January 4, 2019 / 12:47 PM / 6 months ago

UPDATE 2-Norway's Vistin Pharma hit by $12 mln fuel trading loss

* Company set up energy trading unit last year

* Head of energy trading stepped down on Thursday

* Vistin shares drop as much as 18 pct to record low (Adds CEO quote, background, bullets)

By Terje Solsvik

OSLO, Jan 4 (Reuters) - Norway’s Vistin Pharma has racked up 101.3 million Norwegian crowns ($12 million) of losses from trading bunker fuel derivatives following a disastrous expansion into energy trading, sending its shares plunging to a record low.

After selling off its opioid and tablet businesses in 2017, Vistin said last March it would set up an energy trading arm to complement its remaining drugmaking operations, which it said offered “solid growth prospects” but lacked scale.

Having hired a team of oil market veterans, it bought derivatives betting on a widening price difference between high-sulphur and low-sulphur bunker fuel ahead of regulations on shipping fuel emissions that come into effect in 2020.

Announcing the losses on Friday, the company said it would now evaluate the strategy of the energy trading unit.

“There’s a board meeting next week. For the time being we’re still holding the contracts and have not yet decided what we will do with them,” Chief Executive Gunnar Manum told Reuters.

The initial value of the investment amounted to around 400 million crowns, he added.

On Thursday, Vistin announced the abrupt resignation of its head of energy trading, Torbjoern Kjus, but did not at that point reveal the extent of its losses.

Vistin said the counterparty for the derivatives contracts was a Norwegian commercial bank, but declined to name it.

At 1345 GMT, Vistin’s shares were down 8.1 percent at 6.8 crowns, having traded as low as 6.1 crowns.

In 2017, Vistin made a profit from continuing operations of 5.6 million crowns.

$1 = 8.6404 Norwegian crowns Reporting by Terje Solsvik; Editing by Gwladys Fouche and Mark Potter

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