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Report: Local energy producers suffered new declines in revenues and profits in Q2 of 2016
Local energy producers suffered new declines in revenues and profits, unable to capitalize on opportunities offered by the international market, where raw materials, including oil and gas, experienced a spectacular price comebacks in the second quarter, after reaching their lowest in February, Tradeville trading company reports.
Financial results in the second quarter disappointed investors; shares of OMV Petrom, the biggest company listed in Romania, marked a 3.5 percent decline the next day, while Romgaz securities remained at their lowest, since their listing.
Tradeville's analysts point out that the investors' reaction was triggered by their anticipation of a positive effect of the oil price rebound on OMV Petrom's second quarter results; however they continued to drop, despite the company's cost reduction program. Prospects of the near future are also not very optimistic, as the potential of a sustainable rebound of the oil price is expected to be limited due to continuous pressure on both demand and supply.
Revenue and profitability of Romgaz continued to drop after its 2014 peak. Gas production dropped by 60 percent in the first quarter, due to warm weather at the beginning of the year as well as the drop in demand from industrial clients; it overlapped with the low gas price at the beginning of 2016.
The report also shows the electricity producers were heavily impacted by the drop in prices, which led to a single figure making the difference between profit and loss. Nuclearelectrica, the only local nuclear energy producer, reported a 6 percent drop in energy production, as a consequence of a halt in one of the nuclear plant units for double the usual break. The company was compelled to sell more electricity on a short term; prices dropped by 7 percent and caused the first operation loss after listing.
According to Tradeville, the result reported for the first semester by utility companies reflect the more severe regulation framework, as the Regulatory Authority for Energy (ANRE) began to sanctions on companies for missing investment targets by cutting tariffs. Hence, in the first semester only companies that compensated the cuts in tariffs with increasing the transported quantities, such as Electrica, were able to experience increases in revenue and profit.