Romania’s OMV Petrom proposes same dividend as last year despite 64% profit drop

Romanian oil and gas group OMV Petrom (SNP), the most valuable company listed on the Bucharest Stock Exchange, recorded a 64% drop in net profit in 2020 compared to 2019, to RON 1.29 bln (EUR 266 mln).

However, the company’s Directorate proposes that the gross dividend for 2020 stays at the same level as the one paid from the 2019 profit, namely RON 0.031 per share. Thus, the shareholders could get total dividends worth RON 1.75 bln (EUR 360 mln), more than the company’s net profit in 2020. It’s for the first time since the company’s privatization in 2004 when this situation occurs.

OMV Petrom’s shares jumped by 2% in the opening of the Thursday trading session after the announcement. At the current price (RON 0.408 per share as of 10:15 AM), the dividend yield is 7.6%.

The low oil prices negatively impacted the group’s financial results in 2020, but the company expects an improvement in 2021. Fuel sales are also expected to recover, after they were hit by the pandemic-related restrictions in 2020.

OMV Petrom reported sales of RON 19.7 billion (EUR 4.07 bln) in 2020, down by 23% compared to 2019. The average price at which the company sold its oil was 38% lower compared to the previous year and the upstream operating result was almost zero. The oil production was 5% lower compared to 2019 while the gas production was down by 6%. The refining margins also contracted compared to the previous year and the sales of refined products dropped by 9% year-on-year, to 4.99 million tons. Higher electricity production at the Brazi power plant partly compensated for the drops in the other segments.

This year, OMV Petrom expects the average oil prices to increase by 19-30% compared to 2020 and refining margins to also go up by about 38%. “Demand for oil products and power is expected to be above 2020, while demand for gas is expected to be broadly similar to 2020,” the company predicts.

The group also expects the Romanian state to amend the Offshore Law, which would allow it to move forward with the Neptun Deep gas project in the Black Sea.

(Photo source: the company)