ECONOMY

Higher oil prices boost HELPE profit

Greece’s largest refiner, Hellenic Petroleum (HELPE), reported stronger first-quarter net profits yesterday, helped by higher oil prices and favorable exchange rates, with the only blip its loss-making power plant. Profit rose 32 percent to 72 million euros ($92.8 million), beating an average forecast of 65 million in a Reuters poll of eight analysts. «The results do not show any major surprises; cost control measures are on track. The only weaknesses were in the power generation and marketing segments,» said analyst Vassilis Roumantzis at Egnatia Finance. Hellenic Petroleum shares ended 3.69 percent lower at 11.50 euros on the Athens Stock Exchange yesterday, being caught up in the sudden downturn after fears of interest rate hikes emerged. Earlier, the market had risen, partly due to the refiner’s results. The refiner said high crude oil prices, steady demand in the domestic market and the stronger dollar against the euro versus a year ago had contributed to earnings growth. The refining division made an operating profit of 92 million euros, up 4 percent, in contrast to other independent European refiners, which have seen refining profits decline this year amid a narrowing in the spread between light and heavy crudes. Earnings before interest, tax, depreciation and amortization (EBITDA) rose 4 percent to 134 million euros, broadly in line with expectations, with sales up 41 percent to 2 billion euros. Last year, the refiner diversified into power generation, with its power plant in northern Greece the main competitor to dominant utility PPC, recording sales of 25 million euros in the first quarter and EBITDA of 1 million. «Despite the positive result from cross-border trade, the electricity activity on the whole shows a loss,» the company said, without providing details. Management has forecast an annual 35 million to 50 million euros in EBITDA from the power plant after 2006. Hellenic Petroleum trades at about 14 times forecast 2006 earnings, similar to rival Motor Oil, according to Reuters Estimates. The refiner said cost-cutting measures were on track, setting a zero growth target for operating costs, while a procurement initiative launched in May should result in 10-15 percent cost savings over three years. (Reuters)