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Petrom's net income surges to 400 million euros

Petrom's net income surges to 400 million euros
18.08.2006, 19:29 6

Petrom, the biggest company in Romania, controlled by Austrian OMV group reported 1.42 billion RON (403 million euros) net income for the first half of the year, 2.3 times higher than in the corresponding period of 2005.
This came as a result of the fast-paced increase in the price of oil worldwide and the rise in the amount of products sold.
Mariana Gheorghe, Petrom's new CEO, says she hopes the company will improve its results by the end of the year, but this does depends on the volatility of the prices on the international market. The 2006 budget projects 520 million-euro net income and 3 billion-euro turnover.
The exploration and production unit remains the Romanian petroleum company's bonanza, generating a half-year EBITDA of 2.5 billion RON (over 700 million euros).
The refining unit witnessed contrasting fortunes, posting H1 operating losses of 407 million RON (approximately 115 million euros). The losses of Petrom's refining division influenced the results of the OMV group, as well. The Austrians reported a net profit of 904 million euros to the Vienna Stock Exchange.
Petrom's personnel was cut by 25% over the past year, to 38,136 employees. This was mainly because of the introduction of a new system for operating filling stations, which takes the related personnel out of the company's structure.
Nonetheless, the results posted by Petrom were lower than expected by some of the main analysts on the market.
"The results for the second quarter of the year were significantly lower than estimated by ING Bank, by 34.44% for EBITDA and 44.29% for the net profit. Although our model factored in the weaker results on the refining and distribution segment, we were confident Petrom would manage to post very strong results on the exploitation segment by taking advantage of the rise in the petroleum price worldwide," explained Nicoleta Banica, equity analyst with ING Securities.
"Another area where Petrom's results were below our expectations was the insufficiently steady pace of efficiency improvement, that is usage rate of refineries, production costs and level of losses," Nicoleta Banica added.
However, other analysts say that the results were in line with the expectations of the market.
"Half-year results were in line with the expectations of the market, with a turnover that witnessed substantial growth, due to the increase in the petroleum price and to the purchase of the fuel distribution networks in Bulgaria and Serbia," says Cristian Tudorescu, analyst with brokerage firm Vanguard. He added that, under the current circumstances on the international market, he expected Petrom to post a "significantly" higher profit compared with the target budgeted for this year.
"Since Petrom's full-year budget, calculated around a price of $55/barrel, led to an estimated profit of 550 million euros in 2006, I believe that under the current petroleum price circumstances, the profit target may be exceeded significantly," Tudorescu says.

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