Petrom: Presidential Elections Might Affect Reforms In Romania

“The continuing restructuring pressure on the private sector is likely to cause unemployment rate to rise well into 2010 within the context of a steep demand decline. This autumn’s presidential elections could influence the Government’s response to the current economic downfall and its ability to implement the necessary reform measures,” Petrom said Wednesday in its half-year financial report.

Petrom expects the oil price to recover from the sharp fall recorded at the end of 2008, but to remain well below last year’s average.

The Romanian leu is seen continuing its depreciation against both the euro and the US dollar.

“The average EUR-USD exchange rate for 2009 is expected to remain volatile. We maintain our assumption of a weaker RON/EUR exchange rate compared to the 2008 average. In the short term, the RON is likely to depreciate against both EUR and USD,” the report noted.

Petrom said it would continue investments to optimize its operations and build new terminals, despite gloomy forecast on the Romanian economy, which is expected to fall by over 4% in 2009.

The company allocated 4.7 billion lei (EUR1=RON4.2096) for investments in 2009.

However, the company plans to adjust its mid-term investment strategy, “given the current unfavorable economic and industry conditions.”

Petrom reported a net profit of RON923 million in the first semester, down 45% compared with RON1.66 billion in the same period a year before.

The company, owned by Austria’s OMV (OMV.VI), reported net sales of RON5.9 billion in the first year-half, down 28% on the year, mainly due to lower price levels.

Petrom’s debts rose 5% in the first semester to RON12.3 billion, mainly driven by an increase in long-term loans.

Petrom had 29,103 employees at the end of June, compared with 33,311 at the end of 2008.

On the Bucharest bourse Tuesday, Petrom shares closed down 1.92% on the day, at RON0.256.