Petrom beats expectations, lifted by one-off litigation gain
• The company reported clean CCS operating profit of RON 1,188 mn, representing a 6% decline QoQ and a 14% decline YoY. However, it outperformed the consensus estimate of RON 1,111 mn, exceeding it by 7%, mainly due to stronger-than-expected performance in the E&P segment. The results were significantly boosted by a one-off litigation settlement, which increased EBITDA and EBIT by RON 200 mn. The outperformance was even more pronounced at the net profit level, further supported by RON 170 mn in interest income related to the litigation award.• The outperformance relative to analyst expectations was largely driven by the litigation award, and therefore should not be viewed as a fundamentally positive development.
• There were minor updates to the guidance. For refining, the refining margin outlook has been raised from USD 7.0 to USD 8.0 per barrel—possibly due to the weaker USD—while commercial and retail margins are expected to remain under pressure.
• The Board of Directors is expected to decide on the special dividend in Q3. The base dividend of RON 0.0444 per share has already been distributed. We anticipate a total dividend of RON 0.065 per share (although outlook worsened since our latest public earnings estimation).
Concorde Securities Ltd. is Hungary’s leading independent company engaged in investment banking activities. It provides its clients with integrated financial services, including securities trading, research, corporate financing advisory, capital market transactions, wealth management and investment advisory. The operational management of the company is the responsibility of the CEO, while the owners/managers (who control one-third of the company through their shares and options) are in charge of its strategic governance. Concorde Securities Ltd. is a member of the Budapest, Frankfurt, Warsaw and Bucharest stock exchanges, as well as of the Hungarian Association of Investment Service Providers.
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