Analysts predict net profit for Petrom at €218-303 mln

The main reason for lower profits include a drop in oil production and the appreciation of the national currency, which has led to a 14 percent decrease in the company’s revenue. “In the first quarter, the appreciation of the RON lowered Petrom’s earnings by RON 125 million (€39,13 million),” according to Wood&Co investment bank Analyst Bram Buring.

Contacted by Business Standard, Petrom officials declined to comment on the analyst’s outlook, because the company is listed on the Bucharest Stock Exchange (BVB), and is to publish its financial results this Thursday. Petrom’s net profits in Q1 amounted to €112.7 million, with turnover at €815 million.

Another reason for lower earnings is a drop in oil prices, according to the head of Raiffeisen Capital & Investment’s Analysis Department, Oleg Galbur. In the first three months of 2007 alone, prices decreased 7.4 percent year-on-year. Likewise, the planned closure of the Arpechim refinery in the second quarter impacted negatively on the refining and marketing segment. Raiffeisen Capital & Investment’s estimation for H1 Petrom profit is €276 million and turnover worth €1.75 billion.

“We expect Petrom to post a turnover 12 percent lower than in the first half of 2006,” Galbur added. Analysts at the KBC Securities brokerage company are more optimistic. They expect Petrom’s profit to exceed €300 million and net sales to amount to €1.9 billion. The Vanguard brokerage company is forecasting profit worth €283 million, and €1.73 billion in turnover, 3 percent lower year-on-year.

“Petrom’s operational environment was better in the second quarter, compared to the first quarter, so we expect the difference in results between 2006 and 2007 to narrow. However, net sales will be slightly lower, and profits will be 30 percent lower year-on-year,” Vanguard’s Analysis Department Director, Cristian Tudorescu, said. Petrom is the largest company listed on Bucharest Stock Exchange. Its capitalization reached €9.3 billion by the end of yesterday’s trading session, or 32.2 percent of total capitalization of listed companies.

Its main shareholder is Austrian OMV group, with 51.01 percent of the shares.