August 7, 2012 / 6:11 AM / 5 years ago

ERG core earnings rise in H1 as it downsizes refining

2 Min Read

MILAN, Aug 7 (Reuters) - Italian energy group ERG said on Tuesday its core earnings in the first half rose 90 percent boosted by its power generation and renewable energy businesses as it moves to downsize its presence in a weak refining sector.

"In the second part of the year the group will benefit from its reduced exposure in refining," ERG CEO Luca Bettonte said in a statement.

ERG, which said its adjusted core earnings at replacement cost in the first six months was 205 million euros, said refining margins are expected to decline in the rest of the year compared to May-June because of high volatility.

ERG agreed at the end of January to sell a 20 percent stake in its main ISAB refinery in Sicily with a 320,000 barrel-per-day capacity to Russian oil major Lukoil.

It has an option to sell its remaining 20 percent to Lukoil in October 2013.

The outlook for European refiners, battered by weak demand and heavy competition from Asian rivals in the past few years, remains clouded due to Europe's sluggish economy.

ERG has built renewable energy assets over the years and its green energy unit is now Italy's third-biggest renewable power operator.

ERG said it posted a net loss at replacement cost in the first half of 9 million euros compared to a net loss of 40 million euros the year before.

Reporting By Stephen Jewkes

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