INTERVIEW – Bulgarian Lubricants Maker Prista Oil Plans 100 Mln Euro Investments, Sees 25-30% Yearly Rise in Sales

The company will aim to expand in production, distribution and marketing of lubricants through acquisitions, strategic partnership deals or greenfield investments, seeking to become a leading European player on the market, managing board chairman Plamen Bobokov told SeeNews in a recent interview.

“All options are possible. However, we will focus on takeovers and mergers, and I don’t exclude long-term partnerships. In case it proves to be not the right business platform, we will undertake greenfield investments in new capacities,” Bobokov said.

“Most probably this will be the scenario on which we work in regard to Russia, but it is still at an early stage. Meanwhile, we have an investment plan to build a logistics base in Georgia but it needs more studying,” Bobokov said without elaborating on the company’s plans in Russia. He added that regarding Georgia, the political and security situation there must calm down first.

Georgia sent troops in August to retake the rebel region of South Ossetia, which rejected Tbilisi's rule in '91-'92 after months of skirmishes with separatists. Russian forces moved into Georgia in response, driving the Georgian troops out of the rebel region, after which it recognised the region as independent.

Prista Oil is currently working on six projects which it expects to carry out by the end of next year.

“If all six happen – good, and if they don’t happen – again good – we always have back-up options. But in any case, if we keep to the 85%-success rule, the necessity of funds we will need is roughly 100 million euro for the next three years,” added Bobokov without specifying the projects.

The company will focus on two main pillars under its three-year business plan – creating a pan-European network of plants with a total combined processing capacity of 450,000 tonnes of ready products and sales of at least 250,000 tonnes a year; and marketing, which will have two sub-pillars – establishing a mutli-brand network aimed at placing the company as the most preferred partner and directly entering the original equipment manufacturers (OEM) market on which it is already present indirectly through a partnership with U.S. Chevron Texaco.

The company's units have a current combined processing capacity of 250,000 tonnes of ready products and sales of 100,000 tonnes a year.

“We intend to sign long-term partnership deals in the Western Balkans and in Greece, and I hope that the signing of the deals in Greece is a question of less than a month,” Bobokov said.

Last month, Prista Oil became an exclusive distributor of transformer oil for U.S. lubricants maker Ergon through its European subsidiary, Ergon Europe, covering  most of the southeast European states and Turkey.

HEALTHY GROWTH

The company closed 2007 with a three-fold increase in consolidated net profit of 22 million levs ($15.1 million/11.2 million euro) and a 48% rise in consolidated sales of 303 million levs. It sold 75,000 tonnes of lubricants, 60% more from 2006.

“Achieved results give us grounds to expect consolidated sales of around 380 million levs in 2008 […] and a net profit of 35 million levs. For each of the next three to five years, we expect a growth [in sales] of an average 25-30%,” Bobokov said.

“We now need strategic partners in marketing and we are already in talks with a world famous company in that direction,” Bobokov said without giving any names.

However, the company expects its share of the domestic market to fall - but not to below 50% - from the current 55% due to the high level of competitiveness. In other markets the company sees its market share stable or rising.

In Turkey it is expected to reach an 11% market share by the end of the year, compared to just 3.0% at the end of 2007. In Romania, it estimates its market share at 14-15% and in Serbia it will grab a 30% share this year, which is its first year of operations there. In Hungary, it says it has a stable market share of 5.0%.

Prista Oil (www.prista-oil.com) has a network of four base oil storage and shipping terminals with a combined capacity of 52,000 cubic metres – two terminals in Korfez, Turkey; one in Odessa, Ukraine, and one in Varna, on the Bulgarian Black Sea. It has three plants - two in Bulgaria and one in Turkey, and co-operates with the blending at Belgrade's oil refinery, Rafinerija Nafte. Prista Oil is the majority shareholder in Bulgarian blue-chip car battery maker MonBat.

U.S. investment adviser Gramercy and U.S. Marsdale International are the main shareholders in Prista Oil’s sole owner – the Dutch-registered Prista Oil Group B.V.

(1 euro = 1.95583 Bulgarian levs)