Hedging saves a third of Petrom's profit in Q1

Petrom, the largest Romanian company, posted 506 million RON (118.5 million euros) in net profit, down 48% compared with the similar period of last year, but almost a third of this sum is accounted for by earnings obtained as a result of the oil hedging done as early as in 2008. In the absence of these financial instruments, Petrom’s profit would have amounted to just 329 million RON (77 million euros), 66% less than in the first quarter of 2008. “Risk hedging instruments generated financial gains due to the fact that the average price of the oil barrel in the first quarter of the year was below 65 dollars a barrel per year, which saw Petrom earn 15 dollars a barrel in Q1 of 2009 for the 40,000 barrels a day covered by the risk hedging contracts,” say Petrom representatives. Petrom gained 54 million dollars (177 million RON) from financial instruments alone. The poorer results recorded in the first quarter of 2009 compared with the similar time of 2008 are due to the unfavourable trend of oil prices and to the deteriorated economic situation. The company’s turnover saw an 18% decline in the first three months of the year against the similar period of 2008 from 3.7 billion RON (1 billion euros) to 3 billion RON (711 million euros) due to the decline in fuel sales prices. On the Stock Exchange, Petrom shares fell 3.8% to 0.201 RON on Friday, with the company’s capitalisation amounting to 2.75 billion euros.