Croatia: INA-Industrija Nafte Records Profitable Downstream

Dr Tomislav Dragičević, Chairman of INA, said ”INA has successfully completed H1 2008 reaching the net profit of HRK 797 mill, almost the level reported for the full 2007 business year. Modernisation programme is on track, formally introducing the second phase of the programme at Sisak refinery with conclusion of the Contract for revision of the basic design for the MMHC/HDS. Leading position on the Croatian market was kept and the retail network expanded with new stations. Efficiency improvement programme and higher capital expenditure contributed to the favourable results. INA continues to suffer the negative impact of the price cap - the management believes that the price cap is a direct consequence of high crude prices as the regulator considers INA Upstream's profitability as a source for compensation of regulated prices.”

In petrol retail, the average throughput per site increased by 2.1% in the first half of 2008 to 1,342 tones. In line with INA's retail strategy six new petrol stations were put in operation since June 30, 2007. In H1 2008 the segment generated HRK 117 mill (US$25m) operating loss, against HRK 17 mill operating profit in the same period 2007. The unfavourable result was caused by HRK 62 mill higher negative  price cap effect, HRK 26 mill higher negative effect of IAS 36, HRK 28 mill provisions for environment protection and HRK 36 mill  higher other costs (effect of increased number of petrol stations), offset by HRK 18 mil higher margin from increased sales volumes. Segment's loss in 2Q 2008 increased by HRK 69 mill to HRK 83 mill. 

The INA refining & marketing segment contributed to INA Group's results in H1 2008 with the operating profit of HRK 124 mill (US$26m), including HRK 516 mill positive result from the increased value of finished products' and WIP inventories. In comparison with H1 2007 the operating profit increased by HRK 69 mill. Increased operating profit resulted from refining optimisation undertaken to decrease the production of EURO II quality products (motor gasolines and fuel oils which had unfavourable trend of spreads) with the increased import of EURO IV quality products for domestic market. This positive effect was partially offset by HRK 33 mill higher unfavourable impact of the remaining price cap together with HRK 182 mill of newly identified negative effect from the regulated LPG prices in H1 2008 (the management is negotiating with the regulator to re-consider the request for price increase) . Operating profit in 2Q 2008 increased by HRK 210 mill in comparison with the same period 2007.

Looming in the background is MOL’s bidding of a higher stake in INA.  Mol, which already owns 25 percent of  Ina Industrija Nafte d.d., last month said it would bid for an additional 30.15 percent stake. The company, which is headed by Zsolt Hernadi, 47, has spent more than $1 billion since 2000 buying refineries in Slovakia and Italy and service stations in Austria and Romania.

PetrolWorld 140808