In April 2022, BET increased by 0.1%, while in the first 4 months of 2022, it decreased by -2.59%, ending April at 12,723.23 points.

The Bucharest Stock Exchange has published its monthly trading data for April 2022. In the report, they highlight the fact that the first four months (and especially April) experienced an increase in volatility, which led to liquidity spikes on the BVB. To be exact, a 67% increase YoY compared to the same period of 2021. This led to a cumulative value of over RON 9bn (EUR 1.85bn) for all types of financial instruments. In total, the equity turnover in April amounted to EUR 103.7m, which would translate into an average daily turnover of EUR 4.94m.

It should also be noted that the largest volatility was experienced by the BET-NG index, an index that tracks energy and related activities. In total, this index increased by 5% in April 2022. Looking at the Romanian blue chips (which constitute the BET index), on an MoM basis, only 9 out of 20 experienced positive change, with Aquila being the only one to remain unchanged MoM.

Breaking this down further, Transgaz experienced the largest increase, growing by 12.9%, followed by Romgaz with 12.4%, and Digi, with 6.9%. On the flip side, Purcari lost -12.3%, Med life lost -10.5%, while Teraplast lost -7.5%. If we were to look at how the companies performed in the first four months of 2022, there are some changes. If we looked at it this way, only 7 out of 20 BET constituents experienced growth. First among them is Romgaz, with a 15.4% increase, followed by BVB with 12.9%, Sphera Franchise Group with 6%, and One United Properties, with 4.9%. On the other hand, Purcari lost -34.7%, Teraplast lost -22.7%, Transelectrica lost -14.7%, while Medlife lost -14.6%.

Performance of BET constituents in April 2022 (%)

In total, the BET index ended April with 12,723.23 points, remaining roughly unchanged MoM (+0.1%), but losing -2.59% of its value from the beginning of the year till the end of the month. The high volatility and uncertainty recorded on the Romanian market is something that is also evident in other Stock Exchanges across Europe, but also the US. With high inflation, the Russia-Ukraine conflict as well as the proximity of Romania to Ukraine, there are a lot of factors that are negatively influencing the Romanian equity market.

In Q1 2022, OMV Petrom recorded revenue growth of 145% YoY, EBITDA growth of 92%, and a net income of RON 1.75bn, an increase of 205% YoY.

Consolidated sales revenue grew by 145% YoY and amounted to RON 11.9bn, supported by higher commodity prices and higher sales volume of petroleum products and electricity. Of this, the Refining and Marketing segment represented 49% of total consolidated sales, while Gas and Power accounted for 51%. The last segment, Exploration, and Production accounted for only 0.1% of sales after the divestment of Kazakhstan subsidiaries in Q2 2021 (sales in Exploration and Production being largely intra-group rather than third-party sales).

Clean CCS Operating Result grew as well, amounting to RON 2.24bn, an increase of 243% YoY. This was due to a much higher contribution of all business segments following the increase in prices in the Exploration and Production segment, strong margins on gas from storage and third party transaction in the Gas and Power segment, as well as the higher refining margins in the Refining and Marketing segment.

Special items had net charges of RON -162m (Q1 2021: RON -61m), driven by the net temporary losses from forward contracts in the Gas and Power segment. Inventory holding gains amounted to RON 107m a slight decrease of 6% YoY, but still at a stable level due to the increase in crude oil prices.

With the higher prices in the market, EBITDA amounted to RON 2.92bn, up 92% YoY. The net financial result amounted to RON -82m (vs. Q1 2021: RON -34m), mainly due to the higher interest expenses in relation to the discounting of receivables. Income tax amounted to RON 355m, with the effective tax rate of 17% in Q1 2022, 2 p.p. higher YoY. Finally, the net profit amounted to RON 1.75bn, an increase of 205% YoY.

CAPEX amounted to RON 629m, an increase of 10% YoY. RON 453m of that investment went into Exploration and Production (Q1 2021: RON 511m). Investments in Refining and marketing amounted to RON 121m, a more than 2x increase, while investments in Gas and Power increased significantly, amounting to RON 49m (Q1 2021: RON 1m).

OMV Petrom key financials (Q1 2021 vs. Q1 2022, RONm)

The Company also touched on the conflict in Ukraine. They said they are continuously monitoring the situation, as well as the potential impact on its business operations. Disruptions in Russian commodity flows to Europe could result in increases in European energy prices, and could accelerate the risk of cost inflation. Sanctions on Russia and countersanctions issued by Russia could lead to disruptions in the global supply chains and shortages in raw materials, agricultural products, and metals, and thus, a further increase in the risk of inflation. Finally, they said they are regularly evaluating the impact on the Company’s cash flow and liquidity position.

Full-year 2022 Outlook

The Company also provided an outlook for 2022, provided that no significant lockdowns or supply disruptions appear. OMV Petrom expects that the avg. Brent oil price will be around USD 95/bbl (previous guidance was USD 75/bbl). Urals (oil from Russia) average discount to Brent is expected to remain high and volatile, reflecting the current geopolitical situation. The refining margin is expected to be significantly above the 2021 level (previous guidance: app. USD 6/bbl, 2021: USD 5.5/bbl). Demand for oil and gas to be on an upward trend, demand for power to be at similar levels to 2021, while demand for gas to be lower than in 2021. CAPEX is expected to increase to app. RON 4bn, depending on the investment climate (2021: RON 2.8bn).

In Q1 2022, Nuclearelectrica recorded operating revenue growth of 165% YoY, EBITDA growth of 164% YoY, and a net profit of RON 818.9m, an increase of 249% YoY.

Nuclearelectica recorded op. revenue increase of 165% YoY, driven by an increase of 164.7% in the weighted average price of electricity sold in Q1 2022, as compared to that price in Q1 2021, also taking into account the total quantity of electricity sold was 1.9% higher. The quantity of electricity sold on the competitive market of bilateral contracts grew by 1%, given that the avg. sale price on this market was 154% higher YoY. The quantity of electricity sold on the spot market in Q1 2022 was 6% higher, given that the avg. sale price on this market was up 190% YoY.

Moving on, operating expenses increased by 116% YoY, and amounted to RON 911.2m. The main driver of this increase is by far the windfall tax expense for electricity producers, which amounted to RON 459.2m (Q1 2021: RON 0). The expense with the windfall tax comes from the difference between the avg. monthly selling price of electricity and the price of RON 450/MWh (this price is based on the law).

Even with this increase, the Company’s EBITDA amounted to RON 1.11bn, an increase of 164% YoY. The net financial result amounted to RON 18.7m (Q1 2021: RON -442k), due to a higher net financial revenue and lower financial expenses through the exposure to EUR and CAD.

Due to the overall higher earnings, income tax expense amounted to RON 155.9m, an increase of 226% YoY. As a result, and because of the above-mentioned factors, the Company’s net profit amounted to RON 818.9m, an increase of 249% YoY.

Meanwhile, looking at the Company’s balance sheet, total assets increased by 10.9% YoY and amounted to RON 10.7bn. The increase was mainly driven by an increase in current assets to RON 4.65bn (+32% YoY), which itself was driven by an increase in trade receivables (+93.2% YoY) as well as the cash and cash equivalents (+70% YoY).

On the other hand, total liabilities also increased (+18% YoY) and amounted to RON 1.49bn. The increase was driven by an increase in current liabilities (+40% YoY) to RON 929.5m, which itself was a result of an increase in accounts payable and other liabilities (+46% YoY) and corporate tax (+339% YoY). The total investment in 2022 is planned for RON 702.8m, an increase of 62% YoY, of which, 14% was completed by the end of Q1 2022.

Nuclearelectrica key financials (Q1 2021 vs. Q1 2022, RONm)

The influence of the Russia-Ukraine conflict

The Company also touched on the impact of the Russia-Ukraine conflict on its business operations. The Company does not have activities that depend on the areas under conflict or affected by sanctions (Russia, Ukraine, Belarus). Because of this, their sales in the foreseeable future should not be significantly affected.