Omv Ag

Good morning, ladies and gentlemen. Welcome to OMV's earnings call for the fourth quarter 2025. With me on the call are OMV CEO Alfred Stern and our CFO Reinhard Florey. Alfred and Reinhard will walk you through the highlights of the quarter and discuss OMV's financial performance. Following their presentations, the two gentlemen will be available to take your questions. And with that, I'll hand it over to Alfred.

Thank you, Florian. Ladies and gentlemen, good morning and thank you for joining us. Before I discuss the details of our fourth quarter performance, I would like to briefly reflect on the operational and strategic highlights of last year. Despite the challenging economic and geopolitical backdrop, we achieved a strong performance across our three business segments. In energy, we were able to almost reach the prior year oil and gas production level if we exclude the divestment of the Malaysian business. We slightly increased our fuel sales volumes, reinforcing our position as a supplier of choice in the downstream sector. And in chemicals, Total polyolefin sales volumes, which include the joint ventures, rose by 3% year-on-year, underscoring our product's strength in a challenging market environment. Our clean CCS operating result reached a strong €4.6 billion, however decreased by 10% compared to the prior year quarter. Importantly, despite the difficult backdrop our cash flow from operations, The basis for shareholder distributions amounted to 5.2 billion euros and thus was just 4% lower than the year before. This resilience demonstrates again the strength of our integrated business model delivering robust cash flows in a volatile market environment. A particular achievement worth noting is that by the end of 2025, we have already surpassed 70% of our efficiency program 2027 target, demonstrating our steadfast commitment to operational excellence and supporting our strong cash flow generation. We have maintained a disciplined approach to investments. Our balance sheet remains very strong, reflected in a very healthy leverage ratio of only 14%. This strong financial position provides us with the necessary flexibility to navigate market uncertainties while continuing to invest in future growth opportunities and OMV's transformation. Ladies and gentlemen, as promised, our shareholders will directly benefit from our success. For the financial year 2025, We will propose to the Annual General Meeting a regular dividend of €3.15 per share, and again, an attractive additional dividend of €1.25. In total, this will amount to a cash dividend of €4.40 per share, resulting in a dividend yield of 9.3% based on the closing price of last year. This payout will represent 28% of our cash flow from operating activities. Despite the weaker economic environment, OMV will once again offer attractive shareholder distributions. Let me briefly highlight our strategic progress in 2025. In the energy segment, the flagship gas project of OMV Petrom, Neptune Deep, remains firmly on track and within budget for a targeted startup in 2027. This marks a major milestone in our ongoing commitment to diversifying and securing gas supply. We strongly believe in the Black Sea's potential for the region and have reinforced our position through further exploration in Bulgaria, partnering with Numad Energy and the Bulgarian State. Exploration drilling in Hanas-Baru began in December 2025 with the noble Globetrotter-1 vessel contracted to drill two exploration wells. Having two rigs simultaneously in operation, one offshore Bulgaria and another offshore Romania, represents a significant achievement for OMV Petron. We have successfully diversified our gas portfolio, ensuring continuous and uninterrupted supply to all our customers since more than one year. As a result, We are no longer dependent on any single supplier and now have the strongest gas portfolio in OMV's history. In renewables, OMV Petrom achieved notable progress by expanding its renewable power capacity, advancing towards a leadership in southeastern Europe. We have advanced geothermal energy projects. We completed drilling and the successful production test in Vienna and are on track to commission our first geothermal plant by 2028. In October last year, we have made an oil discovery in Libya in the Sirte Basin with estimated recoverable volumes between 15 and 42 million PoE. What makes this especially promising is the location. just seven kilometers from existing infrastructure. Turning to fuels. Our coprocessing plant is operational and producing renewable diesel. In April last year, we started up our 10 megawatt electrolyzer plant in Schwechat, the biggest of its kind in Austria. Construction of the SAF HVO plant at Petrobras is progressing as scheduled. with startup targeted for 2028. We are also investing in around 200 megawatt electrolyzer capacity in Austria and Romania. These green hydrogen projects are fully integrated with our refineries and primarily designed to supply our own facilities captive demand. In retail, we have nearly doubled our EV charging network in 2025 and rebranded our retail stations, underscoring our commitment to sustainable mobility and enhanced customer service. In chemicals, the game-changing agreement with APNOC to form Boruch Group International establishes a global polyolefin powerhouse and more resilient chemicals growth platform. we successfully commissioned our re-oiled chemical recycling plant and continue to advance key growth projects such as Calo and Boruch IV. Calo is expected to start up in the second half of this year, while Boruch IV production is expected to ramp up through 2026 as units are commissioned and brought online. The first unit of Boruch IV should come online still this quarter. Aligned with our strategy 2030, we remain focused on an agile transformation, responding to evolving customer needs, all while maintaining strong cash flow discipline and carefully managed investments to ensure attractive returns for our shareholders. Let me update you on the status of Boruch Group International. We made very good progress regarding the closing of the transaction and expect this as previously communicated in the first quarter of this year. We are pleased to report that we have already secured all necessary foreign direct investment approvals as well as almost all the other required regulatory clearances. In addition, in preparation for the acquisition of Nova Chemicals, we have successfully completed our financing process. We have secured $15.4 billion, ensuring that sufficient liquidity is in place to support the transaction. At this stage, the primary remaining tasks are to obtain the outstanding clearances. Discussions regarding the recruitment of BGI executive board and executive leadership team positions are nearly complete. Announcements regarding these appointments, along with nominations for the supervisory board, will be made in due course. Finally, the active collaboration between ADNOC, OMV, Barouche, Borealis, and Nova Chemicals has resulted in detailed plans for day one and beyond, and we have established a robust framework from the very outset of the integration to realize the synergies of more than $500 million. Overall, these developments clearly demonstrate strong momentum, and we remain confident in the successful closing and integration of Paroosh Group International. Let me now move on to the details of our fourth quarter performance. Our clean CCS operating result reached around 1.15 million euros representing a decrease of 222 million euros or 16% compared to the same quarter of 2024. Excluding the positive net effect of 210 million euros arbitration award received in the fourth quarter of 2024, our clean CCS operating result would have been broadly in line with the prior year quarter, despite lower oil and gas prices. The quarter was marked by significant geopolitical volatility. Brent crude prices declined, driven by a weak short-term demand outlook and increased OPEC Plus output. The introduction of new U.S. sanctions against major Russian oil exporters were somewhat supportive. European gas prices also fell despite the onset of the winter season as demand was easily met thanks to ample LNG supply. Refining margins increased further supported by product tightness resulting from the announced sanctions on Russian refiners and unplanned outages at other refineries. In the chemicals market, we observed some improvement of the olefin indicator margins. However, overall demand remained subdued, with many customers focused on reducing their inventories before the end of the year. The clean CCS tax rate saw a significant decline from 50% to 36%. This was mainly due to a reduced share in the overall group of certain companies in the energy segment located in high-tax countries, as well as stronger contribution from equity-accounted investments. As a result, clean CCS earnings per share remained nearly stable at €1.7 per share. At 1.7 billion euros, our cash flow from operating activities was truly exceptional this quarter, jumping by over 60% year on year. This very strong operating cash flow clearly demonstrates our continued ability to generate strong liquidity, even in the face of a challenging market environment. The clean operating result in the energy segment cropped markedly to 586 million euros. Around 40% of the decrease is explained by one-time effects. The Malaysia divestment and the net arbitration award of 210 million euros received in the prior year quarter. The remainder, approximately 390 million euros was largely attributable to decreased oil and gas prices, as well as lower sales volumes. The realized oil price fell by 13% to $62 per barrel, mirroring the movement in print prices. Our realized gas price decreased by 14%, averaging 26 euros per megawatt hour. thus less than European gas hub prices, which declined by 28%. This was mainly due to changes in portfolio composition following the divestment of Sapura OMV. Additionally, negative currency developments impacted our results by about 80 million euros compared to the prior year quarter. production volumes decreased by 11% to 300,000 BOE per day. The main reason was the sale of the Malaysian assets, which had contributed 24,000 barrels of oil equivalent per day in the fourth quarter of 2024. Excluding the effect from the divestment, ENP production declined by about 4% due to production declines in Norway, Romania, and New Zealand, reflecting their field's natural decline, partly offset by slightly higher output in the UAE. Unit production costs rose slightly to above $10 per barrel. This increase resulted mainly from lower production volumes and unfavorable exchange rate movements. Cost reduction measures taken had a mitigating effect. Sales volumes decreased by 65,000 BOE per day, thus stronger than production. In addition to the missing volumes from Sapura OMV, the sales in Norway and Libya were lower due to the lifting schedule. The result of gas marketing and power declined to 116 million euros, primarily due to the missing positive impact from the arbitration award received in the fourth quarter of 2024. Aside from the arbitration award, Gas waste decreased mainly due to lower release of transport provision. The contribution of Gas East rose strongly, driven by excellent results across both the gas and power business lines, supported by higher gas sales volumes and increased production of the Pras power plant in the context of power market deregulation. The clean CCS operating result of the fuels segment more than tripled to 346 million euros, primarily driven by substantially stronger refining indicator margins, a significantly higher contribution from ad-hoc refining and global trading, and improved results of the marketing business. This strong performance was partially offset by, amongst others, negative production effects related to repairs at the Buchhausen refinery. The European refining indicator margin rose sharply to $14 per barrel, while the refining utilization rate remained high at 89%. The marketing business delivered a higher contribution compared to the prior year quarter, with retail performance benefiting from slightly improved fuel margins due to a more favorable quotation development for oil products, higher non-fuel business profitability, and slightly higher sales volumes following the acquisition of retail stations in Slovakia. The performance of the commercial business came in slightly better as well, supported by higher contributions from the aviation business and increased sales volumes. The contribution of APNOC refining and global trading increased significantly to 51 million euros, mainly due to a better market environment. The clean operating result of the chemicals segment rose sharply to 236 million euros, driven to a large extent by the stop of Borealis depreciation. In our European business, we recorded favorable market effects, totaling 58 million euros, reflecting higher olefin indicator margins. Inventory effects were slightly lower. The utilization rate of our European crackers stood at 72%, which is significantly below the level of the prior year quarter. This was mainly because of weaker demand and inventory optimization measures at year end. Nevertheless, the result of OMV-based chemicals improved due to stronger olefin margins. The contribution from Borealis, excluding joint ventures, increased to 89 million euros, mostly driven by the stop of depreciation. However, the results of both base chemicals and polyolefins declined. The base chemicals result was affected by lower utilization rate, as well as decreased feedstock advantage and phenol margins. Improved olefin indicator margins in Europe and lower fixed costs provided some support. For polyolefins, the contribution decreased primarily due to softer indicator margins and greater market discounts. This was partially counterbalanced by reduced fixed costs. Polyolefin sales volumes for Borealis, excluding joint ventures, grew by 4%, largely attributable to higher sales in the infrastructure and consumer product sectors. Contributions from our joint ventures rose by €41 million, mainly reflecting the deconsolidation of PESTA. The contribution from Baruch remained broadly stable versus the fourth quarter of 2024, as a less favorable market environment in Asia was compensated for by substantially higher sales volumes. Thank you for your attention, and I will now hand over to Reinhard.

Thank you, Alfred, and good morning from my side as well. At the beginning of 2024, we launched a comprehensive efficiency program aimed at generating at least half a billion euros of additional sustainable annual operating cash flow by the end of 2027. This initiative helps to mitigate inflationary cost increases we have experienced over the past years, as well as effects from lower commodity prices. In October, we had announced that even considering the BGI transaction and resulting deconsolidation of Boialis, we expect to achieve the originally targeted at least 500 million euros from the efficiency program, as we introduced a new cost savings program of 400 million euros by end of 2027, further de-risking the program's implementation. This program is well on track, By the end of 2025, we successfully delivered more than €350 million of additional cash flow compared to 2023, which represents around 70% of our 2027 target. We achieved this through technical improvements in oil production, optimization of gas flows, reduction of E&P cost base, as well as various margin improvement measures and refining optimization related to utilities, crude supply, and energy efficiency. Overall, more than 100 million euros are attributable to operational cost reduction measures. This builds upon our continued drive for operational excellence, following initiatives from prior years with the impact clearly visible on our cash flow from operating activities. Turning to cash flows, our fourth quarter operating cash flow excluding net working capital effects was 821 million euros. This figure was impacted by a significant net cash outflow related to CO2 emission certificates of around 330 million euros, which is always booked for the year end in the fourth quarter. In the fourth quarter of 2024, the net cash related to CO2 emission certificates was around 270 million euros, largely offset by the one of net gas arbitration award of more than 200 million euros. The year-on-year decline also reflects a lower contribution from energy, partially compensated by lower tax payments and a higher contribution from fuels. Networking capital cash inflows were very strong at 860 million euros and more than reversed the minus 400 million euros recorded in the third quarter of 2025. This was largely driven by substantial inventory reduction in the fourth quarter 2025, whereas in the prior year quarter we recorded a negative effect of around 140 million euros. As a result, the cash flow from operating activities amounted to around 1.7 billion euros in the fourth quarter of 2025, an increase of more than 60% compared with the previous year's quarter. Let us now look at the full year's picture. At 5.2 billion euros, cash flow from operating activities was once again very strong, only 4% below the high 2024 level. After payment of dividends of 2.3 billion euros, our free cash flows to the positive 180 million euros supported by inorganic cash inflows coming from the GUSHA divestment and Bayport loan repayment. Our balance sheet remains very strong, with a leverage ratio of only 14% at the end of 2025, despite ongoing macro challenges. Our financial strength is also reflected in our investment-grade credit ratings, A- from Fitch and A3 from Moody's, both with stable outlook. This strong rating underscores our healthy capital structure and prudent financial management. Following the closing of the BGI transaction, we anticipate our leverage ratio to increase mainly as a result of the deconsolidation of Borealis equity and net debt from our balance sheet as well as the agreed equity injection of up to 1.6 billion euros into BGI to equalize OMVs and Adnox shareholdings. I think it's worth highlighting that even after this game-changing transaction, we anticipate our leverage ratio to be in the low 20s by year-end, well below the mid- and long-term threshold of 30%. This reflects our commitment to maintaining a robust capital structure and healthy balance sheet. Such a strong financial position provides us with the ability to do both, continue with attractive shareholder distributions and moving forward based on our headroom with our strategic growth initiatives. We once again deliver on our promise and offer our shareholders attractive distributions. We will propose to the Annual General Meeting an increase, a regular dividend of €3.15 per share plus an additional dividend of €1.25 per share. Thus, we will distribute total dividends of €4.40 per share which is an attractive yield of 9.3% based on the closing price year in 2025. With a total payout of 28% of our operating cash flow, we once again went to the upper part of the guided corridor of 20% to 30% of operating cash flow. Since 2015, we have delivered every single year on our progressive dividend policies. which aims to increase the dividend every year or at least maintain it at the respective prior year level. Over that period, we have more than tripled our regular dividend from one euro per share to now three euros and 15 cents in 2022 to further enhance our shareholder distributions. We had introduced an additional variable dividend, which we now also paid for the fourth consecutive year. OMV remains committed to pay attractive dividends to its shareholders. As announced on our capital markets update in October last year, we are introducing a new dividend policy, effective as of this financial year, that builds upon our previous approach and incorporates the clear benefits arising from the BGI transaction for our shareholders. Under the new policy, OMV will distribute 50% of the BGI dividend attributable to OMV, in addition to distributing 20 to 30% of cash flow from operating activities from our consolidated businesses. Our dividend will continue to consist of two components, a progressive regular dividend, which we strive to increase each year, or at least maintain at the previous year's level, and an additional variable dividend which will be paid if our leverage ratio remains below the 30% threshold. This approach aligns with our commitment to deliver attractive and growing shareholder returns supported by strengthened cash flows and a solid capital structure. Based on the estimated closing in the first quarter of this year, we expect Boruch Group International to pay at least a floor dividend for the full year 2026, which means net to OMB at least $1 billion. The dividend will be paid in two tranches. Now, let me move to the outlook, beginning with capital spending. For the year 2026, we expect organic capex to be around 3.2 billion euros, substantially lower than the past few years, reflecting the deconsolidation of the Borales business and our ongoing capital discipline. The major growth projects in 2026 are the Neptune Deep project, which is scheduled to start up next year, the SAF HVO plant in Romania, and the green hydrogen plants in Austria and Romania. In the following years to 2030, the average organic capex will be below the guided level of 2.8 billion euros per annum outlined at our capital market updates. About 60% of our organic capex in 2026 will be allocated to energy, with the majority of the remaining spent going to fuels. Following the BGI transaction and the deconsolidation of the Borales business, organic investments explicitly shown in our financial statements in chemicals will be relatively small, reflecting only our fully consolidated chemicals business, specifically the refinery integrated crackers in Austria and Germany and the new plastic waste sorting plant in Germany. The latter is expected to start up this year. Around 70% of our organic CAPEX in 2026 is dedicated to growth, positioning OMV for the future. In addition to Neptune Deep, major organic growth project initiatives include developments in Norway, Austria, the UAE, and renewable power initiatives in Romania. In the fuel segment, we are advancing key projects like the South HBO plant, as well as the two hydrogen plants in Romania and Austria. Around 30% of the investments planned for 2026 are allocated to sustainable projects in line with our average guidance for 2030. Please note that our guidance for organic capex of 3.2 billion euros in 2026 excludes any expenditures related to Borealis. Let me conclude now with our outlook for key market assumptions and operations for 2026. We forecast an average brand price of around $65 per barrel. The average TAG gas price is estimated at about 30 euros per megawatt hour, while the OMV average realized gas price is expected to be below 30 euros per megawatt hour. In energy, we expect average oil and gas production of slightly below 300,000 BOE per day, reflecting natural decline and assuming no interruption in Libya. The unit production cost is expected to stay below $11 per barrel, supported by various planned cost initiatives. Exploration and appraisal expenditure for the group is expected to be below 200 million euros in line with previous year's spending. In fuels, the refining indicator margin is projected to be around $8 per barrel. We anticipate the utilization rate of our European refineries to be above 90%. No major maintenance is planned throughout the year at our refineries, supporting high operational availability. Total fuel sales volumes are expected to be higher than last year. Retail margins are projected to be slightly below the levels seen in 2025, while commercial margins are also anticipated to decline. In chemicals, we do not anticipate a significant market recovery in the first half of 2026. Following the closing of the BGI transaction, Borealis will become part of the new company in which OMV and Adnok will hold equal shares. BGI will be reported at equity within our financial statements. Hence, we will no longer report separate KPIs for the polyolefin business. These will henceforth be published by BGI. However, we will continue to provide an outlook for European olefin indicator margins which will impact our fully consolidated chemicals business. We expect market indicator margins to be slightly below the levels of the previous year, with realized margins continuing to be affected by prevailing market discounts. The utilization rate of our two crackers is expected to rise to approximately 90% in 2026. There are no major turnarounds planned for the year. The clean tax rate for the full year is expected to be around 45%. Thank you for your attention. Alfred and I will now be happy to take your questions.