Azomureş Back Into BSE Spotlight

Izabela Sîrbu

Azomures - Targu Mures (BSE:AZO), the largest producer of chemical fertilizers in Romania, has announced intent to resume production at maximum capacity, after a period of inactivity. "The temporary production cut, when the plant operated with a single ammonia installation and the complex fertilizers unit completely closed, is over. All employees have been called back to work to restore the installations that were temporarily stopped to full functionality," reads a press release from Azomures.

Following the announcement, speculators drove AZO shares up by 12.7% during yesterday"s session of the Bucharest Stock Exchange (BSE). Last month, AZO shares ranked 15th among the most traded shares listed on the Bucharest Stock Exchange with an overall liquidity of 9.02 million RON. "The future performance of the AZO shares will depend significantly on the company"s financial results, which will most likely not be as spectacular as in the past years. On the contrary, I would expect very poor results, as the market for Azomures products has not benefited from the same favourable context," said Andreea Gheorghe, Head of Analysis with the brokerage firm Intercapital Invest.

According to the brokers, AZO shares generated earnings above the main indexes of the Bucharest Stock Exchange during times of instability and uncertainty, precisely due to their speculative nature, which give them the potential to generate good performance when the overall stock market is declining. "Normally, AZO shares should perform below the average of the indexes in the near future," Gheorghe concluded.

Azomures has a share capital of 52.6 million RON divided into shares with a face value of 0.1 RON. AZO shares are listed on the Bucharest Stock Exchange Tier I since 16 January 1996. The plant concluded last year with a net profit of 50.54 million RON, slightly down from the 55.6 million RON reported at the end of 2007. Azomures has unveiled a six-year investment plan worth 32 million EUR, financed primarily from equity and most of the net profit made in 2008. Projections for this year include a net profit of only 7.4 million RON, down 85% from 2008, and overall revenues of 839.5 million RON, down by 30%.

Eurofert Investments LLC New Castle USA is the majority shareholder with 55.97%, followed by Azomures Holdings LLC with 19.05%. The remaining shares are free float on the Bucharest Stock Exchange.