INA Industrija Nafte d.d., a Croatian refiner controlled by Hungary’s Mol Nyrt. (MOL), will focus on upgrading its domestic business after it pulled out of Syria to comply with the European Union policy, the head of the management board Zoltan Aldott said.
The company will invest about 2 billion kuna ($352 million) this year to continue with the overhaul of refineries in Rijeka and Sisak, modernize its retail network and boost research and exploration, Aldott said today in a briefing in Zagreb. That marks an increase from 1.5 billion kuna in total investment in 2011.
“This year, we’ll focus strongly on Croatia,” he said. “We also want to stay financially flexible in the future, and as it’s not easy to get the financing in this market, it’s better for us to be a bit conservative,” he said.
Croatian companies are struggling to shore up earnings as authorities fight the country’s prolonged recession and declining demand from abroad during the European debt crisis. Croatia’s largest refiner was also hit by the civil violence in Syria, which caused it to shut its once-profitable Middle Eastern business.
INA’s first-quarter net income fell to 412 million kuna from 1.05 billion kuna a year earlier, the company reported today. Revenue rose to 7.2 billion kuna from 6.9 billion, while earnings before interest, taxes, depreciation and amortization declined to 1.29 billion kuna, down from 1.8 billion kuna.
“INA Group got strong results in difficult external circumstances and even without income from Syria,” Aldott said. Efficient management, beneficial exchange rates, and improved refineries attributed to the quarterly profit, following a loss of 257 million kuna in the previous quarter, he said.
In 2011, profit almost doubled as Syrian revenue boosted the first three quarters before violence escalated. INA announced on Feb. 27 it is pulling out of Syria, following the Croatian government decree to abide by an EU embargo on the Middle Eastern country.
“We don’t expect this to be a short-term issue,” Aldott said.
INA, Croatia’s fourth-biggest employer, spent about 17 billion kuna in the last decade to expand its operations. Mol, which secured managing rights in a 2009 contract with the Croatian government, owns 47.47 percent of INA. The government holds a 44.84 percent stake.
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