Naphtha-dependent Petkim hit by weak profitability – Erste

05 December 2011 13:36  [Source: ICIS news]

LONDON (ICIS)--Sole Turkish major petrochemical producer Petkim is suffering from very weak profitability with its dependence on naphtha feedstock undermining performance, Erste Group Bank said on Monday.

With petrochemical prices retreating amid fears of a global slowdown, but oil and naphtha prices remaining at high levels, naphtha-based petrochemical producers have seen margins contract, the bank said.

 “We have been [and continue to be] cautious regarding Petkim’s profitability going forward for exactly that reason. Our full-year 2011 forecasts [for Petkim profits] will likely be cut in our next update,” Erste added in a commentary on the company.

On 1 November, Petkim reported that its third-quarter net profit for 2011 had risen by 19% year on year to Turkish lira (TL) 34.7m ($19.0m, €14.2m).

However, Erste noted that without one-off gains, which it estimated at around TL60m on the operating profit level, Petkim’s “bottom line could have easily turned negative”.

Erste said it had anticipated a worsening of Petkim’s profit margins in the third quarter because of “a clearly deteriorated market environment compared to the first half of 2011”, but had underestimated the degree to which this would happen.

Petkim is controlled by the State Oil Company of the Azerbaijan Republic (SOCAR) & Turcas Energy, whose majority shareholder is SOCAR.

($1 = TL1.83, €1 = TL2.45, $1 = €0.75)



By: Will Conroy
+44 20 8652 3214

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