Paz Oil Company Ltd. (TASE:PZOL) reported sharply lower profit on higher revenue for the first quarter of 2011. Revenue rose 20% to NIS 4.49 billion from NIS 3.73 billion for the corresponding quarter, due to higher fuel prices.
Net profit attributable to shareholders fell 32% to NIS 100 million for the first quarter from NIS 146 million for the corresponding quarter of 2010. Paz CEO Yona Fogel attributed the drop to higher financing costs, driven by higher prices for crude oil and reduced refining margins, as well as rising inflation and interest rates.
Net financing costs were NIS 31 million for the first quarter, compared with net financing income of NIS 11 million for the corresponding quarter. The company also reported a NIS 59 million capital gain in the corresponding quarter from the sale of Haifa Basic Oils Ltd.
Sales by Paz Ashdod Refinery rose 30% to NIS 3.53 billion for the first quarter from NIS 2.71 billion for the corresponding quarter, due to higher fuel prices. The refining margin fell to $0.40 per barrel in the first quarter from $1.90 per barrel in the corresponding quarter, while the price of oil rose to $117 per barrel at the end of March from $64 per barrel a year earlier.
Adjusted net profit attributable to shareholders fell 45% to NIS 91 million for the first quarter from NIS 165 million for the corresponding quarter.
Paz said that, for the first time, rising prices for crude oil reduced demand for refined oil products in Israel: demand for diesel was 2% lower in January-April compared with the corresponding months of last year, while demand for gasoline was flat.
Paz's share price fell 0.6% by early afternoon to NIS 598.90, giving a market cap of NIS 6.11 billion.
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