Saras Business Plan To Focus On Organic Growth
by AFX News Limited
June 16, 2008
Italian oil refiner Saras SpA's 2009-2011
business plan on June 24 is likely to drive investors' attention on organic
growth, while no surprises are expected on the M&A front, which remains the main
trigger for the stock, analysts said.
Saras could announce investments exceeding the 600 million euros planned in
its previous three-year plan, mainly to further upgrade its diesel-focused
Sarroch refinery in Sardinia, and improve the efficiency of the site, they said.
Upgrading projects will be aimed at increasing its capacity to transform
fuel oil and other heavy derivatives into light ones in demand on the market,
such as diesel, whose margins should remain strong, driven by robust demand from
"Saras has already done a good job, but can do more," a French analyst said.
"With structural shortage of diesel in Asia and gasoline demand hit by the U.S.
recession, it makes sense for Saras to further increase its diesel exposure".
More than half of the Sarroch refinery's production is middle distillates,
mainly diesel, about 28 percent is gasoline and naphtha, and nearly 5 percent
fuel oil. The refinery has a daily output of about 300,000 barrels.
A Milan analyst said he does not expect Saras to make any M&A announcements.
"No M&A at the moment. Saras has no acquisition in the pipeline," he said.
Saras has repeatedly said it is interested in acquisitions, but does not
intend to overpay. The company started a share buyback in May of up to 10
percent of its capital, with the shares also to be used for external growth
On prospects for diesel, the French analyst said margins will continue to be
high, but they could fall "a bit" in the third quarter when Reliance
Industries's 580,000 barrels-a-day refinery at Janmagar, India comes onstream.
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