Petrom, the largest Romanian company, reported net profit worth 687 million RON (188.2 million euros) in the second quarter of the year, up 36% against the same time last year, whilst turnover amounted to 4.5 billion RON (1.2 billion euros), up 70%.
Petrom's net earnings are below analysts' expectations and were affected by the inclusion of extraordinary expenses. The expenses were so high that earnings derived from higher oil prices, which reached historic highs in the second quarter, were unable to compensate. On the Bucharest Stock Exchange, Petrom shares dropped by around 3% after the results were announced, whilst in Vienna, the shares of OMV (the majority shareholder) went up, after the Austrians announced they were giving up the fight to take over Hungarian rival MOL.
"The profit decline that occurred in the second quarter was generated in part by the decline in gas production, as well as by the provisions set up for litigations, risks and expenses, as well as due to the significant adjustments operated to the value of corporeal and non-corporeal assets in the wake of major investments," explained Mariana Gheorghe, CEO of Petrom. Therefore, in the second quarter of the year, the company allocated a 446.6 million-RON (122 million-euro) provision to cover potential risks for litigations brought on by several current and former employees, based on a differing interpretation of clauses in the labour contract, with regards to Christmas and Easter bonuses. In fact, if Petrom had not set up this provision, the company's net profit would have exceeded one billion RON (274 million euros) in the second half of the year, which would have met analysts' expectations. The net profit dropped 30% in the second quarter of the year against the first quarter.
Petrom has been repeatedly criticised by Government officials, more specifically by the Minister of Economy and Finance, Varujan Vosganian, for the huge profit it makes from exploiting all of Romania's oil reserves. It was even suggested that supplementary taxes should be levied on the company's earnings.
"I am certain the Romanian Government is discussing supplementary taxation for petroleum companies with other countries. We shall see what these talks will amount to, because governments usually don't discuss these aspects with companies," specified Gheorghe.
In the first six months of the year, the company reported net profit worth 1.6 billion RON (436 million euros), up 88% against the same time last year, with a big part of the increase being generated by the significant rise in oil prices, which came close to 150 dollars a barrel. In the surveyed period, Petrom posted an 8.27 billion-RON (2.25 billion-euro) turnover, up 52% against the same time last year.
On the exploration and production segment, which has the biggest contribution to Petrom's earnings, the company's total production went down 1% in the first half against the year-ago period. The operating profit rose to 2 billion RON (545 million euros) on this segment, up 57% against the same time last year, while domestic production costs went up 7% and reached 42.95 RON per barrel.
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