Petrom reports Q4 loss, full year profit slumps 43%

Petrom runs activities in the business segments of Exploration and Production, Refining, Marketing Natural Gas and Energy and handles proved oil and gas reserves estimated at 0.9 bln boe with a maximum refining capacity of 8 million metric tons and about 550 filling stations in Romania.

The company runs an international network of 257 filling stations in Moldova, Bulgaria and Serbia.

The Austrian-based OMV, the majority shareholder of the company, recorded a 13% reduction of full-year net profit for 2008, down to 1.374 bln euro net income after minorities, reads a press release remitted by the company.

In 2007, the Austrian oil company posted after-tax profit of 1.579 bln euros. OMV holds 51.01% of Petrom share capital. Ministry of economy holds 20.64% stake, while Property Fund owns 20.11% shares, and 8.24% to minority stockholders.

The main drivers of the Q4 1.269 bln lei loss were the one-time charges related to provisions and the crash of oil price, for the first time since its privatization.

Earnings before interests and taxes of Petrom shrank 33% in 2008, down to 1.309 bln lei (355.7 mln euro), from 1.965 bln lei a year earlier.

“Our financial performance in 2008 was mostly affected by several factors, such as one-time charges mainly relating to litigation provisions, personnel restructuring costs and Arpechim’s impairment”, said Mariana Gheorghe, CEO and President of the executive board.

The negative financial result for the last three months of 2008 reflects the litigation provisions booked at Petrom, for pensions and severance payments and abandonment payments as well as the sharp fall of crude oil price. The oil company had set up three provisions in this purpose, of 447 mln lei.

Analysts polled by Reuters said they had expected the company to record a net profit of 131 million lei (35.6 million euros) in fourth quarter 2008, down 43% compared to a prior-year period.

However, analysts at ING and Erste drew a gloomier scenario, expecting the company to report losses in fourth quarter. Thus, Austrian Erste had forecasted 409 million lei loss (110 mln euros) in 4Q in 2008, while ING’s specialists had seen 839 million lei loss, given the writedown and provisions booked.

The turnover of the company rose 36% last year, up to 16.751 bln lei (4.55 bln euros), from 12.284 bln lei a year earlier, the growth being driven mainly by the rising sale volume of fuel at the filling stations.

“Apart from these effects, Petrom recorded a substantial growth of business that reflects the favorable price of crude in the first three quarters of 2008, as well as the improvement of company-wide operating efficiency”, the CEO of Petromn added.

Last year, the company has significantly increased investment value, up to 6.404 bln lei, up 68% from 3.82 bln lei in 2007.

The company has a share capital of 5.66 bln lei, divided into 56.64 bln shares at a nominal value of 0.10 lei.

Petrom shares are listed at BSE’s tier I. The Tuesday’s closing price of shares was 0.1310 lei/share. The company value amounts 7.42 bln lei (1.73 bln euros).

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