What does the privatization of Unipetrol promise?

The prices of shares on the Prague Stock Exchange are rising unstoppably and no one knows how long this situation will last. The ideas for development have, of course, varied. On the one hand, there are pessimists who, due to wild growth, expect a correction and it is recommended to get rid of the action. On the other hand, they are optimistic, arguing with the better results of domestic companies supported by the recent completion of the privatization of Telecom and especially the petrochemical Unipetrol. What will happen to his privatization in the end?

The joint-stock company Unipetrol was established in 1994 with the aim of merging selected petrochemical companies into a group that would be able to compete with multinational companies in their field. Today, companies such as Benzina, esk rafinrsk, Chemopetrol, Kauuk, Paramo, Spolana, Unipetrol Rafinrie and Unipetrol Trade belong to the Unipetrol Group.

The fact that the companies on the Prague Stock Exchange (PSE) have recently been given evidence is thus proved by Unipetrol. Although the company is the lowest in terms of market capitalization and in terms of the volume of trades in the SPAD stock exchange segment, in the last year it has recorded (similarly to most titles) a sharp rise in stock prices, which means an increase of 34.4% since the end of the year.

Oil companies are doing well

The rise in the stock market is supported by the excellent financial results for the first quarter of this year. The group’s revenues reached CZK 55 billion, which is by CZK 5.7 billion compared to last year. The company’s profit was thus surpassed by an analyst and reached 1.8 billion K. This is twenty times the number compared to last year. And on Benzina, which recorded a loss of 243 million K, all the subsidiaries had profits. Although Benzina reported a profit of CZK 174 million last year, this year was negatively affected by the continuing increase in purchase prices and the decline in margins on fuel sales, thus creating an extraordinary reserve due to the first antitrust laws.

Unipetrol share price development over the last year and trading volume

Source: Prague Stock Exchange

On the other hand, the highest gross profit of 1.03 billion K was reported by Chemopetrol, which was last year in

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loss of 210.6 million K. According to Tom Zikmund’s speech, other companies belonging to the group also ended up in profit, which is influenced by strong demand, dream costs and the Czech crown. However, the results of Unipetrol are not unique in the petrochemical industry in Central and Eastern Europe. According to analysts, demand is growing faster than in the downturn, and a very important factor is the growing margins caused by the price difference between Russian oil and Brent oil, a base for which companies then sell their products.

Unipetrol will have a new owner

The Polish company PKN Orlen also did well, surpassing all true analysts and in the first quarter of this year it achieved a profit of 837 million zlotys on sales of 8.5 billion zlotys. This is no more than three times the same period last year. PKN is the largest fuel retailer in Central Europe, but from our point of view, it is important that this company first won a tender for 63% of the shares in Unipetrol, which is currently owned by the state. The esk government decided to do so in April this year and to pay the Polish group for shares of Unipetrol CZK 13.05 billion – ie CZK 99 per share – for the basis of the agreement signed in June.

Privatization will probably not take place by the end of the year

However, the privatization process is abandoned, compared to two. The transaction must be approved by the European Commission in Brussels. However, this has not happened yet. The problem was the new European Commission itself approved by the European Parliament until last week. The Dalal factor is the fact that the Polish company Jet did not supply the Commission with all the necessary materials. As a result of the slippage and the initial re-closing of the transaction by the end of the year, it is still showing less reward and it is considered to be postponed to spring 2005 or to go later.

There are two boxes in the way of a complete trade. The first is the decision of the commission on public support, which is in charge of the Czech government. The kind of decision is to avoid the creation of a monopoly, in which the representatives of both companies cooperate. After

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The document was then delivered to the MSC commission to approve the acquisition. I decided to stretch the bag – in case of small irregularities by two weeks, or by three months in case of problems.

Other inconveniences that could adversely affect the completion of the entire transaction are often changes in the company’s management (already in the company’s management for the last six years), or disputes between the state and the company’s co-owner, the richest Polish Jan Kulczyk. However, the company’s management, in a meeting with the Minister of Finance Sobotka, declared its interest in completing the acquisition of Unipetrol.

The completion of the acquisition would thus have a positive effect on the restructuring of the company under new ownership, and the owners of the share would appreciate it, who can buy PKN when buying the share, which could buy the minority shares at prices and 99 K per share.

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Do you think that the privatization of Unipetrol will be completed at the end of five years? According to the increase in prices, is the action on the stock exchange sustainable in the long run? Drink to you.

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