Massive investment into the refining process will increase Slovnaft's efficiency.
"Slovnaft is becoming one of the leading refineries in central and eastern Europe," agreed Ivan Chodák, an analyst with CA IB brokers. "Their huge investments into new projects will secure Slovnaft a more effective refining process, and will make them significantly more efficient than either [Austrian refinery] OMV or [German fuel giant] Moll."
Slovnaft invested 8.3 billion Sk ($224 million) into modernization in 1998, a sum close to its 1997 investments. Besides its largest investment project ever, the EFPA project (Environmental Fuel Project Apollo), another 25 constructions were completed, said company spokesman Ľubomír Žitňan. 4.8 billion Sk in newly constructed facilities are about to be commissioned, the highest value for one year in Slovnaft's history.
In 1998, Slovnaft also carried out several organizational changes. The first took place at the beginning of the year when the refiner charged its affiliated company Slovnaft Benzinol with the management of Slovnaft's network of petrol stations. Further organizational changes focused on the management of companies in which Slovnaft controls a majority stake and those that were included into the newly established Slovnaft holdings.
Organizational changes prepared as of January 1 will mean a further development of the holding structure and will affect all of Slovnaft's trading companies. Slovnaft will be the exclusive wholesaler of Slovnaft products embracing motor fuels and oils in Slovakia.
"Slovnaft Benzinol, which accounted for over two thirds of Slovnaft's wholesale business, will conclude its activities in this area in the first quarter of 1999 and will start to focus on operating and developing its network of petrol stations that control about 60% of the motor fuel market in Slovakia," said Peter Ďatel, appointed general director of Slovnaft Benzinol in early December.
Slovnaft Benzinol renovated 24 petrol stations and prepared the construction of eight new petrol stations in 1998. It introduced chip cards which enable payment for motor fuel at 550 retail outlets. The company also established a new information system and expects a significant increase in profit this year in comparison with previous years.
In 1998, the development of Slovnaft's other foreign affiliations continued as well. In 1999, Slovnaft Moravia will become an exclusive importer of Madit lubricants to the Czech Republic, while an increase in sales of motor fuel is expected too.
Slovnaft CS achieved a considerable increase this year in sales of motor fuels, and in 1999 plans to widen the network of 32 petrol stations it operates in the Czech Republic.
Slovnaft Ukraine strengthened its financial stability and position on the market under the complicated conditions of the Ukrainian economy and won a tender for the construction of petrol stations in the town of Kalusa. Slovnaft Polska is also developing its activities and constructing two petrol stations, Žitňan said.
Chodák agreed that "Slovnaft has great chances on the Czech and Ukrainian markets because expansion of the gas station network is already prepared."
In late September, Slovnaft reported profit of nearly 1.8 billion Sk. 1997 gross profit totaled 3.113 billion Sk when the volume of processed crude oil was 5.23 million metric tones. Chodák said that future revenues should remain stable as "oil prices are not expected to fall radically." Exports equaled 20.3 billion Sk in 1997, or 50.67% of total sales.
by Ivan Remiaš