Rompetrol Rafinare said on Wednesday it projected a turnaround to a net profit of US$6.75 million (5.0 million euro
) this year. RRC expects a net turnover of $1.98 billion for this year versus US$ 2.1bn. The company added it plans to invest US$178 million this year, including US$73 million from its own funds, and plans to process 3.7 million tonnes of crude oil.
Our view: We are seemingly much more optimistic on the company’s result than the management expecting a net profit of US$ 63.6m for this year. The dull outlook on the results for this year is surprising for us given the booming refining margin environment in the last 2 months especially in the Mediterranean region. We believe that investors can take the message as a profit warning showing that even at this favorable margin environment Rompetrol is able to achieve the profits close to the break even. Therefore we might see the negative reaction to the news. We are keen to hear more detailed comments from the management before revising our estimates. Rometrol is going to reveal its 1Q07 report tomorrow.