OMV Petrom's earnings shrink on lower production, prices and solidarity contribution in 2023

The net profit of Romanian energy group OMV Petrom (BVB: SNP) plunged by 61% y/y to RON 4 billion (EUR 804 million) in 2023 amid a combination of lower hydrocarbon and electricity production, lower utilization rate of the refinery and lower prices on the markets for power and petroleum products.

Furthermore, the company's 2023 profit and loss statement includes the one-off element "solidarity contribution" (RON 2.7 billion) for the years 2022 and 2023.

The profit before taxes and solidarity contribution (RON 350/EUR 70 for each tonne of crude oil processed) decreased by only 35% y/y to RON 7.8 billion (EUR 1.57 billion) – more in line with the 37% y/y contraction of overall revenues to RON 38.8 billion (EUR 7.8 billion).

There were multiple causes for OMV Petrom's revenues. The company's hydrocarbon production dropped by 5% y/y to 113.3 kboe (barrels of oil equivalent) in 2023. The average realized crude price also fell by 18% y/y to USD 71.8 per barrel.

The refinery utilization rate dropped to 80% in 2023 from 95% in 2022 due to overhaul works at the company's sole refinery. Indicator refining margin decreased by 16% y/y to USD 13.96 per barrel.

The net electrical output of the Brazi power plant dropped by 17% y/y to 4.16TWh due to the prolonged planned outage of the plant (from March to the beginning of July 2023).

The company's management proposes to distribute RON 2.57 billion (EUR 617 million) as a base dividendout of last year's profit and also envisages an extraordinary dividend later this year. The base dividend would result in a 7.1% gross yield.

The dividend proposal will be subject to the approval of the company's shareholders in April after it is approved by the Supervisory Board of OMV Petrom.

(Photo source: OMV Petrom)