The chairman of Austrian petroleum group OMV, Wolfgang Ruttenstorfer, has paid a short visit to Bucharest to reveal OMV''s plans for Petrom up to 2008 and the sale of the 25.1% in petroleum group Rompetrol, which is run by businessman Dinu Patriciu.
The OMV boss announced over one billion euros of investment in Petrom by 2008, adding that the Romanian company would adapt to the group''s profitability standards, with annual profits in the region of 200 million euros expected by close to 2008.
"Petrom will be profitable in 2005 and then much more profitable in 2008," Ruttenstorfer said, indicating that the 2008 target meant attaining an average return on average capital employed (ROACE) of 13%.
Petrom made losses of 8 million euros in 2003 against a turnover of 2bn euros, according to international accounting standards. This compares poorly with OMV''s 393 million euro profits and 7.6bn euro sales in the same year. Petrom''s 2004 financial results are still being audited and have not yet been released. Ruttenstorfer said that for this reason it remained to been seen whether dividends would be paid to shareholders, after Petrom already informed the Bucharest Stock Exchange (BSE) last month that no dividends would be paid for 2004.
OMV acquired 51% in what is Romania''s largest company last summer after paying some 1.5bn euros. They transferred 669 million euros to the state for the direct acquisition of one third in Petrom and at the same time participated in a capital raise with a further 830 million euros in order to acquire a majority. OMV''s capital contribution is to be used for Petrom''s investment programmes, with about 400 million euros scheduled for each year.
The Austrian company has hired more than 80 experts to help restructure Petrom and integrate it into OMV''s structures. This number would soon double, the OMV head said.
The team of experts includes Petrom and OMV employees, consultants from Capgemini, Ernst & Young and S&T Romania.
OMV''s goals for Petrom include consolidation of its regional leader position in petroleum and natural gas production, expansion of downstream (refining and distribution) operations on neighbouring markets in the south of the Balkans and promotion of the natural gas division as the third core business of the company.
Of the 200 million euros earmarked for yearly investments in the exploration and drilling segment (upstream), half will go to identifying new deposits so that by 2008 Petrom will achieve a reserve replacement rate of 80%. International companies, such as Shell, BP and ExxonMobil, enjoy a level close to 100% in terms of reserve replacement.
OMV''s focus on "pushing" Petrom towards the Caspian Sea indicates its clear intention of developing these operations of the Romanian company, an asset that attracted many other large companies during the privatisation process. Petrom plans to take action to stabilise its output at 200,000-220,000 barrels a day, as well to identify new resources, i.e. expansion opportunities in the Caspian Sea area. adrian.mirsanu@zf.ro
TITL: Impact drops instalment plans due to tax changes
Vlad Nicolaescu
Villa builder Impact Bucharest is to stop selling villas in instalments because of the new fiscal rules. Under the new provisions, which are due to come into force on May 1, companies that sell in instalments will no longer be allowed to enter their revenues in the accounting records as the revenues are collected, having instead to do so at the moment a contract is concluded with the client.
As a result, companies using the instalment system will be required to pay profit tax for amounts they will not be collecting for a number of years. Houses sold by Impact in instalments account for 20-25% of the company''s sales, with the rest being paid for with bank loans or with full payment upfront.
"We will no longer be able to offer sales in instalments. We will only make such contracts until April 30, after which the new provisions will come into force,?" Impact''s chief financial officer, Carmen Sandulescu, told Ziarul Financiar.
Impact has developed its business over recent years with a main focus on sales by instalments, mostly with less restrictive conditions than those imposed by commercial banks as required by the central bank.
The company has for some time been considering giving up its crediting operations, which company officials say require resources that could be put to much more profitable use in the building of villas.
In view of this, Impact intends to participate in setting up a mortgage company that will perform crediting operations for Impact''s clients. Enacting the legislation required for this, which would regulate the operations of these types of companies and the way in which they can obtain funding from the capital market, has been held back for several months.
The company recently announced it intended to develop what will be the biggest residential project in Romania. The project is put at 0.5bn euros and will be located north of Bucharest. It will see the building of a total of 5,000 homes on an area of around 120 hectares divided into 6 distinct complexes of between 4 and 45 hectares.
vlad.nicolaescu@zf.ro
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