Petrom gross earnings and turnover set to drop in 2009

Romania's largest company, Petrom, foresees a 33 percent decline in turnover this year, down to RON 11.125 billion (€2.78 bln), compared to RON 16.75 bln (€4.5 bln) worth of business in 2008.

Furthermore, the company, controlled by Austrian OMV group, estimates earnings before interest, taxes, amortization and depreciation (EBITDA) from upstream operations to amount to RON 2.22 billion (€555 mln), 37 percent lower year-on-year. In 2008, EBITDA was worth as much as RON 3.56 bln (€968 million). However, net earnings are set to increase 8.6 percent, to RON 1.11 billion (€277.7 million).

These indicators are to be approved in the company's April 2009 general shareholders meeting. At that same meeting, the company will introduce this year's investment budget, worth some RON 4.73 billion (€1.1 bln), some 26 percent lower year-on-year. A 59 percent slice of this budget is to be used for exploration and production (E&P), and 12 percent each for the company's refining division, its headquarters, and other expenses, 10 percent for the Gas and Energy segment, 5 percent will be allocated to marketing operations, while 2 percent will go to the Petrom Solutions subsidiary.

Petrom is Romania's only crude oil producer and one of the top producers of gas. It operates mainly on the oil and gas exploration and production segment, and is facing a difficult economic environment, given the international crisis, the rather low oil prices, the depreciation of the leu to the euro and the dollar, and a declining fuel market.
The company estimates that the exchange rate, oil prices, and refining margins will remain volatile this year, and that the economic crisis will lower Romania's economic growth.

"There are two vulnerable areas: the crisis and employee litigation," the company's CEO, Mariana Gheorghe, recently told Business Standard. Petrom was forced to make significant provisions due to litigation with current and former employees.

Some of the top players on the oil market, such as Rompetrol and LukOil, are expecting a sharp drop in fuel consumption, up to 18-20 percent, due to the crisis. However, Petrom estimates that Refining and Marketing division sales will decline only 3 percent, to 5.051 million tons. "The budgeted crude oil production is 31.7 million barrels of oil equivalent (boe), gas production is 35.4 million boe, while marketing sales are estimated at 5.05 tons," according to the notice issued to shareholders for the April meeting.

During that meeting, shareholders are also set to approve a new Supervision Board, made up of nine members, whose annual remuneration will be worth €20,000.

Business Standard