UPDATE 2-Petroplus targets deals despite weak outlook
* Q1 net loss $11.3 mln, vs forecast profit of $19 mln
* Underlying profit rises
* Still eyeing acquisitions
* Analysts concerned at cash drain, debt, guidance cut
* Shares down 1.4 percent
(Recasts, adds detail, background, analyst, share rise)
By Emma Thomasson and Tom Bergin
ZURICH/LONDON, May 7 (Reuters) - Petroplus (PPHN.VX), Europe's largest independent crude oil refiner, said it wanted to continue buying refineries despite a weak outlook for industry margins and an unexpected swing into the red in the first quarter.
However, analysts said Petroplus's positive underlying result was outweighed by concerns about the weak outlook and rising debt.
"Results above expectations but clouded by cash drain and guidance cut," analysts at Kepler Capital Markets said.
Cash and short-term deposits fell to $45.5 million at the end of the quarter from $209.8 million at the end of 2008.
Petroplus said a drop in the value of fuel inventories, after oil prices halved compared to the same period in 2008, led to a net loss of $11.3 million. A Reuters poll of eight analysts gave an average forecast for a net profit of $19 million.
Petroplus shares fell 1.4 percent to trade at 20.80 Swiss francs at 0749 GMT, compared to share rises for most of Europe's other independent refiners.
Underlying profits rose, due to firmer refining margins.
Chairman Thomas O'Malley said he expected refining margins to be weak in 2009, leading to lower earnings in 2009 than 2008, and that this would create buying opportunities.
"While the current environment will be challenging, it does lend itself to potential opportunities to purchase refining assets at very low market valuations," O'Malley said in a statement.
In the past four years, Petroplus has grown from a small Antwerp-based refiner by buying refineries from the oil majors, who capitalised on a resurgence in the refining industry to reduce their exposure to this traditionally low-margin business.
However, falling demand for oil products and the startup of new refining plants around the world is weighing on crude processing margins, especially for operators of less technically complex facilities like Petroplus.
The weaker environment had prompted expectations Petroplus would abandon its acquisition strategy.
A number of big oil companies are mulling the sale of European refineries, industry sources said.
Royal Dutch Shell Plc (RDSa.L) said earlier this year it was eyeing potential exits from certain refining and marketing assets in Germany.
Underlying net income from continuing operations, which excludes one-off items and factors related to changes in the value of inventories, was $40 million, up from $5 million in the same period of 2008, thanks to higher crude processing margins.
The result contrasts with a fall in first-quarter underlying operating profit at Finnish rival Neste Oil (NES1V.HE), which said the weak economy had hit oil product demand.
In addition to Neste and the major oil companies, Petroplus competes with refiners like Greece's Hellenic Petroleum (HEPr.AT) and Hungary's MOL MOLB.BU. (Writing by Tom Bergin, Editing by Greg Mahlich and Andrew Callus)
