Polski Koncern Naftowy ORLEN Spólka Akcyjna (PKN.WA) | Investment Case

1. Company Snapshot

1.a. Company Description

Polski Koncern Naftowy ORLEN Spólka Akcyjna, together with its subsidiaries, engages in the extraction, processing, refining, storage, and wholesale of crude oil in Poland, Germany, the Czech Republic, Lithuania, Malta, Sweden, Slovakia, Hungary, Estonia, Latvia, Canada, and China.It operates through Refining, Petrochemical, Energy, Retail, and Upstream segments.The company offers petrol, diesel, LPG, and biofuels; aviation fuels; heating oils; aromatics, including phenol, benzene, paraxylene, purified terephthalic acid, benzene-toulene fraction, and naphthalene concentrate; olefins; polyolefins; plastics; glycols; nitrogen fertilizers; and other products, such as acetone, ethylene oxide, masterbatch, advanced technical carbon black Chezacarb, caprolactam, soda lye, and sodium hypochlorite.

It also provides base, car and motorbike, truck, marine, industrial, and agricultural oils; and paraffin and solvents.In addition, the company produces, distributes, and transmits electricity and heat energy with an installed power capacity of approximately 3.4 GW; and trades in thermal energy.As of December 31, 2021, it had a network of 2,881 fuel stations.

The company was founded in 1999 and is headquartered in Plock, Poland.

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1.b. Last Insights on PKN

Polski Koncern Naftowy ORLEN Spólka Akcyjna's recent performance was positively driven by strong Q2 2025 earnings, with EBITDA nearly doubling to PLN 9.2 billion, fueled by robust performance across all segments. The company's downstream segment reported LIFO-based EBITDA of 2.2bn zlotys ($598.76m). ORLEN's accelerated energy transition investments and efforts to boost profitability also contributed to the momentum. Additionally, the company's strategic focus on sustainable growth and development has likely enhanced its market position.

1.c. Company Highlights

Last Price	91.66
Change Percentage	-0.01%
Open	91.8
Previous Close	91.67
Market Cap ( Millions)	106412
Volume	1336461
Year High	105.28
Year Low	45.4
M A 50	94.4
M A 200	79.98

FCF Yield	15.14%
Dividend Yield	6.55%
ROE	7.23%
Debt / Equity	22.53%
Net Debt / EBIDTA	20.25%
Price To Book	0.74
Price Earnings Ratio	9.91
Price To FCF	6.61
Price To sales	0.38
EV / EBITDA	3.27

2. Orlen's Q3 2025 Earnings: Mixed Macro Environment

Orlen reported a mixed set of results for Q3 2025, with EBITDA coming in at PLN 8.9 billion for the quarter and PLN 30 billion for the 9-month period. The company's EPS was 1.85, missing analyst estimates of 3.11. Revenue growth was impacted by lower oil and gas prices, affecting the upstream business, while the refining environment remained favorable with high margins. Cash flow from operations was robust at PLN 34.4 billion, supporting a significant CapEx program of PLN 21.1 billion and a record-high dividend payment of PLN 7 billion.

Publication Date: Nov -24

                                    📋 Highlights
                                    EBITDA Performance::
                                                Q3 EBITDA at PLN 8.9 billion, 9M25 at PLN 30 billion, driven by high refining margins offsetting weak petrochemical sales (-16% decline).
Cash Flow & Dividend::
                                                Strong operational cash flow of PLN 34.4 billion, with PLN 7 billion dividend paid, maintaining 25% payout ratio of operational free cash flow.
CapEx Allocation::
                                                PLN 21.1 billion spent in 9M25, with 2025 guidance at PLN 33-35 billion for production expansion, renewables, and distribution modernization.
Refining Margins::
                                                Q4 refining margin assumed at $25/barrel (conservative), driven by supply shortages and geopolitical disruptions (Ukrainian attacks on Russian facilities).
Segment Outlook::
                                                Upstream and Consumer & Products face Q4 headwinds, while Energy (distribution) and Downstream (refining) show resilience despite seasonal retail pressures.

                                

Segmental Performance

The company's segments showed varied performance, with the Upstream and Supply segment impacted by lower gas and oil prices, Downstream delivering solid results driven by high refining margins, Energy showing significant improvement, and Consumer & Products maintaining stable results in retail. Operationally, Orlen saw an increase in gas production, distribution, and sales, as well as higher throughput and wholesale fuel sales, although petrochemical sales dropped by 16%.

Outlook and Guidance

Orlen expects a positive Q4 in the Upstream and Energy segments, stability in Downstream, and a decline in Consumer & Products due to seasonality. The company is guiding towards a CapEx of PLN 35 billion, focusing on increasing production, expanding distribution networks, and developing renewable energy projects. The CEO reaffirmed the company's commitment to its dividend policy, with a payout of up to 25% of operational free cash flow minus interest.

Valuation and Metrics

With a P/E Ratio of 10.66 and an EV/EBITDA of 3.5, Orlen's valuation appears reasonable. The Dividend Yield stands at 6.09%, and the Free Cash Flow Yield is 14.07%, indicating a potentially attractive return for investors. The company's ROIC is 5.42%, and ROE is 7.23%, suggesting a decent return on capital and equity. As per the CEO, the company is working on creating efficient business lines, particularly in the Energy segment.

Refining Margins and CapEx

The company is assuming a $25 per barrel refining margin for Q4, considered conservative given the current high margins driven by supply shortages. CapEx is likely to be at the lower end of the PLN 33-35 billion guidance, with some projects postponed to next year. The refining segment expects lower throughput due to planned shutdowns.

3. NewsRoom

Orlen SA (PSKOF) Q3 2025 Earnings Call Highlights: Record-Breaking Growth Amidst Strategic ...

Nov -28

Source:

Orlen Secures Environmental Decision for 1 GW Baltic East Wind Project

Nov -19

Source:

DNO announces stake sale in Ekofisk PPF project to Orlen Upstream Norway

Nov -18

Source:

Consumers Feel Pinch at Pump as Russia Drives Oil Refining Boom

Nov -15

Source:

Naftogaz Secures Greek, Polish Partnerships to Import US LNG

Nov -11

Source:

White & Case advises BGK on PLN 3.5 billion offshore wind financing

Nov -03

Source:

FERC approves commissioning extension for Plaquemines LNG plant

Oct -17

Source:

Societe Generale: shares & voting rights as of 31 August 2025

Sep -09

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.55%)

6. Segments

Refining

Expected Growth: 4.5%

Growing demand for petroleum products, increased crude oil processing capacity, and strategic investments in refining segment drive growth for Polski Koncern Naftowy ORLEN Spólka Akcyjna.

Gas

Expected Growth: 4.2%

Increasing demand for natural gas and liquefied petroleum gas, driven by growing industrial and transportation sectors, will fuel PKN Orlén’s gas segment growth.

Upstream

Expected Growth: 4.5%

PKN ORLEN's upstream segment is expected to grow driven by increasing crude oil and natural gas production, rising demand for energy, and Poland's efforts to reduce dependence on Russian energy imports.

Retail

Expected Growth: 5.5%

PKN ORLEN’s retail segment growth is driven by increasing demand for fuel and convenience shopping, supported by the expansion of its network of fuel stations and shops across Poland.

Energy

Expected Growth: 4.5%

Growing demand for energy, government support for renewable energy, and Polski Koncern Naftowy Orlen's focus on crude oil processing and energy production drive the segment's growth.

Petrochemical

Expected Growth: None%

None

Corporate Functions

Expected Growth: None%

None

Unallocated Adjustments

Expected Growth: None%

None

7. Detailed Products

Refined Petroleum Products

ORLEN Spólka Akcyjna refines crude oil to produce various petroleum products, including gasoline, diesel fuel, jet fuel, and liquefied petroleum gas (LPG).

Petrochemicals

The company produces petrochemicals, such as ethylene, propylene, and benzene, which are used as raw materials for the production of plastics, fibers, and other chemicals.

Lubricants

ORLEN Spólka Akcyjna produces a range of lubricants, including motor oils, transmission fluids, and industrial lubricants.

Bitumen

The company produces bitumen, a binding agent used in road construction and maintenance.

Aromatics

ORLEN Spólka Akcyjna produces aromatics, such as benzene, toluene, and xylene, which are used as raw materials for the production of plastics, fibers, and other chemicals.

Fuels for Aviation

The company produces jet fuel and aviation gasoline for the aviation industry.

Marine Fuels

ORLEN Spólka Akcyjna produces marine fuels, including heavy fuel oil and marine diesel oil, for the shipping industry.

Heating Oils

The company produces heating oils, including light heating oil and heavy heating oil, for use in heating systems.

LPG

ORLEN Spólka Akcyjna produces liquefied petroleum gas (LPG) for use as a fuel and feedstock.

8. Polski Koncern Naftowy ORLEN Spólka Akcyjna's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for ORLEN Spólka Akcyjna is moderate due to the presence of alternative energy sources and refining companies in the market.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of concentration in the downstream market, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of a few large suppliers of crude oil and other raw materials.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the refining and petrochemical industry, including high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several large players in the market, leading to intense competition in terms of pricing, quality, and innovation.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	9.14%
Debt Cost	4.92%
Equity Weight	90.86%
Equity Cost	7.41%
WACC	7.18%
Leverage	10.06%

11. Quality Control: Polski Koncern Naftowy ORLEN Spólka Akcyjna passed 6 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

PKN ORLEN

A-Score: 6.7/10

Value: 8.7

Growth: 3.3

Quality: 4.6

Yield: 8.1

Momentum: 9.0

Volatility: 6.7

1-Year Total Return ->

Repsol

A-Score: 6.7/10

Value: 7.1

Growth: 5.6

Quality: 2.5

Yield: 8.8

Momentum: 8.0

Volatility: 8.3

1-Year Total Return ->

Eni

A-Score: 6.4/10

Value: 7.5

Growth: 4.8

Quality: 3.2

Yield: 8.8

Momentum: 5.0

Volatility: 9.3

1-Year Total Return ->

Shell

A-Score: 6.0/10

Value: 6.9

Growth: 4.1

Quality: 4.5

Yield: 6.2

Momentum: 5.5

Volatility: 9.0

1-Year Total Return ->

Equinor

A-Score: 5.8/10

Value: 8.3

Growth: 6.0

Quality: 5.0

Yield: 7.5

Momentum: 1.5

Volatility: 6.3

1-Year Total Return ->

A-Score: 5.7/10

Value: 6.2

Growth: 2.9

Quality: 2.7

Yield: 8.8

Momentum: 6.0

Volatility: 7.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-5.06%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.18%

Polski Koncern Naftowy ORLEN Spólka Akcyjna - PLPKN0000018

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on PKN

1.c. Company Highlights

Cheaper

Higher Yield

Average Growth

Earnings Miss

Revenues Beats

Medium Volatility

Earnings Beats

Revenues Miss

Average Quality

Stable Momentum

Average Yield

Weak Momentum

Less Volatile

Strong Momentum

Fairly Valued

2. Orlen's Q3 2025 Earnings: Mixed Macro Environment

Segmental Performance

Outlook and Guidance

Valuation and Metrics

Refining Margins and CapEx

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.55%)

6. Segments

Refining

Expected Growth: 4.5%

Gas

Expected Growth: 4.2%

Upstream

Expected Growth: 4.5%

Retail

Expected Growth: 5.5%

Energy

Expected Growth: 4.5%

Petrochemical

Expected Growth: None%

Corporate Functions

Expected Growth: None%

Unallocated Adjustments

Expected Growth: None%

7. Detailed Products

Refined Petroleum Products

Petrochemicals

Lubricants

Bitumen

Aromatics

Fuels for Aviation

Marine Fuels

Heating Oils

LPG

8. Polski Koncern Naftowy ORLEN Spólka Akcyjna's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Polski Koncern Naftowy ORLEN Spólka Akcyjna passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.e Scoring ^Insights

12.f DCF ^BETA