According to the flash estimate by the Croatian Bureau of Statistics, the Croatian CPI in January 2024 grew by 4.1% YoY but decreased by 0.4% MoM. The final release will be published on 22 February 2024, and changes might occur until then.
Yesterday, the Croatian Bureau of Statistics released the latest flash estimate for the Croatian CPI, for the month of January 2024. According to the flash estimate, the Croatian CPI grew by 4.1% YoY but decreased by 0.4% at the end of January.
Croatian CPI YoY growth (February 2013 – January 2024, %)
Source: Croatian Bureau of Statistics, InterCapital Research
Breaking this change down into main components of the index, on a yearly basis, Food, beverages, and tobacco recorded an increase of 7.1%, Services grew by 5.9%, Non-food industrial goods without energy by 3%, while prices in Energy decreased by 0.6%.
Meanwhile, on a monthly basis, Food, beverages, and tobacco increased by 1.1%, Services grew by 0.7%, while Non-food industrial goods without energy declined by 3.1%, and Energy decreased by 0.6%.
Furthermore, according to Eurostat’s release of the Harmonized Index of Consumer Prices (HICP), in January 2024 Euro area annual inflation amounted to 2.8%. Meanwhile, Croatia recorded a YoY HICP increase of 4.8%, while on a MoM basis, HICP decreased by 0.3%.
Comparison of HICP change with available European countries (January 2024, YoY, %)
Source: Eurostat, InterCapital Research
Compared to other available European countries, Croatia stands 2nd with the highest HICP, right behind Estonia’s 5%. Austria and Slovakia recorded 4.3% growth, Malta 3.6%, Spain 3.5%, and France 3.4%. In other words, even though there was an improvement in the HICP, the yearly data show us that Croatia still ranks as one of the most affected countries in terms of price growth.
Comparison of HICP change with available European countries (January 2024, MoM, %)
Source: Eurostat, InterCapital Research
Meanwhile, on the MoM basis, most of the European countries recorded a decrease in the HICP, with only Estonia, Latvia, and Slovakia noting >0.5% increase, at 1.3%, 0.7%, and 0.6%, respectively. Croatia was placed somewhere right in the middle of the observed countries.
While the slowdown in inflationary growth is clearly present, for example, last month it amounted to 4.5%, and the month before at 4.7%, one has to take into account the base effect. In the comparable period at the end of 2022 and the beginning of 2023, Croatian CPI reached its highest level in years. This would mean that although there is a clear trend of slowdown, elevated inflation even when dropping plays a more significant role due to that high base last year.
During 2023, OMV Petrom recorded a revenue decline of 37% YoY, a Clean CCS Operating Result decrease of 27.3%, and a net income to majority of RON 4.03bn, a 61% decrease. Furthermore, during Q4 2023, revenue decreased by 40% YoY, Clean CCS Op. Result grew by 10.8%, while the net income to majority amounted to RON 1.48bn, a 29.4% increase YoY. OMV Petrom also proposed a base dividend of RON 0.0413 per share with a 7.1% DY, as well as the intention to propose a special dividend during 2024.
Starting with the financials, OMV Petrom recorded a sales revenue of RON 38.8bn during 2023, a decrease of 37% YoY, and RON 10.3bn during Q4, a 40% decrease YoY. For the yearly results, the revenue was negatively impacted by lower commodity prices and lower sale volumes of electricity, which was only partially offset by higher sales revenue of natural gas. In terms of the sales mix, the Refining and Marketing segment accounted for 69% of total sales, the Gas and Power segment 30%, while the Exploration and Production segment was only 0.1% (it should be noted that this segment is mostly intra-group sales).
Q4 was similarly affected by lower commodity prices and lower sale volumes of electricity and natural gas. During the quarter, Refining and Marketing accounted for 71% of the total sales, the Gas and Power segment accounted for 29%, and the Exploration and Production segment accounted for only 0.2%.
Next up we have the Clean CCS Operating Result (Clean current cost of supply), which excludes special items and inventory holding effects, as well as temporary hedging effects. In other words, normalized operating profit amounted to RON 7.46bn during 2023, a 27% decrease YoY, and EUR 2.06bn during Q4, a 10.8% increase YoY.
For the yearly data, the decrease came as a result of lower contribution from all business segments, mainly triggered by weaker refining margins and lower utilization rate due to the refinery turnaround in the Refining and Marketing segment, decrease in prices in the Exploration and Production segment, as well as lower gas margins from both third party transactions and equity gas in the Gas and Power segment. Furthermore, the result was also affected by lower E&P specific taxes, mainly as a result of lower prices, as well as decreased purchases, mainly due to lower volumes and prices for natural gas, electricity, and imported crude oil, which was partially offset by higher volumes of traded petroleum products.
On the other hand, the increase on the Q4 basis came primarily from the Gas and Power segment, in the context of good op. performance and a low base effect in Q4 2022.
Meanwhile, the reported operating result decreased by 37% YoY to RON 7.56bn during 2023, mainly as a result of lower market prices and lower availability of the Group’s assets due to planned maintenance activities, mostly of Petrobrazi refinery and Brazi power plant. This is also reflected in the operating expenses, as they have decreased across most lines both on the FY and Q4 basis. On the FY basis, they decreased by 37% YoY to RON 31.9bn, while on the Q4 basis, they decreased by 49% to RON 8.54bn.
The net financial result was positive at RON 263.2m, an increase of over 14x YoY, mainly as a result of higher interest income on bank deposits. Furthermore, the solidarity contribution (special tax introduced in 2023 on energy companies in Romania, after a certain level of profit) amounted to RON 2.73bn during 2023 (2022: RON 0), while in Q4 it amounted to RON 374.7m. As a result of these developments, the net profit to majority amounted to RON 4.03bn, a decrease of 61% YoY during 2023, and RON 1.48bn during Q4 2023, an increase of 29% YoY.
OMV Petrom key financials (Preliminary 2023 vs. 2022, RONm)
Source: OMV Petrom, InterCapital Research
Base and special dividends
OMV Petrom also proposed the base dividend, in the gross amount of RON 0.413 per share. At the share price before the announcement, this would imply a DY of 7.1%. This also represents a 10% increase YoY, at the high end of the 5-10% range in the dividend guidance. Furthermore, OMV Petrom also announced the intention to propose a special dividend in 2024. If the base dividend is approved by the Audit Committee and the SB, it will be voted upon in April 2024’s GSM. The special dividend meanwhile, will be subject to a future GSM.
OMV Petrom dividend per share (left, RON) and dividend yield (right, %) (2013 – 2024)
Source: OMV Petrom, InterCapital Research
Outlook for 2024
For 2024, OMV expects the average Brent oil price at around USD 80/bbl, with a refining margin of around USD 10/bbl. Demand for retail fuels, gas, and power is expected slightly above the 2023 level. They also expect that the legislative measures (solidarity contribution) will continue until the end of March 2025. These affect all companies that produce and refine crude oil, and they have to pay RON 350 per tonne of crude oil processed. The payment for 2023 is due at the end of June 2024, in the amount of RON 1.24bn.
For organic CAPEX, it is estimated at RON 6.5bn, with increased investments dedicated mainly to Neptun Deep as well as low and zero-carbon projects, mostly SAF/HVO, renewables, and EVs. Additional investments for the announced low and zero-carbon M&A transactions bring the total CAPEX to app. RON 8bn.
If you would like to read the report in more detail, click here.