Petroleum drags Oltchim profits down

The chemical company Oltchim Ramnicu Valcea on Monday reported a steep decline in profits for last year, as compared with 2004, despite having succeeded in further increasing its sales, which hit almost 400 million euros. Last year was, however, the second consecutive year in which the company has derived profit after a long loss-making period.

For last year, Oltchim reported a net non-audited income standing at 24.8 million RON (6.8 million euros), about 70% lower year-on-year. The plant”s turnover climbed by 17.4% in euros, to 398 million euros.

Oltchim was seriously hurt last year by the rising prices for raw materials generated by the higher petroleum prices on international markets. The plant”s main supplier of raw materials is the Arpechim Pitesti refinery, operated by Petrom, a company controlled by the Austrian OMV.

On the other hand, according to Oltchim representatives, the prices of the products manufactured by the plant registered an insignificant increase during the same period. The company”s main products include vinyl poly-chloride, used in the constructions and plastic products industries, as well as sodium hydroxide.

According to the revenue/expenditure budget, the company is this year eyeing turnover worth 1.7 billion RON (470 million euros), one of the biggest in Romania, and profits worth 44 million RON (12 million euros), almost double those logged last year.

Oltchim is one of the few Romanian companies still owned by the state, with the latter being in conflict with minority shareholders, who are contesting a capital increase. Moreover, it is not clear whether the state owns 95% or 53% in the company”s stock.

Vienna Capital Partners, an Austrian investment fund owning a similar complex in Hungary, as well as the Polish oil company PKN Orlen, have voiced their interest in Oltchim. Oltchim also holds assets in the agrifoods industry, such as the Raureni food canning plant, which will supposedly be spun off ahead of privatisation.

Oltchim stock counts among the Stock Exchange speculators” favourites, due to the possibility of the capital increase of 2003 being annulled. It was through this operation that the state received a stake in exchange for some debts.

Should the operation be cancelled, the minority shareholders” participation would be boosted.

Oltchim stock has followed an ascending tendency this year, despite the company having forecast weaker results.