The Group’s first-quarter revenue was PLN 14.34bn, compared with PLN 13.25bn a year earlier (up 8% yoy), with EBITDA at PLN 2.16bn relative to PLN 2.67bn in the same period last year (down 19% yoy). EBIT also decreased, from PLN 2.01bn to PLN 1.38bn (down 31% yoy). The Group earned PLN 1.06bn in net profit, compared with PLN 1.57bn the year before (down 32% yoy).

“In the first quarter of 2019, our revenue increased 8% over the same period last year,” said Piotr Woźniak, President of the PGNiG Management Board. “The high cost of gas fuel purchased from sources east of Poland weighed on the Group’s performance, but imports from other sources – especially LNG – helped us mitigate the adverse impacts of the Yamal contract. These are tangible effects of our pursuit of a strategy seeking to reduce our reliance on a single monopolistic supplier and build a diversified portfolio of reliable partners,” he added.

Exploration and Production

As in previous quarters, the Exploration and Production segment made the largest contribution to the Group’s EBITDA, of 60%. In nominal terms, its EBITDA came in at PLN 1.30bn compared with PLN 1.38bn in the first quarter of 2018. The decline was a consequence of lower oil and gas market prices. The Brent crude price in USD per barrel fell 6% year on year, and the price of gas on the Day-Ahead Market of the Polish Power Exchange dropped 12% year on year.

Trade and Storage

In Q1 2019, EBITDA of the Trade and Storage segment came in at PLN -0.07bn, compared with PLN 0.18bn a year earlier. The decrease was primarily attributable to the higher costs of imported gas fuel procurement, up 17% year on year.

Price rises were particularly felt in the case of gas imports from across Poland’s eastern border. The nine-month average Brent crude price in USD per barrel, affecting the Yamal contract delivery price, was a third higher than in the previous year.

The Company succeeded in partly mitigating the negative effect of this factor on the segment’s performance by replacing gas sourced from east of Poland with supplies from other directions – primarily liquefied natural gas (LNG) and gas procured from suppliers based west and south of Poland.

In Q1 2019, the volume of LNG supplies to the President Lech Kaczyński Terminal in Świnoujście reached 727 million cubic metres of the regasified fuel, a 44% increase year on year. As for imports from the western and southern directions, they reached 1.15 billion cubic metres, more than three times the volume imported over the same period of 2018. At the same time, the volume of gas procured in Q1 2019 from the eastern direction was 1.79 billion cubic metres, down 40% year on year.

The segment posted PLN 11.69bn in revenue, up by 15% year on year. In addition to other factors, the revenue increase was driven by gains on the gas purchase and sale hedging transactions, as well as a 2.5% increase in the average price of fuel gas in the new retail tariff effective from February 15th 2019.

The volume of gas sold by the Trade and Storage segment was 9.9 billion cubic metres, the same as a year earlier. The stable sales were, on the one hand, a consequence of relatively high temperatures (the warmest first quarter since 4 years), which weakened demand for gas as a heating fuel, partly offset by a strong growth in gas sales recorded by PST, to 1.35 billion cubic metres (up 35% yoy).

Distribution

The segment’s EBITDA was PLN 0.58bn, versus the previous year’s figure of PLN 0.76bn. The share of Distribution in the Group’s consolidated EBITDA came to 27%. The segment’s performance was affected by a 5% reduction in the distribution tariff, coming into effect on February 15th 2019. Another factor was the weather – with the average temperature almost 3 degrees Celsius above last year’s level, Q1 2019 was the warmest first quarter in four years. As a result, the volume of distributed gas fell 8% year on year, from 4.22 to 3.88 billion cubic metres.

Generation

The Generation segment’s EBITDA did not change relative to Q1 2018, coming in at PLN 0.4bn, which translates into an 18% contribution to the Group’s consolidated EBITDA. As was the case with Trade and Storage and with Distribution, results posted by the segment were significantly affected by the relatively high temperatures in Q1 2019. In consequence, the heat sales volume dropped almost 11% year on year, to 16.97 PJ. The volume of electricity sales remained similar as in Q1 2018, at 1.51 TWh. However, revenue from sales of electricity rose 38% year on year, driven by markedly higher electricity prices.