of the lower spreads. The level of margins of gas was lower. And even though we had higher sales volumes, the result was lower by PLN 6.3 billion in this segment. I've also mentioned that what is very important about profitability of upstream and supply is the regulation effect as well as the fact we didn't have to support the final consumers. According to our strategic assumption, we are working on increasing the exploitation volumes in the Norwegian shelf. We will take a closer look on our investments later, but here I would just like to say that in upstream and supply we are planning more than PLN 11 billion of investment. And Yggdrasil and Fenris are -- value up to PLN 3 billion in here. Here the main player is Aker BP. And we participate in that. This is one of the key investments in this segment. Downstream. Here [ Irek ] also introduced this segment a little bit. This year, the situation is hard. It is really hard to manage this segment because of the market and macroeconomic environment. It can be also seen in the results of the segment. Downstream, it's PLN 1.7 billion (sic) [ PLN 1.221 billion ] this year, as well as we noted a lowering by more or less PLN 1 billion. We noted that both in refining and petrochemistry. In refining, the results are influenced by a weaker macro environment, a lower refining margin. They were lower by 46%. This translates directly to profitability of production. We've also noted a lowering of volumes. Sales volumes were lowered by 4%. The most important lowerings were connected with oil. These were the results of the lowering demand. We noted a lower demand on the market, a high activity of our competitors. Operationally, we also had restrictions connected with planned maintenance, stoppage in ports. Then we also had maintaining stoppage in other places, which are mainly planned, so we expect that these results would influence positively the results of downstream as well as refining activity -- were higher margins as well as strengthening zloty against the dollar. In petrochemistry, what we've already mentioned, this effect is so important that it is worth repeating. Petrochemistry is still dealing with very hard environment. Petrochemistry margin were lower. We've also noted a lowering of sales volumes in all of our product groups in petrochemistry. Together, these were lower by 12%. The sales of fertilizer, for example, was lower by 60% -- 16% [Sorry.]. And this is mainly because of stoppage in [ Polana ] in our Czech partner. We are planning [ restructurization ] of these assets in [ Polana ] because of the economic situation. We also had stoppage of work in [indiscernible]. There we had a power failure, which influenced volumes of production and sales. We also have lower PTA sales volumes by 1/3, and polyolefin by almost 10%. This is because of stoppage in the first quarter. Additionally, the results of our petrochemistry results were negatively influenced by the strengthening of the euro against the dollar. The next segment, energy. Here we've got higher EBITDA by -- PLN 4.3 billion, as well as grew by PLN 0.6 billion. The increase of this result is mainly because of distribution. Distribution volumes, both when it comes to energy and gas, grew. There were higher tariffs realized by our operators. Another factor that supported our financial results was heating. We had a colder winter compared to the last year. The temperature was lower. That's why sales volumes were higher. Hydrological and weather conditions were much harder, and they didn't support generating renewable energy results. Even though we had a bigger power in renewable energy, we've noted a lower result of EBITDA in this segment. And this negatively influenced the segment. Segment energy, what we've also seen at the very beginning presented by [ Irek ], this is a segment in which we concentrate on development and in which we are planning important investments. We will talk about the details later, but here I would just like to say that investment in offshore wind production; as well as opening of port in Leba, which will be a service and maintenance base -- this is something that we built from scratch. The infrastructure that -- we've constructed that together with our partner, will have an important -- will be very important for supporting the future offshore wind. We are also building 2 CCTGs (sic) [ CCGTs ] in Grudziadz and Ostroleka. And we want to invest [ PLN 60 million ]. They will produce 1.3 gigawatts. And we will take a look at the details later when it comes to the slide about investments. And the last operational segment, consumers and products. Here we've got PLN 1.2 billion EBITDA LIFO, and it was more or less 50-50 fuels and others. The increase of the result can be seen in retail and gas. When it comes to gas and oil, here we've got a better result because of the better results of gas because we had higher sales volumes. When it comes to fuels, it is worth noting that we maintained the profitability of selling fuels in Poland, bettering of profitability in Germany and Lithuania as well as higher margins. They grew in the Czech Republic and in Poland. Some details when it comes to volumes. The sales of fuels was lower by 2%, and this is mainly because of lower sales in Austria. This is the result of a decision that we took last year about eliminating sales of cheaper fuels that came from Russia. This resulted in customers turning to our competitors. We have, more or less, 3,000 fueling station. The alternative fueling stations grew by more or less 90%, and these are mainly electricity refueling points. That is electricity charges. And now investments. The group used PLN 6.2 billion for investments. This can be compared to the situation last year. In the perspective of the whole year, we are maintaining our prognosis of our assumption of spending PLN 35 billion. 75% -- in 75%, these are investments connected with developments. And now let's take a look at the segments. Very rarely, we get to take a look at the details, so I think this is one of the best occasions to do so. In upstream and supply, we are also having -- looking for new reserves and we are analyzing new reserves. We have successes; and one, well, let's say, failure, one exploitation in [indiscernible] one other place. Here we don't really have a confirmation of hydrocarbon in the reserves. As a result, we have to change our plans. We've planned PLN 1 billion for this project, but we will have to be very flexible about allocation of the capital to the [ M&H ] project. That is the possibility of buying the deposits. We've also talked about this during the presentation of strategy, that in our allocation of capital, we want to be flexible; and to realize our strategy through our own work and organic growth as well as nonorganic work. The next exploratory project is something that gave us a big success and something that we've talked about a few days ago. That is ORLEN Upstream Norway, together with other companies, discovered new reserves of hydrocarbon in introspect (sic) [ E-prospect ]. Here we assess it to be 3 million to 7 million BOE. When it comes to our reserves, we focus mainly on Fenris and Yggdrasil. Here we continue our works connected with prefabrication and installation of the construction of platforms, and it's supposed to take place this year. Segment downstream. Here we have very important investment works in 2 important investments. The first investment, new chemistry project, that is installation of plants to [ project ] monomers in ports. Here we have -- the project is advanced in 83%. When it comes to basic construction, we are going forward. However, we are talking with the consortium when it comes to technical issues and financial issues. And we are keeping the agenda up to date when it comes to supporting infrastructure. Here we are at the 40% level and here the works are getting faster. The main result of the quarter is the fact that we are focusing on the annexes that [ we ] sanctioned all the changes. Another important investment in downstream is the installation for Mažeikiai in Lithuania. This installation is worth EUR 1 billion. And here we are very advanced when it comes to both the main installation and supporting infrastructure. A few examples: finalization of pipeline, piles, construction and -- of equipment. As you can see, the works are ongoing. Energy. Here, our focus, on the offshore wind plant in Baltic. In 2026, we will have the first energy produced by this offshore wind plant, Baltic Power. Here we are preparing to the installation of turbines. [ Irek ] mentioned monopiles that are currently being installed. We've mentioned maintenance base in Leba a few times. The level is very -- at a very advanced level. Another neighboring project, Baltic East, here we are still ongoing when it comes to dialogues about the environment. We are focusing on the strategy when it comes to buying and using local content in a maximized way. Another investment, in energy blocks in Ostroleka and Grudziadz. And some examples from the last quarter: In Ostroleka, we have constructed the next part of the plant. We are at an advanced level when it comes to pipeline. In Grudziadz, here the works are still ongoing, pipelines and so on. We are at very advanced stages. Here I would like to draw your attention to certain things. I will start with a -- something very good and something that we haven't mentioned yet. Yesterday, we received a confirmation of Moody's energy A3 with stabilized perspective. It is very trustworthy reflection of our resilience of our business model. The financial position of the group is very good. At the end of the first quarter, we had 1.6 billion (sic) [ PLN 1.2 billion ] net cash. We reduced our debt, mainly because of a good generation of cash from our core business. The debt is almost 0. And what is also important and worth highlighting is the fact that we achieved very good effects when it comes to sources of funding. They are very well diversified, with the average deadline 2029. You may remember that, at the beginning of the year, we issued bonds in American dollar. And this issuance allowed us to postpone this deadline by 1 year. It is super important because this structure helps us to mitigate the risks. And the last slide that we would like to share with you. Here we would like to talk about the potential results of the group this year. I will focus about the changeability of the first quarter and about our expectations to -- in this year when it comes to upstream and supply. Here macroeconomic environment, higher prices of gas supported the results of upstream and supply. The positive effect of spread between Henry Hub, the American; and TTF, the European one, was maintained. This influenced the good results of import from the United States to Poland. The spread that we observe now is lower than the one that we observed 3 months ago. However, it still has a positive effect. Its scale changed, but the support, it's maintained. For other segments, the effects or trends that we observe are similar to what we've seen at the beginning of the year. It allows us to say that we feel comfortable with the consensus that we publish and after the expectations of all the analytics. However, I'd say that we approach it a little bit more cautiously. We see a little bit more of risks, but we still think that our integrated model and effectiveness of operations will allow us to get expected results. Thank you very much for your attention. As I understand, now we have a time for questions and answers.

[Interpreted] Yes. Thank you very much for the presentations. As you can see, well, talking about this business takes a lot of time because it's a big business. And it has a big footprint and big influence when it comes to economy, but now we would like to invite you to ask questions. The mics are turned on. First of all, we will invite people who are here with us. And then we will have time to answer questions from the Internet. Please, to make it fluent -- 2, 3 questions. And please tell us who you are.

[Interpreted] I will have 4 questions, but they are connected. The first question is a very general one when it comes to consolidation of the market. When it comes to fuels, we had information about Shell and BP. We've also heard from the market that there are another transactions going on. I would like to ask about a potential scenario when it comes to the situation on the market. That's the first question. Then I would like to ask about the perspective for the next months of this year. What do you think, how will the sales on the fuel station look like? The third question, VITAY platform; and something that you've said, that you've talked about that is integration of the system and that the fact that is building this part of the business. I would like to ask about at what stage the platform is being finalized. And the last question, a very traditional one. That is about selling of business ORLEN Paczka. Where are we here? And what will happen in the next months?

[Interpreted] Thank you very much for your question. Okay, we will -- I will just start, consolidation of the market, Shell, BP and our competitors. Our role in this market, in this segment, is a very small one. We are a very big player. We can't consolidate the market. We are observing the situation because that's what we have to do. We observe what our colleagues from our -- other companies do. If Shell and BP joined forces, then they will become the second biggest network in Poland. They will have more than 1,000 fueling stations. We'll cooperate because -- that's what I can say. That's something that's outside of our realm, similar to MOL. MOL, it's our client, but at the same time, there are certain history between us when it comes to stations in Hungary. This is something that will stimulate us to work forward. What about sales? I hope that the sales will be going well. The prices are lowering. According to Eurostat, we've got one of the lower prices when it comes to fuels in Europe. The average price was [ 5 75 ]. I would just remind you [indiscernible] campaign from the [ first ] May weekend. The fuel could be bought -- the product [Sorry.] could be bought by lower prices. That's why we will be fighting for a very high influence of the market. When it comes to the status of VITAY, I don't know. I don't know if we are prepared. Do you know anything about that?

[Interpreted] Yes. We are working on that both when it comes to technology of, the development of the application. You can observe the changes on the daily basis, but at the same time, we are working on creating an integrated offer for final consumers. And here it is too early to say when the offer will be available. However, the works are ongoing. And you will see them in application if you use it daily. And ORLEN Paczka. Here we've done a lot of work already. We have some key successes in the first quarter. We optimized the activity of our parcel lockers as well as our delivery services through ORLEN Paczka. So we'd split our delivery service from ORLEN Paczka. Today, we've got an integrated business within ORLEN Paczka and the team which concentrates on the development of this activity. In the -- we will focus on building a precise value of this business, working on finding partners or selling the business. We don't really have a precise plan today that we could share with you, but we are on a very good pathway to realize the plan of optimization when it comes to actives in this area.

[indiscernible]?

[Foreign Language] [Interpreted] [indiscernible]. What are the plans at the end of the year? And I would like to also ask about investments in renewable energy, when it comes to your competitors. You mentioned BP. In their strategy, they recently decided to downsize their investment when it comes to green technologies.

[Interpreted] The United States. We've talked less about reserves but more about midstream. And this is the segment that we would like to be engaged in when it comes to transmission. And we are currently having talks. In the future, we will continue them. If we invest, please note that I say if we invest, this will be connected with access to upstream. I don't know when we have the decisions. These are very hot topics. They're requiring analyzing the market, access to the market, prices, but I hope that we will be able to achieve our goals in a short perspective. Capacity market. Additional auction should take place in July. We would like to be ready with 2 projects, Grudziadz II and Gdansk. We don't know if we are ready. Everything depends on talks with potential suppliers. On our side, all the works when it comes to these actions are done. We are only waiting for the offers from our partners. If we have these offers, we will participate in July, if not in December. For December, we are preparing Siekierki project. And we hope that it will be launched then and that we'll get necessary agreements. Renewable energy, this is a big challenge for everybody. BP might be looking at the issue globally. In its strategy change at the beginning of the year, they assumed that part of the business will be moved from Europe, where the pressure, especially the legal pressure, is so high that they don't really see any possibility of development. And they transferred to the regions where the legal pressure is lower. Here I'm talking about expectations of legislators when it comes to renewable energy. We don't have such comfort when it comes to this issue, but at the same time, we're analyzing all the projects that we have. And we can see potential for the company in developing renewable energy sources. That's why we are talking about offshore wind plants. That's why we are seeing a possibility that we will be realizing these projects. Thank you.

[Foreign Language]

[Interpreted] [ Andre Patanovsky ]. It will be hard for me. I haven't been sleeping for 32 hours. [We are sorry, but the interpreter can't hear the question.] ORLEN has more than 90% of shares of ENERGA. During the last conference, you stated that the results -- the sentence was carried out. However, the codex of listed companies states that the listed company should go back to their previous state. If the general meeting hasn't carried out the sentence, first of all, does the company want to carry out the sentence wholly? First of all, has this company put aside sources for potential payouts for the shareholders? You've also mentioned the growth of ORLEN. During the last conference, you've also mentioned the growth of ENERGA. [Foreign Language] [Interpreted] So what about the losses of ENERGA? [The interpreter can't hear the question asked off mic.] [Foreign Language]

[Interpreted] Thank you that we -- are here with us.

[Foreign Language]

[Interpreted] Thank you that you are supporting ENERGA. ENERGA is a very important element of ORLEN. We've talked about this at the beginning. We've talked about the amount of money that we invest in ENERGA and the grid that ENERGA oversees. We are proud that ENERGA is a part of ORLEN. I don't understand the first question. We've carried out the sentence. It was very simple. We were to delete the application when it comes to buying out -- about the shareholders that is delisting. We did that. That's why the shares are still publicly available. And if someone wants to get rid of them, they can sell them. Do we have money put aside? We don't have a reserve created for that because we don't have any legal basis to do so. There are no -- there is no sentence that would oblige us to do so. If you are asking theoretically: President (sic) [ Vice President ] Bartos talked about our financial situation. And I can ensure that, if there was such a need, we do have financial resources. I don't remember from the last conference what the ENERGA results was.

[Interpreted] Well, it's lowering...

[Interpreted] When I'm done, I will give you a voice. This is a financial market. Here the actions are growing. They are -- they were going down.

[Interpreted] I do understand the market. I've been a broker for some years. [The question was asked off mic. The interpreter can't hear the question asked off mic.]

[Interpreted] The situation was solved. The goal of shareholders was to delete the delisting. It was carried out. Thank you very much.

[Foreign Language]...

[Interpreted] But thank you very much for your engagement. It builds our conviction that we are trying to do the good thing and that sometimes we have to disagree. I do understand, but the goal of ENERGA developing is something that is important for both of you and us.

[The interpreter can't hear.]

[Foreign Language] [Interpreted] For years, there have been possibilities. And there were periods where the price were up to PLN 40.

[Foreign Language]

[Interpreted] Well, we both care about ENERGA.

[Foreign Language]

[Interpreted] I'm sorry. You still have some questions in the room. I would like to move forward.

[Interpreted] One question. [indiscernible]. In April, ORLEN talked about acquisition of ORLEN Olefiny. I would like to ask about the process. What is still to be done? Will be there any costs?

[Interpreted] The acquisition of ORLEN Olefiny is at the legal stage, analysis of legal stages. I cannot add anything.

[Foreign Language]

[Interpreted] [indiscernible]. I would like to ask about power auctions because the market of gas-fired power plants is very hot. I'm asking about Siekierki here. Will that be built at the same time? And up to what time will you have to have the offers from your contractors so we can start in auctions? And the second question is about arbitrage with Venture Global.

[Interpreted] I will start with the second question because it's easier. I wouldn't say that it's going slowly. International arbitrage has its own way of working, and the deadlines are very fast, so I think that, this year, we won't see any changes. Magda, please remind me, but I think that the first meetings from arbitrage will take place in January of the next year. So they are not going very slowly. This is a standard procedure of the international process. The first question. I would just tell you that, at 12:00, I have a meeting with Siemens' [ COO ]. And we'll be talking about that because it is one of our suppliers. I hope that we will get these offers, when it comes to the [ deadlined ], so we can apply in July, I think, as fast -- I hope, as fast as possible. On the second hand, well, if we are working in this business, we know what the offers will be when it comes to the framework. So apart from the fact that we don't have the offer, we still are preparing for the auction. So even if we get the results very late, I think we'll be ready in July to participate with these 2 projects, Grudziadz II and Gdansk. Thank you.

[Interpreted] Julia Cydejko, Polityka Insight. I have 2 questions. I would like to ask about integration of retail, when it comes to cooperation side. How is it going? Do you have any formal procedure like with upstream what you've -- that you've published? And the second question, about 5 investments in gas in Norway that you've mentioned. Will there be enough to realize strategic goals when it comes to exploitation in Norway? What will the volumes will -- be? Are there new reserves, old reserves? Can you say anything more?

[Interpreted] The so-called [ kangaroo project ] is still ongoing. We are currently analyzing this project. I can't really say when we'll be able to realize this project, but this is a very hard project also when it comes to the legal situation. I can only promise you that our intention is to finalize the project as quickly as possible, but it's not easy. The 5 new deposit we've mentioned, they -- the new deposits, they're at the environmental decision stage. And we are analyzing these deposits. So 3 of them will be launched, so we have to check the economic value of these deposits. If we have decision to launch these exploitation: Well, this process will take a few years, so don't expect any of them this year. We don't know anything about the volumes yet.

[Interpreted] I would like to give voice to our -- to those with us [ who mentioned us ] online.

[Interpreted] [indiscernible]. [Foreign Language]

[Foreign Language]

[Interpreted] We know that river transportation in new chemistry is delayed because it got simply [ stacked ] on the river with large-volume elements. Will it have any influence on the agenda of this investment?

[Interpreted] Well, certainly it will influence our agenda, but it's not very important. They are not significant. We will be able to change the situation in the future. [Foreign Language]

[Interpreted] I will just go back to our questions online. We have many questions there. For the majority of them, we'll -- the majority of them will be answered online, but we'll just ask 3 questions. Something about new chemistry, a short update. Someone is asking about an update when it comes to new chemistry. Is it following the new agenda and planned volumes?

[Interpreted] Yes, it is going as planned. Our plan is clear. On the 30th of September, we would like to present our approach to this project. We want to have a complex approach, and nothing changes when it comes to that.

[Interpreted] Investment package. Recently, when it comes to offshore, the information about inflation was widespread. Do you see any influence on your project?

[Interpreted] We know that some projects realized abroad are facing financial pressure and investors' draw-back, but in -- we are -- in Poland, we are in a different situation. We are pioneers in the market. The weather condition, wind conditions on the Baltic Sea are very good, so we are quite optimistic when it comes to our projects. When it comes to our subcontractors, we are noticing certain -- I don't want to say delays but maybe challenges that they are facing. They are connected to the fact that there are many orders for new equipment because we've also ordered a new type of turbines. There are certain technical -- technological challenges. However, we don't see any significant indicators that would tell us that the project will be delayed or that it will be more expensive. That's the answer for today.

[Interpreted] And the last question, from the same area. There are going consultations when it comes to atomic -- nuclear power plants in Poland. Does ORLEN take place in -- take part in this discussion and other discussion about SMRs?

[Interpreted] Obviously, that we are engaged but in -- not in a very high scale. Right now we are one of a very few advanced players when it comes to introduction of these technologies in Poland. We get very positive information from Canada when it comes to agreements given by the governing institutions when it comes to the next licenses. This is something very positive. 2 months ago, I was in [ Darlington ] with [indiscernible]. We've seen the development of the project, and it is going very well and our Canadian colleagues are very optimistic. 2 -- I think, 2 weeks ago, the first cost analyses were published. In the first analysis, we can see an increase of costs, but after detailed analysis, we can see that it's resulted by factors that are not present in Poland. So we are still interested in this project. We've mentioned that, up to 2035, we want to have 2 SMRs. This question wasn't asked, but I'm certain that it will. We are still negotiating with our partner when it comes to the new shape of functioning of this project. It is going beyond what we ambitiously assumed we will be able to achieve, but I hope that we will find a consensus with our partner. Thank you.

[Interpreted] Thank you very much for all your questions. Thank you to everyone online. Thank you for all the questions. If something wasn't answered, it will be answered in writing. Thank you very much for the presentation. Please enjoy coffee. And see you in September. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]