Petrom profit exceeds OMV’s and analyst estimates

Consequently, Petrom’s profit is superior to that of its Austrian owner, the OMV group, at the end of the first six months. OMV’s earnings plunged 84 percent in H1, to €185 mln, from €1.13 billion in the first half of 2008, considering that revenues from sales fell 35 percent, to €8.4 bln, from €12.91 bln.

“We gained from hedging, because 45 percent of production is insured for a barrel between $65 and $80, and the price of oil was below this level,” Petrom’s Chief Executive Officer, Mariana Gheorghe, told Business Standard.

Thus, the firm’s financial profit amounted to RON 550 mln (€131 mln) in the first six months of 2009, almost triple the RON 199 mln level in H1 2008, “mainly due to hedging instruments, which generated financial earnings worth RON 339 million, and due to a higher level of dividends received from subsidiaries and the earnings from the evolution of the exchange rate.”

In the second quarter, Petrom’s profit, of RON 417 mln (€98.6 mln), is 39 percent lower year-on-year, far better than the estimates of analysts. Prior to the announcing of financial results, analysts saw Petrom’s profit down 68.2 percent in Q2, to RON 218 mln (€51.9 mln).

“Analysts were so wrong because, in general, they look at the price of oil and the exchange rate, etc. On the whole, these are the general hypotheses they rely on when they make forecasts. The financial result, and financial results in general, cannot be anticipated, because the information is not public in this area,” Gheorghe added.

Petrom’s net sales in the first half of this year amounted to RON 5.926 bln (€1.41 bln), a 28 percent drop compared to the corresponding period of 2008. Total revenues were of RON 6.88 bln (€1.62 bln), 30.6 percent less than the RON 9.91 bln level in the same period in 2008. According to the official, the economic crisis will affect the fuel market more in the second half of this year than in the first six months.

“The retail segment could drop five percent by year-end, because the effects of the economic crisis include a decline in consumption and purchasing power, and implicitly sales. In the commercial sector, from a 10 percent drop in the first half, depending on the economic evolution, we forecast a decline of between 5 and 15 percent by the end of 2009,” Gheorghe indicated.

Furthermore, the natural gas market is to slide 19-21 percent this year, due to a reduction in industrial consumption, the company estimates.
Petrom drafted its budget for 2009 based on a 4-6 percent decline in gross domestic product, and at present it is not planning to revise this, although the CEO is even considering a possible eight percent economic drop this year.