Bulgarias Prista Oil is taking a step backward this year in terms of financial performance, but that is not deterring it from moving ahead with investment and growth plans.
The leading lubricant supplier in Bulgaria is preparing to build a Black Sea base oil terminal aimed at giving the company more purchasing flexibility. In addition, it recently struck an agreement to sell Valvoline lubes in Turkey and claims to be discussing potential deals with two other major oil companies.
But officials denied a recent news report that it is planning an initial public stock offering.
Headquartered in the capital city of Sofia, privately owned Prista dominates Bulgarias lubricant market, claiming a market share of 60 percent. According to an Oct. 17 article by Dnevnik, Pristas sales revenue is growing at a 20 percent clip this year and is projected to reach 130 million lev (U.S. $80 million). Profits, however, are expected to fall 30 percent to 4.9 million lev. Dnevnik said Prista officials blamed the decline on sharply escalating raw material costs.
Prista said it is moving forward with plans to build a 15,000-metric-ton terminal at Varnau, on the western coast of the Black Sea. Officials said it will help optimize logistics and give Prista more flexibility in procuring base oil for its blending plant in Ruse, 200 kilometers inland.
You can realize the importance of having necessary quantities [of base oils] stored for at least two to three months, Hristo Savchev, a member of the companys management board, told Lube Report. Thus Prista controls raw materials supply, and its finished products become more predictable in price range.
Prista expects to obtain a building permit for the terminal next month and then spend approximately five months constructing it. It will be the second Black Sea base oil terminal built by Prista in two years. In June 2004 the company opened a facility in the Ukrainian city of Odessa.
Prista recently reached a licensing agreement with U.S.-based Valvoline to make and sell the latters motor oils in Turkey. The deal calls for 30 products to be manufactured at Pristas two-year-old plant in the northwestern city of Korfez. Prista expressed enthusiasm about the opportunity to tie up with an internationally recognized brand. Valvoline said it wanted to cooperate with a company that had a strong presence in the area.
This is essentially a relationship with a partner that has an extremely good infrastructure and established network, said John Noal, Valvolines vice president and managing director for Europe, the Middle East and Africa. He added that the deal is part of Valvolines broader effort to expand its presence in the region and that the company sees significant opportunity in Turkey because its transportation system depends heavily on automobiles.
Prista confirmed that it is negotiating potential arrangements with two other major motor oil suppliers, but it declined to identify them or elaborate. The company already has a manufacturing and distribution agreement in Bulgaria with Chevron Corp., which bought a 25 percent stake in Prista in 2000.
Savchev denied Dnevniks report that Prista is preparing to conduct a stock offering next year. The company might pursue such a course in the future, he said, but has no current plans.