Ukrainian Community Press Releases
| |
News
from and about Ukraine & Ukrainians
Ukrainian Community Press Releases |
Translated from the Newspaper "Halychyna", 17th April 1999
BRITS GO FOR NEFTEKIMIK REFINERY
After the last shareholder meeting which took place at the end of March, two British men - financial specialist Simon Devenish and technologist Jeff Temple became First Deputy Chairmen to director Trotsenko.
HOW LONG WILL IT LAST
The British involvement comes at a time when the Refinery continues to suffer many financial and economic problems.
As in previous years the most important aspect is the level of crude oil supply which increased last year by 16.1% (from 738,313 metric tons in 1997 to 941,131 metric tons last year) This is well below the capacity of the plant which can process 2,367,000 metric tons of oil per year. Increased throughput will decrease the unit cost of the refined products. If one year ago, the Board of Directors talked about the economic independence of the Company, then today the subject is dead.
In 1998 the Refinery operated at 38% of capacity which is less than at other comparable Ukrainian refineries. Even so, last year was not the worst ever for the Nadvirna Refinery - the difficulties of 1997, when only 738,000 metric tons were processed and profits fell from the 1996 level of UAH 16,381,000 to UAH 1,808,000 in 1997 have been overcome.
Last year, the volume processed at the Refinery increased and the financial indicators also improved.
The net profit of UAH 5,028,000 was UAH 1,000,000 more than forecast. The return on assets increased from 2.3% in 1997 to 10.2% last year.
Last years accounts make interesting reading. If we consider the low returns from feedstock processing (the directors always complain about this) and decreased sales (only 83.6% of the 1997 figures) together with the effects of the Ukranian financial crisis, the reduction in profits by UAH 4,182,000.
Evidently the stimulator for last year profits was the decrease in the primary production cost of UAH 8,493,000. The cost of producing UAH 100 in income was UAH 90.75 ( a decrease of UAH 7 over the previous year). This is the result of the introduction of new working methods which gave savings in chemical and energy costs and reduced other losses
The financial health of the plant is still complicated. The retained earnings of the plant for the year were UAH 4 million and operational costs were UAH 9,638,000.
Trade creditors are UAH 35,372,000 and bank debt stands at UAH 37,198,000 including UAH 10,214,000 of State debt. During the year both debts doubled.
The target for 1999 is to process 1,000,000 mt of crude oil and increase export of oil products especially vacuum gasoil fuel and mazut to make it possible to buy 300,000 mt of crude oil. For comparison last year the enterprise processed 239,000 mt of owned oil).
So the main task of Nefetkimik Prekarpatia is to increase the volume processed and the amount of owned oil throughput. This will guarantee an increase in the value of shareholder capital and provide a cost reduction on the production side.
This, together with an emphasis on strict cost-saving (a program for planning and day-to-day controls is being introduced) should improve the financial position of the plant. There is no solution as yet to increasing sales volume. It is no secret that because of the heavy competition for buyers from cheap Russian and Lithuanian oil products Neftekimik has had great difficulty during the past couple of years in increasing its sales.
In the middle of 1998 the ex-president of Neftekimik Prekarpatia Dmitri Yeger said "The main problem of the shareholder company is reduced sales resulting from the inability of consumers to pay for oil and the import of cheap products from outside Ukraine which creates negative financial conditions for the plant. The enterprise is thus regularly forced to lower its sales prices all the time and this has had a major affect on profits"
The main category of buyers is and will be companies in the agricultural industrial complex who receive money from the state budget every spring and autumn but product quality remains the main issue for every buyer.
Submitted to BRAMA by Mr. Jeff Temple.
|