Romania’s largest company, Petrom, which posted some €629 million in earnings in the first nine months of 2008, 48 percent higher year-on-year, is redrafting its investment priorities agenda.

The company will abandon a part of its initial projects and opt only for profitable ones, which will allow for a quick return on investment, according to Petrom General Manager, Mariana Gheorghe, cited by BusinessStandard.Ro.

The oil company, controlled by Austrian OMV group, could speed up the sale of its non-core assets, depending on market opportunities, amid the current financial crisis and Petrom’s need for investments, Gheorghe said.

Furthermore, based on the cash-flow, the company will revise its operating expenses for raw materials, utilities and labor. “We are working on the 2009 budget, which must be approved by year-end. We have several scenarios, because of the high volatility of oil prices and capital markets,” Gheorghe told Business Standard.

Petrom is listed on the Bucharest Stock Exchange (BVB), where quotations have significantly dropped since the beginning of 2008.

The company is searching for medium and long-term bank financing for its 2009 investment program, worth some €1.5 billion. It recently borrowed a record €375 million from a club of five banks. However, the company actually required a €500 million loan, according to Gheorghe. “Romania is not immune to this crisis. Petrom is a solid company and has a healthy cash-flow... but we are analyzing the possible impact of the crisis on the company,” she added.

In spite of the 48 percent increase in earnings for January-September, the company posted a 5 percent decline in net income for the third quarter, to €172 million, according to the financial results sent to BVB. Operating profit (EBIT) was 54 percent higher year-on-year, up to €673 million, for January-September. For the third quarter, however, earnings before interest and taxes (EBIT) dropped 7 percent, to €173 mln. The decline is due to a €160 million provision, because of a drop in the estimated value of Petrom’s Arpechim refinery.

The Q3 turnover amounted to €1.26 billion, 46 percent higher year-on-year. For the first nine months of 2008, the company posted €3.5 bln worth of business.

CA IB Securities brokerage company’s Analysis Department head, Adriana Marin, said that Petrom’s results are much better than expected. Analysts questioned by Business Standard last week were forecasting an average 47 percent decline in earnings for Q3, lower than €100 million. However, Marin warned, that “the fourth quarter could be much worse, because oil prices have dropped significantly.”

OMV, Petrom’s main shareholder, posted a 27 percent increase in net profit in the first nine months of 2008, up to €1.89 billion. Net earnings declined by 10 percent in Q3, to €546 mln, due to lower oil prices.

‘Romania is not immune to this crisis. Petrom is a solid company and has a healthy cash-flow... but we are analyzing the possible impact of the crisis on the company Mariana Gheorghe Petrom General Manager.