Hellenic Petroleum says hefty H1 profit rise needed for investment
Deputy Development Minister Giorgos Salagoudis is scheduled to chair a broad meeting of parties involved in the production and distribution of fuels about how to stem excessive price rises.
The government is concerned that the price of unleaded gasoline on some large islands, notably Crete, and on the national highways from Athens to Patras and Athens to Thessaloniki has neared or exceeded 1 euro per liter, and has referred a number of distributors to the Competition Commission for cartel practices. On Wednesday, Salagoudis ruled out the imposition of price ceilings, saying they would be ineffective.
The issue has become a war of accusations between fuel retailers and the refineries. Efthymios Christodoulou, president of the country’s largest oil refiner Hellenic Petroleum (HELPE), said the company was not in business in order to exercise social policy and could neither afford to subsidize consumption nor reduce its profit margins.
“HELPE needs reserves in order to be in a position to meet any (adverse) developments in the market and to finance its investment,” he said.He said an element of the unpredictable now rules the market, as the price of oil has become subject to so much more speculation than it was a year to 18 months ago. He noted that rising prices have led to a fall in consumption, except for jet fuels, and that drivers now shy away from completely filling their tanks but tend to visit gasoline stations more often. Christodoulou claimed Greek fuel distributors enjoyed higher profit margins than in the rest of Europe. In response, the Gasoline Station Owners’ Federation condemned in a statement any attempt at speculative exploitation “wherever it may originate” and said its members’ gross profit margins have been squeezed to the point of merely covering operating expenses.
Hellenic Petroleum
As if confirming fuel distributors’ charges, HELPE yesterday posted a hefty 78 percent rise in first-half net profit to 141.3 million euros. Earnings before interest, tax, depreciation and amortization (EBITDA) rose 55 percent to 311.5 million.
The company attributed the improvement to “continuing high prices on crude oil and products, and high Mediterranean cracking margins.” Sales were up 29 percent to 2.86 billion euros.
HELPE’s chief executive, Panos Cavoulacos, reported a “difficult environment,” with a reduction in consumption and a 5 percent higher dollar exchange rate.” Asked about prospects for the third quarter and the effects of higher oil prices, Cavoulacos said: “Refining margins are unstable when oil prices rise quickly. For the time being, margins are falling. The recent small correction in the dollar exchange rate doesn’t help.”
HELPE, which currently maintains about 2.6-2.7 million tons of reserves, said it aims to readjust its stocks.
“Due to the high reserves we have, we are readjusting stocks for reserves and clients,” Cavoulacos said. “There is an effort to control the risks from maintaining such high reserves.”
Sales at the OKTA refinery in the Former Yugoslav Republic of Macedonia increased by 26 percent, reflecting continued improvement in the operation and management of the refinery during the last year, the company said.
HELPE said it is studying a major investment in upgrading its Petrola refinery in Elefsina.
Kathimerini/Reuters (12/08/2005)