Friday, May 15, 2009

Romania's Petrom keeps 2009 net profit target

* Keeps 2009 net profit target unchanged
* Financing programme for this year completed
* Budget built on oil prices from $40-$60 per barrel
* In advanced talks for Arpechim petrochemicals sale

By Marius Zaharia
BUCHAREST, May 14 (Reuters) - Romania's top oil and gas company Petrom affirmed its 2009 profit target, with its chief executive saying poor economic conditions later this year would damage earnings after a stronger-than-expected Q1.

Petrom, majority-owned by Austrian OMV, has a net profit target of 1.1 billion lei ($356 million) for 2009, having already earned 500 million in January-March.

CEO Mariana Gheorghe said on Thursday her earnings outlook deteriorated for subsequent quarters, because of the prospects for a weakening of domestic demand.

"It will be worse before it gets better for sure. It will be worse in the second part of this year and 2010 will depend on the government's and the market's answer (to the crisis)," Gheorghe told Reuters in an interview.

"What we haven't seen in the first part of the year is a reduction in (domestic) private consumption, but as (companies) continue to restructure, the impact on consumption will be higher ... We are not changing our (net profit) prognosis."

Tumbling commodity prices and shrinking euro zone demand have pummelled companies across central and eastern Europe and sent economies in the region towards recession.

Romania's finance minister has said there were signs of improvement in revenue collection in April, but Gheorghe said Petrom's business was under the same pressures as in previous months.

She said Petrom's 2009 budget was built on projections by the International Monetary Fund that the economy would shrink 4 percent this year and on Petrom's expectations that oil prices will range between $40 and $60 per barrel.

For the rest of the year, Petrom plans to spend its 4.7 billion lei investment plan mainly on exploration and development of key oil and gas fields.

Its financing programme for 2009 has already been completed, Gheorghe said. Over the past few months, Petrom has contracted loans of about 700 million euros from international financial institutions and has not drawn up further plans.

"We more or less completed our financing programme," she said, adding further financing deals depend on improvement in Petrom's cash flow.


Petrom also plans to sell the petrochemicals assets of its Arpechim refinery, for which it is in advanced talks with state-owned chemicals company Oltchim.

"We keep waiting for our negotiation partner to finalise its financing sources," Gheorghe said. "In the next few months it (the deal) can be finalised."

The group also plans to sell other non-core businesses, such as its gas distribution unit Petrom Distributie Gaze and its Doljchim chemical plant, but has not found any buyer yet.

At 1140 GMT, Petrom's shares traded just above a one-week lows of 0.1860 lei, having fallen 6 percent on the day. (Editing by Dan Lalor) ($1 = 0.3088 lei)

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