Robert Brzozowski
Vice-President of the Management Board
UNIMOT

21 January 2020

UNIMOT S.A. is an independent importer of liquid and gas fuels, active in the Polish market for more than 25 years. Its energy offer includes: diesel oil (ON), gasoline, biofuels (Bio), liquid gas (LPG), natural gas (incl. LNG), as well as electricity. Under the AVIA brand, UNIMOT also manages a network of petrol stations in Poland.

UNIMOT has published excellent results for the third quarter of 2019, a historical high for the company in fact. What contributed to this success?

Indeed, and we are very excited with this outcome because last year the situation was completely the opposite. We had serious problems with our margins and this motivated us to implement a recovery system, which involved reducing staff and optimizing our costs and processes. This was key for the good results you are seeing now.

 

The market in 2019 has been very strong and I expect it will remain so in the coming period. The Polish economy is very stable and GDP will likely continue to grow at a faster pace than other European countries. Domestic demand is also growing, due to supporting legislation and smartly used EU funds, which helped develop national roads and railways.

 

Gas is seen as a transition fuel, however, Poland does not hold many reserves. What are the key markets from which you are sourcing gas nowadays?

We are importers for both LPG and natural gas, but we are much more focused on LPG because it is much easier to transport and we have a long tradition in this area. Up until now we have been sourcing it mostly from Russia and Belarus but those days are changing. Russian supply is drying up because of developments in their petrochemical industry, which is changing their market structure, so we are looking more towards western markets nowadays.

 

For natural gas Poland has a contract with Russia which will expire in 2022 and probably will not be renewed. For a few years now the Government has been working to diversify the natural gas supply, and there are several infrastructure projects designed to support this decision.

I think it was the right call - for instance, the LNG terminal that was built allows us to ship gas from different sources like Kuwait, Qatar or the US and gave us a better negotiating position  with Russian suppliers.

 

As a company we are an inland player on natural gas market in Poland, we have our own pipeline system north of Warsaw but we are not a significant importer.. Compared to the diesel business where we are the biggest independent importer, for natural gas we play a rather small role. 

You expressed confidence that demand for your core business will be steady in the coming years, but you are also expanding into new areas such as bitumen or e-mobility. What drives your interest towards diversification?

Entering the bitumen business was a pure market opportunity, one of our competitors went into bankruptcy last year and we decided to acquire their bitumen team of specialists who have a very good knowledge of the market. Polish infrastructure is still being heavily developed so demand for bitumen will be strong. Add to this the fact that margins on bitumen business are very solid compared with diesel.

With regards to e-mobility, we see the changes that are taking place in the world, we are aware that the economy is starting to turn towards e-mobility. That is why we invest in this sector and want to participate in these changes. On the other hand, we are aware that fossil fuels will not disappear from the world economy most probably during our lifetime, so the change process will be long-term.  

Biofuels are also part of your portfolio. Do you see relevant demand for this and is it a part of business that you want to grow?

The European Union has introduced the obligation to add about 7% of biofuel to each liter of diesel. As a diesel importer, we are obliged to buy biofuel and mix it with diesel. It is simply mandatory for us.

Why are you not embracing this direction with more enthusiasm?

The main type of biofuels  we use in Poland is rapeseed methyl ester (RME), coming from rapeseed oil. We have to transport this rapeseed oil from the southern to the northern part of Poland, a total of 600 km, using trucks that burn diesel. It is not very ecological if you think about it. If we take the direction of use agricultural waste then it makes more sense, but the present  set up creates more hurdles than opportunity.

Can you expand on what you see as the biggest hurdles faced by companies like your in the Polish business environment?

 

A long term challenge for us is the bio obligation and how to deal with it. Changes in regulation are putting pressure on logistics and our time at work becomes less about trading and more about navigating new regulations.

 

Another long term challenge has to do with changes in the energy mix and e-mobility, in the sense that it is unclear the direction in which we are heading. I support an increased role of electricity, but for now cars in Poland are still charged with coal fueled electricity. 

Short term, the question is how the market  will look after the merger of PKN Orlen and Lotos, which I see as both a challenge and an opportunity. 

Unimot expressed an interest to purchase some of PKN Orlen’s stations, is that still the case?

Yes, we see this as a huge opportunity to develop our retail business at a high speed. And we have a good vision about the role retail stations will play in the future, for instance we trust they will go more and more in the direction of convenience shops. Now that the Government decided to close shops on Sundays for instance, we see a huge jump in our stations performance.

Do you have a final message for investors that are looking to join your field of work in Poland?

There are plenty of investment opportunities because few players are active in our sector for the time being. The entrance barrier is still rather high, because historically this sector was protected by the government, but I believe that EU pressure will change this. The market will become more open and opportunities will increase, so I consider Poland a very interesting choice.

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