Profit of JSC Ventspils nafta in the first six months of 2008 - 7.8 million lats

According to the unaudited financial results of JSC Ventspils nafta Group in
the first six months of 2008, the consolidated net turnover of the company has
reached LVL 40.7 million and net profit - LVL 7.8 million. Although the
mentioned results exceed the budget forecast for 2008 published before by JSC
Ventspils nafta, the economic processes in the first six months of 2008
globally and in Latvia have unfortunately attested that the cautious forecasts
of JSC Ventspils nafta have been correct, by planning what would be the
potential influence of external factors to the work of several subsidiaries of
the holding - including exchange rate fluctuations resulting in the Group
losing more than 4 million lats in total. 

The Management of JSC Ventspils nafta emphasized before that the year 2008 is
very complicated for JSC Ventspils nafta and its subsidiaries due to the
influence of both the global circumstances and the internal economic situation
in Latvia. A considerable part of the consolidated turnover of JSC Ventspils
nafta is formed by income in US dollars, gained for example, by the
subsidiaries working in the transit area of the Group - the crude oil and
petroleum products transshipment company Ventspils nafta termināls Ltd and the
owner and operator of crude oil and petroleum products pipelines in the
territory of Latvia LatRosTrans Ltd. These results were therefore affected by
the considerable fall of the USD/LVL exchange rate by 13% in comparison with an
analogue period in 2007. 

“The results of Ventspils nafta Group in the first half-year of 2008 support
that companies of JSC “Ventspils nafta” are able to sustain stable development
despite the complicated circumstances of global economic crisis, which affects
several companies of the Group working in international markets and has
profound effect on the Latvian economy, as the inflation and various expenses
continue to increase for significant period of time. Various effective
solutions positively affect operations of JSC Ventspils nafta Group companies
from a viewpoint of long-term development prospects despite negative
macroeconomic tendencies as showed by the reached budget results. While along
with launching a new production plant, the challenge of the printing branch is
to acquire broader international markets,” says the Chairperson of the
Management Board for JSC Ventspils nafta Olga Pētersone. 



The JSC Ventspils nafta subsidiary Ventspils nafta termināls Ltd continued
active implementation of modernization during the reporting period, by planning
optimization of the company's labor process and procedures, as well as increase
in labor force efficiency and introduction of higher requirements in terms of
environment protection. Modernization of the terminal was commenced along with
involvement of a new strategic partner - the international oil and gas company
Vitol - in summer of 2007. Although a stable high level of petroleum products
transshipment volume can be observed at Ventspils nafta termināls Ltd (more
than 6.6 million tons in the first half-year of 2008), additional safety is
ensured in the complicated economic circumstances by the fact that the contract
with the foreign investor guarantees regular income for the terminal in any
case. 

The aim of modernization is to strengthen the positions of Ventspils nafta
termināls Ltd as the major crude oil and petroleum products transshipment
complex in the Baltic region, by developing its work by following similar
principles as in other companies under the Vitol Group worldwide, such as
EuroTank in Rotterdam and Amsterdam. International competition in the business
of crude oil and petroleum products terminals is incresing. For that reason,
modernization and diversification of the company's economic activity is
currently the only way for the terminal how to adapt to the new economic
circumstances, by maintaining and at the same time strengthening its positions
in the global market. According to the development plans of Ventspils nafta
termināls Ltd, its development will make a considerable contribution for
promotion of competitiveness of both the company and also the entire port of
Ventspils. 

Several relevant measures have been already taken during the initial
modernization stages of the company, for example, improving crude oil and
petroleum products transshipment security, making the work of the shore-tank
farm more efficient, developing a system of continuous notification of the
employees, etc., making investments of about 1 million lats in total. 

According to the previous forecasts of JSC Ventspils nafta, in the reporting
period, external circumstances still substantially affect another Group's
company LatRosTrans Ltd, which is working in the sensitive transit area. Oil
transportation in the direction of Lithuania via the pipeline owned by
LatRosTrans Ltd is still not resumed due to the geopolitical situation, and
technical reasons, such as repair works at the pipeline section in the
territory of Byelorussia, have influenced also transportation volumes of
petroleum products to Ventspils - these have decreased by 0.5 million tons.
Moreover, negative impact was made by the difference of the USD/LVL exchange
rate and its fluctuations in the first half-year of 2008. 

In the first six months of 2008, The JSC Ventspils nafta subsidiary - the major
Baltic printing company JSC Preses nams actively and purposefully continued
implementation of production development, optimization and acquisition plans of
new markets, which enabled official opening of the new book production plant at
Jāņsili, Silakrogs located in Riga District, Ropaži parish already after the
reporting period ended. The technical capacities and technological
possibilities of the new plant have lined JSC Preses nams not only in the ranks
of the largest printing companies in the Northern Europe but also 300 largest
book production companies worldwide. A sum of LVL 13.5 million has been
invested into the book production plant, and it opens up an opportunity for the
company to strengthen in the existing markets and to acquire new markets in
Scandinavia, CIS and Western Europe, as well as other countries. 

The strategic development plans of JSC Preses names include finishing
construction of another printing plant - that is the newspaper and journal
production plant in the territory of the industrial park of the airport Riga.
The plant could be launched in 2009. 

In the reporting period, JSC Ventspils nafta as the central holding company of
the multi-branch Group successfully implemented its tasks in relation to
investment administration in the subsidiaries, thereby furthering increase in
the total value of the Group, as well as the value of each subsidiary. 

Although the situation of economic development and growth is currently
unfavorable, the companies of the JSC Ventspils nafta Group have worked
according to the budget forecasts in the reporting period, taking into account
the interests of its shareholders. 




JSC Ventspils nafta
For further information, please contact
Gundega Vārpa, Public Relations and Advertising Manager
tel. +371 67229793; 29277656; 
e-mail: gundega.varpa@vnafta.lv