Efficiency of polymer production and sales accelerating

In Q2 2007, Slovnaft Group managed to increase the volume of polymer sales by almost 17% to 109.2 kt compared to Q2 2006, while sales revenue grew by 11.8%. Thus the Petrochemicals business has reached about 20% share of the Group’s revenues. The new polypropylene unit (PP3), tripling the Group’s polypropylene production capacity which the Group put into operation in 2005, increasingly influences the results of the Slovnaft Group.

“H1 2007 results confirmed growing efficiency of the Slovnaft Group’s petrochemical business. Along with a high share of exports (3/4 of the production), higher fuel sales in volume terms on the domestic market and also on the Austrian, German and Hungarian markets and sales of biofuels contributed significantly to the good performance of the group, though slowed down by a strengthening domestic currency”, the company CEO Oszkár Világi commented the results.

Despite positive contribution of accelerating polymer production and sales supporting results by SKK 1.5 bn and higher sales of refinery products with a positive effect of SKK 865 mil., Slovnaft Group’s operating profit, without the main one-off items (property sales and reversal of impairment with an effect of SKK 398 mil.) decreased by 14 % y/y in H1 2007 to SKK 4.75 bn.

Profitability was negatively affected by a significant strengthening of the Slovak Crown, which appreciated towards EUR by 10 % and towards USD by more than 16 %. This development slowed down the strong performance of the Slovnaft Group by SKK 2.8 bn resulting in lower net sales revenues of SKK 50.82 bn, down by 17%. In H1 2007 the Group’s net profit decreased by 7 % y/y and was SKK 4.24 bn.

Strong economic growth in the Slovak Republic supported domestic sales of refined products, which increased by almost 6 % y/y in H1 2007. Motor fuel sales also grew at Slovnaft fuel stations (in spite of a lower number of petrol stations), with a continuing strong demand for diesel. As of 30 June 2007 Slovnaft operated 210 petrol stations in Slovakia, which is by 28 less than a year ago.

In H1 2007 Slovnaft has succeeded in further strengthening its leadership in Central Europe in regards to environmental responsibility. In the same period Slovnaft produced only motor diesel with a low sulphur content, out of which diesel with biocomponent FAME represented in Q2 2007 about 61 %, compared to 23.5% in Q2 2006. The company also produced biogasoline with ETBE.