Regarding the results in the first quarter of this year, the company’s profit and turnover are expected to register a significant annual decline, due to lower market demand and a drop in prices.
“In my opinion, there is no fiscal evasion in the oil industry, unlike the milling and baked goods industry, for example [evasion exists in some 80 percent of the milling and baked goods market],” Leu told Business Standard.
The drop in business registered this year is mainly generated by two important factors, a drop in sales and lower prices on a market, where supply exceeds demand.
“Profit was higher in the first quarter of 2008. This was after a year of drought when many players did not have merchandise. The year 2008 was an exceptional one, but now we are returning to the trend of the past few years. This year, net sales were much lower, as was profit, considering prices dropped sharply. We are at the limit of profitability,” said the General Manager of one of the top three largest vegetable oil producers on the local market.
The price of raw material – especially sunflower – rose 50-60 percent in 2008 year-on-year. Raw materials make up 80 percent of total costs of oil producers. Oil sales increased 53 percent in terms of value last year, to RON 788 million (some €214 mln), but declined 11 percent in terms of volume, to 120.5 million liters, with the evolution of indicators being influenced by the significant price rise, according to a study by the Nielsen market research company.
Argus posted RON 22.9 mln (€6.2 mln) in net income last year, 4.4 times higher than the 2007 profit, according to the forecasted financial results sent to the Stock Exchange, while the company’s revenues soared 52 percent, to RON 213 mln (€57.8 mln). Meanwhile the enterprise’s net sales surged 69 percent, to RON 213.8 mln (€57.8 mln).
The company has a capital worth RON 53.7 mln, and according to the latest reports, its main shareholders are the SIF Oltenia financial investment company, with an 18.97 share package, and Vasile Leu, with 11.32 percent.
The oil market is estimated at 250,000 tons annually, with a value exceeding €200 mln. Major players are Bunge, Argus, Cargill, Prutul, and Expur.
