Petrom (SNP.RO), the biggest company on the market posted growth of business and profit, even though the market it operates on continued to go down. Repeated pump price hikes and cost cuts, however, helped it turn in its favor a demand that refused to grow despite tentative economic rebound since the beginning of the year.
Sales were at 4.97 billion lei (EUR1.17 billion), up 27% on the year-earlier period. Net profit in line with international accounting standards reached RON841 million (EUR199.1 million euros), up 4% on the first quarter of 2010, mainly affected by a EUR43 million financial loss.
"The entire retail market went down 4-5% in the first part of the year, which is no surprise to us. On the one hand, it was caused by the trend of public sector salaries and on the other it was a response to high oil product prices. I am not really optimistic about a rebound in demand this year considering forecasts point to a merely 1-2% economic growth for Romania. This will show in the purchasing power as late as next year," said Mariana Gheorghe, Petrom's chief executive officer.
Although admitting that one of the factors that caused the drop in demand in terms of volume was precisely the rise in pump prices, Petrom officials say that the often mentioned fuel price freeze could have adverse effects on the economy as a whole.
"Legally, prices may be frozen in case of an exceptional situation of crisis, yet the consequences of such a step can be negative. I will not believe someone would want a shortage of products as in Russia. Any producer, if it cannot get the market price locally, will export if prices are frozen at a lower level (...)," Mariana Gheorghe, Petrom's CEO says. Several areas in Russia have been faced with a shortage of oil products recently, as local companies chose exports over selling at state-controlled prices.
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