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Net profit leaps at Polish oil and gas group Lotos
Lotos recorded net profit of PLN410.9mn (€97.3mn) in the first quarter of 2017, the Polish state-controlled listed oil and gas group said on April 26.
The result represents growth of 35.4% q/q and as much as 287.6% on the year, as rising fuel prices increased the valuation of Lotos’ inventories, reducing the impact of a decline in downstream sales. The latter suffered because of falling diesel margins and a refinery shutdown that ate into production volumes.
The weakened downstream performance led to a drop of 22.9% q/q in the company’s EBITDA to total PLN226.6mn. In annual terms, however, EBITDA grew a robust 100.6%.
In the upstream segment, production volumes fell 15% y/y, but EBITDA still grew by 76.2% y/y thanks to rising prices of oil and gas and the weakened zloty.
The company’s overall sales amounted to PLN5.4bn, a drop of 14.4% on the quarter, but growth of 38.4% y/y.
Countries in Central Europe made some of the largest increases in military spending between 2015 and 2016, according to a new report from the Stockholm International Peace Research Institute (SIPRI), while Russia became the third highest defence spender worldwide.
The increase comes amid growing tensions between Russia and EU countries, especially the newer member states in the eastern part of the bloc. Nato members in the region have also sought to raise their defence spending to the 2% of GDP stipulated by the alliance, due to both growing perceived threats from Russia and pressure from US President Donald Trump for fellow Nato members to fulfil their commitments.
Total spending in Central Europe grew by 2.4% in 2016, although this was a more modest rise than the 2.6% recorded in Western Europe, led by an 11% increase in Italy. Data from individual countries in the region – from the Baltic states in the north to Bulgaria and Romania in the south – showed an upturn in spending in the last one to five years.
“The growth in spending by many countries in Central Europe can be partly attributed to the perception of Russia posing a greater threat,” said Siemon Wezeman, senior researcher with the SIPRI AMEX programme. “This is despite the fact that Russia’s spending in 2016 was only 27% of the combined total of European Nato members.”
Poland plans to increase defence spending to 2.2% of GDP in 2020 and 2.5% by 2030, according to a draft bill published on April 21. Warsaw is also reportedly eyeing a number of large military purchases, including the US- made Patriot missile system. Romania too plans to buy Patriot missiles, along with other defence purchases. Elsewhere in the region, the Czech Republic is reportedly planning to buy 12 multi-role helicopters from US aircraft manufacturer Bell Helicopters.
Currently only four Nato member states – Estonia, France, Greece and the US – meet the 2% of GDP spending target, with Turkey and the UK falling very slightly short. Other states, several of which say they are aiming to reach the target within the coming years, have more substantial ground to make up; SIPRI claims total military expenditure by Nato’s European member states would have reached $320bn in 2016, an increase of 26%, had all the states met their targets.
Russia hiked spending by 5.9% in 2016 to $69.2bn, pushing Saudi Arabia, which saw a substantial decline in spending, into fourth place. Russia is now behind only the US ($611bn) and China ($215bn).
Prime Minister Dmitry Medvedev announced in January that Moscow has no plans to cut defence spending, Tass reported at the time. The Kremlin is
Russia, CEE hike military spending as tensions rise
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