Essar Energy’s profits tumble, sales soar

Essar Energy’s profits tumble, sales soar

London: Essar Energy reported slumping interim profits on Thursday in the group’s first results statement since floating on the London stock market earlier this year.

Earnings before interest, tax, depreciation and amortization (Ebitda) sank 25% to $320.2 million (€250 million) in the six months to June.

Net profit meanwhile tumbled 19% from a year earlier to $91.1 million.

The group said the fall in earnings reflected the comparison with strong year-earlier figures which were boosted by oil inventory gains and higher retail marketing profits.

Revenues meanwhile soared 66% to $4.76 billion in the first half, largely because of increased volumes and higher prices in its refinery business.

“The first six months of 2010 were a pivotal period with the creation of the company and its successful flotation on the London Stock Exchange," vice chairman Prashant Ruia told a conference call

“We have seen tremendous interest in the growth of India’s energy demand and our strategy for meeting that growing need."

Essar Energy was listed on the London stock market by parent and Indian conglomerate Essar, which retained a majority 76% stake.

The initial public offering (IPO) in May raised $1.85 billion, which it has mostly ploughed into new growth projects.

The IPO, the largest international listing in London since 2007 and the biggest-ever overseas share offer by an Indian company, catapulted Essar Energy into the prestigious FTSE 100 index of top blue-chip companies.

In late morning trade, Essar Energy shares were up 1.70% to 410.30 pence on the FTSE 100 index, which was 0.16% higher at 5,311.31 points.

Jonathan Jackson, head of equities at broker Killik & Co, said the company was very well placed to capitalise on the booming Indian economy.

“India is the world’s second most populous country. Today’s statement highlights the continued strength of the domestic economy, especially in terms of industrial production," Jackson said.

He added that the group was “positioned to capitalise on India’s rapidly growing energy demand".

Ruia also said that Essar Energy remained in talks with British energy giant Royal Dutch Shell over the purchase of three European refineries.

Late last year, Shell entered exclusive talks with Essar to sell the assets, which comprise of Britain’s Stanlow refinery in Ellesmere Port, Cheshire, and two German facilities in Hamburg and Heide.