Refiner Motor Oil posted a 12 percent rise in its annual net profit yesterday, thanks to fat refining margins, and said it plans to increase its dividend by about a third. Net profit rose to 131.6 million euros from 117.6 million euros in 2004. Earnings before interest, tax, depreciation and amortization (EBITDA) increased by 17.5 percent to 230.3 million euros. Motor Oil’s earnings growth trailed Hellenic Petroleum’s 161 percent net profit jump reported earlier. However, Motor Oil’s profits were depressed by disruptions related to refinery upgrading work, which should allow it to capture higher margins in 2006, analysts said. “The key is the outlook for 2006, which will see a full year of earnings contribution from the installed hydrocracker, which was successfully commissioned in November,” Citigroup said in a research note.
Motor Oil said it would propose a 2005 total dividend of 1.10 euros which translates into a dividend yield of 5 percent based on the share’s closing price yesterday. It paid a 0.85-euro dividend in 2004. Sales rose by 46 percent to 3.2 billion euros. The stock trades at 18.4 times its 2005 earnings against a multiple of 16 for the DJ Europe Stoxx Energy index . Refining has offered poor returns for most of the past two decades but the business enjoyed a resurgence in 2005, as margins reached record highs after surging global demand for oil products highlighted a shortage of refining capacity. Many refiners are adding capacity and improving their ability to process the heavy crudes which are forming an increasingly large part of oil supplies. Nonetheless, industry executives expect margins to remain strong in 2006 and 2007.
(Reuters)