Petrom, the largest company in Romania, sells almost one billion euros of petroleum products through OMV networks in Bulgaria, Serbia and Romania. "Petrom is deriving approximately 1 billion euros in annual revenues through around 200 filing stations, which it acquired from OMV in early 2006. The aim is to develop these networks, and gain a market share of approximately 20%. OMV is the only group that approached this market strategically," says Tamas Mayer, a member of Petrom's executive board, in charge of the marketing division of the company. Petrom forecasts turnover worth 10.64 billion RON (3.22 billion euros) this year, around 19% lower on 2006. One third of turnover comes from sales conducted under the OMV brand on the Bulgarian, Serbian and Romanian markets. Petrom entered these markets at the beginning of 2006, when it took over OMV networks in the above-mentioned countries, in a deal worth 234.4 million euros.
Petrom intends to double its market share in Bulgaria over the medium term.
Bulgaria is a country where the company operates with a market share of above 10%, while its presence in Serbia is lower, which will entail larger investments over the coming period to reach the 20% target.
"We are looking at certain markets where we could enter with the Petrom brand directly, but have not made a decision regarding this yet," Mayer says.
As for the domestic market, Petrom officials believe the marketing segment (the retail of petroleum products) will become profitable in three years. At present, it has a negative impact on the profitability of the entire company.
"Petroleum product retail is not a profitable business. It will be a success if in three years we break even and make a positive contribution to the company's results. Anyway, the retail business has significantly improved against three years ago," Mayer adds.
An aspect that erodes the financial results on the marketing segment is the rise in oil barrel prices.
"The higher the prices, the less money we make. In Romania, however, we are extremely lucky because economic growth is so high that it allows the end client to tolerate the price rises in petroleum products. In Germany, for example, demand for petroleum products has gone down, as prices have increased. In mature economies, the possibility of increased petrol and diesel prices is much smaller," Mayer explains.
Petrom completed the transfer of all its filling stations to the Full Agency concept, whereby the company retains full control over its stations, with third parties responsible for their management.
"We only managed a 10% sales increase, per station, by changing the system. The commercial interest is much better represented through the presence of a manager in our filling stations. Half of the managers are former Petrom employees, with the rest being private (entrepreneurs)," Mayer adds. Petrom has 550 stations at present, after 100 stations were closed because they were located in areas without a steady flow of consumers.
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