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    OMV Core Profits Slump 86% in Q2


OMV has cut its dividend and reduced its 2020 capital spending plan.

by: Joseph Murphy

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OMV Core Profits Slump 86% in Q2

Austria's OMV reported a 86% year-on-year decline in core profits in the second quarter, it reported on July 29, as upstream earnings collapsed under the impact of the Covid-19 pandemic on oil and gas markets.

The company's clean current cost of supply operating result was €145mn for the three months, versus €1.05bn a year earlier. Its upstream result swung to negative €152mn, from a €650mn profit, and downstream earnings were also down 28% at €309mn. Operating cash flow shrank 52% to €545mn, while free cash flow after dividends was negative €109mn. 

OMV said on July 28 it had cut its proposed dividend for 2019 from €2.00 to €1.75 ($2.05)/share because of the Covid-19 pandemic and the resulting oil price crash.

Net income was €24mn, versus €543mn a year earlier.

OMV produced 464,000 barrels of oil equivalent/day in the three months, down 5% yr/yr, although its gas output grew by 4% to 287,000 boe/d. It fetched 61% less for its oil at a price of $25.64/b, however, and 33% less for its gas at $2.77/'000 ft3.

Downstream margins were 29% weaker at $2.3/b, although downstream gas sales volumes climbed 21% to 32.32 TWh.

OMV has lowered its 2020 capital expenditure guidance to €1.7bn, down from an earlier forecast of €1.8bn and compared with a €2.3bn spend in 2019. In a statement on July 28, the group also said it intended to issue a bond worth up to €1.5bn within the next year to help fund the purchase of an extra stake in petrochemicals producer Borealis.

It agreed to buy the 39% share for $4.7bn from the UAE's Mubadala in early March, raising its ownership in Borealis to 75%.