OMV, part-owned by Ipic, exceeds forecasts on profit

OMV, the Austrian oil and gas company which is 25 per cent owned by Abu Dhabi’s Ipic, yesterday reported fourth quarter profit exceeding forecasts.

The company said it was helped by refining and petrochemicals, which includes a stake in the Borouge petrochemicals plant in Abu Dhabi.

But the good numbers for downstream and some increase in upstream production volumes could not mask a poor year for OMV, which was hit by a halving of oil prices in the second half of the year and disruptions to upstream operations in Yemen and Libya.

The company reported “clean” earnings (before interest and tax and ignoring changes in the value of inventory) of €545 million (Dh2.27 billion) in the fourth quarter, up 23 per cent from the year-earlier quarter. Analysts had forecast a profit of about €487m.

The full-year profit of €2.2bn was down 15 per cent on the year before.

OMV’s chief executive, Gerhard Roiss, told investors that the outlook was “challenging”, and the company is expecting oil prices in the coming year to remain in a US$50 to $60 per barrel range. Mr Roiss said that the company plans to reduce annual capital expenditure over the next three years to between €2.5bn and €3bn, from €3.9bn last year, with the range dependent on oil prices.

He also said that he expects refining margins to come down this year.

OMV’s refining margins in the second half of last year nearly quadrupled to above $5 per barrel on a combination of lower oil prices and gains made from the consolidation of the company’s downstream operations.

The rationalisation of downstream, headed by Manfred Leitner, who also took over the gas and power division, involved selling off €1bn of “non-core” assets to concentrate on its three main refineries in Romania and Austria.

Mr Leitner told investors that the company was reviewing the power and gas business, which reported a fourth quarter “clean” profit down 49 per cent on the year at €41m, and adding that OMV would make announcements about asset sales later in the year.

Borouge in Abu Dhabi is owned by Adnoc and Borealis, which in turn is 64 per cent owned by Ipic and 36 per cent by OMV.

Mr Leitner said that Borealis contributed €51m to OMV earnings in the fourth quarter, down slightly on the year, but he added that the Borouge 3 expansion was completed in the fourth quarter and will more than double output this year.

Last year, OMV’s management came under severe pressure from shareholders, including the Austrian government, which owns the largest stake at 31.5 per cent.

Part of its efforts to restructure has included a focus on more stable areas of upstream operation. Its Libya exposure means it cannot predict whether production this year will fall to 300,000 barrels per day, from 318,000 bpd in the fourth quarter, or rise to 340,000 bpd, the company’s head of upstream, Jaap Huijskes, admitted to investors.

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