OMV AG shares fell roughly 1% on Thursday following the release of the company’s second quarter trading update. The brief trading note highlighted contrasting performance across OMV’s major business units and signaled potential upward revisions to consensus profit estimates.
Earnings outlook
Visible Alpha Consensus currently records second quarter earnings before interest and taxes (EBIT) at 1,505 million and second quarter net income at 708 million. OMV said its reported trading results could prompt an upward adjustment of around 5% to 6% to those consensus figures for both EBIT and net income.
Division-level performance
The refining and marketing division delivered a robust showing in the quarter. Management attributed this strength to high refining indicator margins, a favorable product mix and solid utilization rates. Those positives, the company said, more than offset negative effects from crude differentials and temporary regulatory measures in Romania and Austria.
In the chemicals business, second quarter EBIT is expected to be higher than in the prior quarter. The increase was driven by stronger olefin and polyolefin prices, though gains were partly offset by greater discounting and reduced cracker utilization.
By contrast, exploration and production encountered several setbacks during the quarter. OMV pointed to lower sales volumes owing to no liftings in the United Arab Emirates, higher taxation in Romania, seasonal maintenance-related declines in Norway and substantial gas realization discounts to benchmark European gas prices in Romania. These factors partly offset the positive effect of higher oil and gas prices compared with the previous quarter.
July indicators and next steps
The company noted record high refining margins of about $30 per barrel and materially stronger olefin margins so far in July. OMV has set July 31 as the date to publish its full second quarter results.
Key takeaways
- OMV's trading update points to a likely 5% to 6% upgrade to Q2 consensus EBIT and net income.
- Refining and chemicals outperformed, while upstream operations were weighed down by volume, taxation and maintenance issues.
- Record refining margins and improved olefin margins have been reported for July to date; the company will release detailed Q2 results on July 31.