In 9M 2023, OMV Petrom recorded a revenue decline of 36% YoY, an EBITDA decrease of 40%, and a net income to majority of RON 3.5bn, a 68% decline YoY. Furthermore, during Q3 2023, the Company recorded a revenue decrease of 43% YoY, an EBITDA decline of 45%, and a net income to majority of RON 1.97bn, a 63% decrease YoY.
OMV Petrom has published its 9M 2023 results, and in this brief analysis, we’re bringing you the most important points. During 9M 2023, OMV Petrom recorded a total sales revenue of RON 28.5bn, a 36% decrease YoY, while in Q3 2023, the revenue amounted to RON 10.7bn, a 43% decrease YoY. Revenue was negatively impacted by lower commodity prices and lower sales volume of electricity, which was only partially compensated by higher sales volumes of natural gas. In terms of segments, there are 2 most important ones, the “Refining and Marketing” segment, which accounts for 72%, and “Gas and Power”, which accounts for 28%. The Company notes that the 3rd segment, Exploration and Production, accounts for only 0.1% of the total sales, as this revenue is primarily intra-group revenue rather than 3rd party sales.
Inside the Refining and Marketing segment, the refining margin (measured in USD/bbl) declined by 6% YoY to USD 14.94 in 9M, and by 2% YoY to USD 16.81 in Q3. Total refined product sales decreased by 2%. On the other hand, in the Gas and Power segment, Gas sales volumes increased by 2% YoY to 33.6 TWh in 9M, and by 19% YoY to 11.67 TWh in Q3.
In terms of expenses, the net inventory variation, decreased by 36% YoY to RON 13.6bn in 9M 2023, and by 49% YoY to RON 4.9bn in Q3 2023, which is in line with the reduced demand. Due to the lower business volume, production, and op. expenses also decreased, by 19% to RON 3.17bn during 9M, and by 24% to RON 1.2bn during Q3. On the other hand, selling, distribution, and administrative expenses increased by 16% YoY to RON 1.9bn on a 9M basis, and by 13% YoY to RON 735m on a Q3 basis.
As such, EBITDA decreased by 40% YoY to RON 7.9bn during 9M, and by 45% YoY to RON 3.3bn during Q3. This would also mean that the EBITDA margin amounted to 27.8%, during 9M 2023, a 2.26 p.p. decline, while in Q3 2023, it declined by 1.33 p.p. to 30.7%. Moving on to the net financial result, it amounted to RON 234m during 9M 2023 (9M 2022: RON -66m), while in Q3, it equaled RON -77m (Q3 2022: RON 99m). On a 9M basis, the increase came as a result of higher interest income (+56% YoY) and slightly lower interest expenses (-4% YoY), while in Q3 the opposite happened, with a lower interest income (-42% YoY), and higher interest expenses (+37% YoY).
Besides all of this, OMV also recorded a solidarity contribution on refined crude oil, which adversely impacted 9M 2023’s net profit. This contribution pertains to companies that produce and refine crude oil. These companies have to pay a contribution of RON 350m per tonne of processed crude oil for 2022 and 2023. During 2023, OMV Petrom had to pay a total of RON 2.35bn for this contribution, of which RON 1,485bn is related to the 2022 obligation, while the remaining RON 870m is related to the 9M 2023 obligation. In Q3 2023, this contribution amounted to RON 372m. As such, OMV recorded a net income to majority of RON 3.46bn during 9M 2023, a 68% decrease YoY, and RON 1.97bn during Q3, a 63% decrease. This would imply a net income margin of 12.1% during 9M, a 12.4 p.p. decrease YoY, and 18.4% during Q3, a 9.96 p.p. decrease.
OMV Petrom key financials (9M 2023 vs. 9M 2022, RONm)
Source: OMV Petrom, InterCapital Research
OMV Petrom key financials (Q3 2023 vs. Q3 2022, RONm)
Source: OMV Petrom, InterCapital Research
OMV also provided an outlook for FY 2023. They expect the average Brent oil price to be above USD 80/bbl (vs. between USD 75/bbl and USD 80/bbl previously). The refining margin is expected between USD 12-14/bbl (vs. above USD 10/bbl previously). In Romania, the demand for oil products in retail is expected to be slightly above the 2022 level, while demand for gas and power is expected to be significantly lower than in 2022. The aforementioned legislative measures (solidarity contribution) are expected to remain in place until the end of March 2025. The 2023 contribution payment is due by the end of June 2024.
In terms of CAPEX, they anticipate it at app. RON 5.5bn, with investments focused on the Neptun Deep project, low and zero carbon projects, and the Petrobrazi refinery. They also expect a positive free cash flow before dividends, but lower YoY, due to higher investments and payment of solidarity contribution.
For a deeper look at the Company’s 9M 2023 results, you can access the report here.
