Petrom spends 200 million euros on foreign capital markets

Romania”s largest company, Petrom, which is probably the largest holder of cash in this country, has invested 200 million euros with foreign investment funds, out of the one billion euros it has.

“We have invested some 200 million euros in guaranteed foreign investment funds. This means the managers guarantee us a certain yield. Furthermore, 95% of the value of the investment is guaranteed,” Werner Schinhan, the company”s deputy general manager told Ziarul Financiar. He did not care to reveal the names of the funds in which the company invested.

Most of the cash the company has comes from the capital increase conducted by the Austrians at OMV as part of Petrom”s privatisation process. The Austrians contributed 830 million euros last year, in addition to the contributions of the minority shareholders. The money is supposed to be used for the company”s investment programme over the next few years eventually.

Besides the amounts put in investment funds, the rest of Petrom”s liquidities, which are worth approximately 800 million euros are placed in banks in both RON and euros.

Petrom”s managers, however, are complaining about not making as much lately as they used to because of the decline in the RON interest rates. “We are not making much (profit) any more because of the decline of the interests on RON,” says Schinhan.

Petrom posted significant financial losses in RON due to the investments in euros that are now worth less. “We have had enough losses because of the RON”s appreciation. They are losses only on paper, though,” Petrom”s management official says. The appreciation of the domestic currency, however, has helped the company report better financial results to its majority shareholder. Petrom files its financial result reports in RON with the Bucharest Stock Exchange, but the consolidated financial results of OMV, which are monitored by the investors on the Vienna Bourse, are calculated in euros.

Petrom is to post its third quarter financial results today. It is the last of the companies listed on the Bucharest Stock Exchange to post its third-quarter financials.

Petrom”s deputy general manager also stated last week that the results the company would reveal would be very good news for shareholders.

Six months into the year Petrom logged 1.25bn euro turnover, an increase of nearly 30% from the same time last year.

The first half profit amounted to 164 million euros, six times higher. Furthermore the company had registered restructuring expenses worth 60 million euros in its accounting books that it was to make in the second half of the year.

The substantial amount of cash Petrom has and the profit it will probably make this year give the Austrians at OMV the possibility to recoup part of the money they paid for Petrom”s acquisition through dividends.

After all, the company”s managers have recently decided to cover the losses accumulated over the previous years and worth over 800 million euros from reassessment reserves and issue premiums, so that Petrom could disburse dividends. vlad.nicolaescu@zf.ro