Saras Third-Quarter Profit Rises 10% as Margins Widen

By Gianluca Baratti and Michele Seghizzi

Nov. 7 (Bloomberg) -- Saras SpA, owner of the Mediterranean region's largest refinery, said third-quarter profit rose 10 percent as refining margins increased by a third.

Earnings adjusted to exclude inventory changes rose to 60.1 million euros ($76.7 million) from 54.8 million euros last year. That was lower than the 68 million-euro median estimate of eight analysts in a Bloomberg survey.

Saras is boosting capacity for diesel production, which is more profitable than gasoline or fuel oil, in response to demand. Chief Financial Officer Corrado Costanzo, in an interview with Bloomberg Television, confirmed a plan to double investment to 1.23 billion euros during the next four years, though the global economic slowdown may affect the timing.

``We might consider delaying some investments in certain periods and decide to accelerate in others,'' he said. The refiner earmarked the funds in part to boost diesel output at its Sarroch plant on the island of Sardinia. The facility has full daily capacity of 300,000 barrels a day.

Refining margins in the third quarter rose 36 percent to $8 a barrel, the company said. The amount of crude oil processed through the refinery rose 1 percent to 28.4 billion barrels.

Refineries

``The mid-term outlook for complex refineries will remain positive, driven by sustained demand for middle distillates, and potential shortages in the European markets caused by the imminent change in specifications for diesel,'' said Chairman Gian Marco Moratti in a statement. Costanzo said diesel margins will be ``satisfactory'' during the winter months.

New European regulations will be enforced limiting sulfur content in diesel from Jan. 1 next year.

Refining at the Saras plant will run at full capacity for the rest of the year because no maintenance has been scheduled.

The credit crunch has made financing purchases difficult, though the conditions should improve ``in several months,'' Costanzo said in today's interview.

Saras rose as much as 5 percent, and traded up 4 cents, or 1.3 percent, to 2.80 euros at 12:42 p.m. in Milan.

To contact the reporter on this story: Adam L. Freeman in Rome at afreeman5@bloomberg.net