Austria-based OMV revealed that its net profit for the July-September period had fallen to 474 million euros, down 43% on the previous year. This drop in profitability was also reflected in the company’s sales, which fell by almost 50%, from 17 billion euros to 9.4 billion euros, compared with the same period last year.
OMV Financial Performance in Q3 2023
Commenting on the results, CEO Alfred Stern said, “We have seen a normalization of our financial performance as energy prices have come down from their exceptionally high levels recorded last year.” It is worth noting that OMV’s operating profit, excluding exceptional effects and changes in inventories (CCS), also fell substantially, to 1.3 billion euros, an impressive drop of 62%.
Like many other companies in the energy sector, OMV had benefited from rising gas and oil prices in 2022, stimulated by the post-pandemic economic recovery and Russia’s invasion of Ukraine. However, prices have since fallen back from their record levels, while remaining relatively high. This trend also affected other industry giants such as BP, ExxonMobil and Chevron, all of which announced quarterly results well below those of the previous year.
Factors impacting OMV’s profits
For 2023 as a whole, OMV forecasts an average crude oil price of $80 per barrel, in contrast to the $100-plus levels recorded in 2022. In addition to challenges in the energy sector, OMV’s chemicals division faced headwinds from sluggish consumer demand.
Outlook for OMV in 2023
The company had previously benefited from the consolidation of its accounts with its subsidiary, Boréalis, a major player in fertilizer production. Despite these financial challenges, CEO Stern expressed confidence in OMV’s “solid” results. However, the company continues to closely monitor the potential impact of the ongoing conflict in Ukraine initiated by Russia. OMV is also committed to diversifying its sources of gas supply in view of the uncertainties associated with Russian deliveries, as the contractual ties with Gazprom extend until 2040.
With regard to the conflict between Israel and Hamas, OMV has stated that its operations in the region are not affected by developments at this stage. The company, which operates across the entire energy value chain with a 31.5% stake held by the Austrian state, reduced its workforce by 9% over the previous year, bringing the total number of employees worldwide down to around 20,000 from 37,700 in 2010.
In conclusion, OMV’s third-quarter 2023 financial results reflect the challenges facing the energy sector as a result of volatile oil and gas prices. The company’s commitment to diversifying its gas supply sources and closely monitoring geopolitical developments underlines the importance of adaptability in today’s global energy landscape.
