Petrom Bucharest (SNP), the largest Romanian company, has announced it could significantly reduce the dividends disbursed from the 2008 profit because of provisions set aside for employee-filed lawsuits and depreciation of the investments in Russia.
Representatives for Petrom did not specify how much the dividends would be cut and only said that they would be "significantly lower" than last year.
Petrom is the largest dividend payer in Romania, after having paid 813 million euros to shareholders over the last three years, 323 million euros of which last year alone.
The dividend reduction may seem surprising, after Petrom announced a record profit for the first nine months of last year, 2.29 billion RON (620 million euros), yet analysts believe it is only natural that the company should want to cut capital outflows, because it has to finance large investments and has already turned to banks and its majority shareholder for loans.
"Disbursement of lower dividends is only natural given that the company has not ceased high investment spending.
"The cash flow generated by sales has gone down as a result of the oil price trend and the company is looking for other streams of cash. It is clear that the time when Petrom had net cash is over," says Adriana Marin, head of the research department of UniCredit CA IB Securities.
Petrom had 752 million RON (208 million euros) in cash and bank deposits at the end of September.
It announced last week that it had taken out a revolving loan worth 500 million euros from its majority shareholder, Austrian OMV group. It also got a 375 million-euro syndicated loan from five international banks in November, to finance its investment programme.
The value of investments scheduled for 2009 stands at 1.5 billion euros.
The favourable market conditions and the increase in petroleum prices
