Privatisation of Croatia's Petrokemija slipping down the agenda - bank

04 December 2012 14:44  [Source: ICIS news]

LONDON (ICIS)--The political clamour for the privatisation of Croatian fertilizer producer Petrokemija has died down, Erste Group Bank said on Tuesday.

Updating its coverage of the company, the bank noted: “In our view, considering the unfavourable gas price contract [which Petrokemija is bound to], the only driver for the stock price in the short run could be privatisation.

However, in recent months, there were only mild rumours on the topic, completely the opposite of the first half of the year, when the new government took charge and privatisation was one of the hot stories on the market.”

In October, Erste said privatisation could be a game changer for Petrokemija if it delivered a cheap gas supplier as a strategic owner.

Following what it described as an extremely disappointing and weak third quarter which hit the company on all lines, the bank said it had adopted a “short-term negative stance” on the firm.

“We have, however, seen some marginal signs of market improvement in recent weeks. The urea price is a touch stronger quarter in Q412, while the oil price [the main cost component because the gas price is linked to it] dropped 6%-8% quarter on quarter which should be further helped by a weaking of the US dollar,” Erste added.

Nevertheless, the urea price was still 20% down year on year, which could not be compensated for by the oil price slippage, the bank said.

Petrokemija has a fertilizer capacity of 1.35m tonnes.

The majority of its output is concentrated around a variety of mineral fertilizers, including urea, nitrogen phosphorous potassium (NPK), calcium ammonium nitrate (CAN) and other mixed fertilizers, which together account for around 90% of company sales.

By: Will Conroy
+44 20 8652 3214

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