Thu, May 02, 2013 - Page 15 News List

YPF says rising inflation could hurt results

BREAKING TABOO:The firm’s warning came in a filing to the US SEC. That could anger Argentina’s government, which fines economists whose estimates differ from its own

Reuters, BUENOS AIRES

Argentine energy company YPF on Tuesday warned that inflation in the South American country may keep rising and affect its results, a rare admission considering the company is controlled by a government known for playing down the problem.

Argentine President Cristina Fernandez, re-elected in 2011 on promises of increasing government influence over Latin America’s No. 3 economy, has dismissed complaints that galloping prices make life hard for consumers and the businesses that employ them.

Inflation has been around 25 percent for several years, according to private estimates, one of the highest rates in the world. The government says inflation is less than half that, and has fined economists whose estimates differ from its own.

However, YPF — which was nationalized last year when the Fernandez administration seized control from Spanish oil company Repsol — said inflation could get to be a problem.

“In recent years, Argentina has confronted inflationary pressure,” YPF said in a filing to the US Securities and Exchange Commission (SEC).

The filing went on to describe the conflict between the official statistics agency and private analysts.

“Increased rates of inflation in Argentina could increase our cost of operation, and may negatively impact our results,” YPF said. “There can be no assurance that inflation rates will not be higher in the future.”

YPF officials were not immediately available for further comment on the company’s inflation warning.

The IMF has reprimanded Argentina about its data transparency, and given the country until Sept. 29 to take action.

The WTO added its voice to the criticism in March, saying Argentina’s restrictive trade policies could fuel price pressures.

However, Fernandez has largely remained defiant, while Argentine Economy Minister Hernan Lorenzino has at times appeared tongue-tied on the subject.

“I think that, eh, it’s a ... Can we cut this off? Sorry,” Lorenzino said when asked about consumer prices in a documentary that aired in late last month.

“Speaking about inflation statistics in Argentina is complex, OK?” he said.

Also on Tuesday, YPF said it would distribute dividends of 330 million pesos (US$63.6 million) this year, up from the 303 million pesos distributed last year. The company reported a net profit of 3.902 billion pesos last year, down 12.2 percent from 2011.

YPF, taken over by the government in May last year, is seeking private investment of US$4.5 billion to finance part of the US$32.6 billion it says it needs over the next five years to boost oil production.

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