OMV Petrom sees five times lower profit as sales drop 20% in second quarter

Romanian oil&gas group OMV Petrom recorded a consolidated net profit of EUR 26 million in the second quarter of this year, down by 83% compared to the same period of 2015. The group’s consolidated sales declined by 20% in the three months ended June 31, 2016, to EUR 807 million. The group saw its operational profit go down on both the upstream and downstream segments, due to lower oil and fuel prices. It also recorded EUR 12 million losses from special items such as personnel restructuring and unscheduled depreciation, according to the financial statements released on Wednesday, August 10. In the first half of the year, OMV Petrom recorded a net profit of EUR 90 million, 61% lower compared to the same period of 2015. The clean net income attributable to shareholders, which doesn’t include inventory holding losses, was EUR 102 million, 50% lower year-on-year. The group’s sales were EUR 1.6 billion in the first six months, down 18%. “In the first half of 2016, the difficult market environment adversely impacted our financial results, outweighing the effects from improved operational performance as well as strict cost discipline and cash management,” said Mariana Gheorghe, OMV Petrom CEO. “The Upstream clean EBIT mostly reflected the drop in oil and gas prices, partly mitigated by the reduction in production costs. The Downstream clean CCS EBIT slightly improved, as a result of the favorable development of provisions for outstanding receivables in the gas business, which offset the effects of weaker refining margins and the planned refinery turnaround,” she added. As the difficult market conditions persisted, the group continued to reduce its investments. “Our CAPEX decreased by 35% vs. 6m/15, reflecting the completion of Neptun drilling and also the strict selection of investment projects. Consultations regarding upstream oil and gas taxation are expected to continue in the second half of the year. As previously stated, a stable, predictable and investment-friendly fiscal and regulatory framework is a key requirement for our future investments, both onshore and offshore,” Mariana Gheorghe explained. OMV Petrom is controlled by Austrian group OMV, which owns a 51% stake in the company. The Romanian state holds 20.6% while Fondul Proprietatea has a 19% stake. The company’s shares are trading on the Bucharest Stock Exchange. The share price has declined by over 30% in the past 12 months. OMV Petrom is currently valued at EUR 3.36 billion. The company's full financial statements for the first half of this year are available here. editor@romania-insider.com