Omv Ag

Welcome to the OMV results January to March 2026 conference call and webcast. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 1 again. Please be advised that today's conference is being recorded. At this time, I would like to refer you to the disclaimer, which includes our position on forward-looking statements. These forward-looking statements are based on beliefs, estimates and assumptions currently held by and information currently available to OMV. By their nature, forward-looking statements are subject to risks and uncertainties that will or may occur in the future and are outside the control of OMV. Therefore, recipients are cautioned not to place undue reliance on these forward-looking statements. OMV disclaims any obligation and does not intend to update these forward-looking statements to reflect actual results, revised assumptions and expectations of future developments and events. This presentation does not contain any recommendation or invitation to buy or sell securities in OMV. I'd now like to hand the conference over to Mr. Florian Greger, Senior Vice President, Investor Relations and Sustainability. Please go ahead, Mr. Greger.

Thank you. Good morning, ladies and gentlemen. Welcome to OMV's earnings call for the first quarter 2026. With me on the call are OMV's CEO, Alfred Stern, and our CFO, Reinhard Florey. Alfred and Reinhard will walk you through the highlights of the quarter and will discuss OMV's financial performance.

Following their presentations, the two gentlemen are available to answer 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 today. Let me start with the extraordinary and challenging environment being faced by global energy markets. The closure of the Strait of Hormuz at the end of February following the escalation in the Middle East has had far-reaching repercussions, not only for oil and LNG flows, but for global energy security as a whole. Our thoughts are with all those affected by the ongoing conflict, and we will continue to prioritize the safety and security of our people and assets in the region. Despite the current circumstances, we delivered a solid clean CCS operating result of more than 1 billion euros and cash flow from operations excluding networking capital of more than 1.6 billion euros. Turning to the macro environment. International energy markets in the first quarter were characterized by extremely volatile price developments. Prior to the crisis, around 20% of total oil and gas supply transited the Strait of Hormuz. Following the closure of the Strait, the price of dated Brent experienced a significant upward momentum. The print price climbed from less than $70 per barrel in January and February to over $120 per barrel by the end of March, resulting in a quarterly average above $80 per barrel. More than 25% higher than the previous quarter and 7% higher year on year. European natural gas markets have also been severely impacted. The initial reaction to the closure of the strait was even more pronounced in early March. Roughly 20% of LNG supply was stuck in the Persian Gulf, and Qatari volumes were offline, causing the average DHE gas price to rise by 32% quarter-on-quarter. Despite this, the DIG gas price for the first quarter averaged 41 euros per megawatt hour and was 13% below the exceptionally high prior year quarter. Refining margins were also very volatile. Market shortages caused by the conflict in the Middle East drove prices and margins higher in March. The OMV refining indicator margin averaged $13.9 per barrel and was thus at a similar level to the previous quarter, but substantially above the prior year quarter, driven by tight middle distillate and gasoline supply in the region. In chemicals, olefin and polyolefin indicator margins posted varied developments. olefin margins declined by 17% compared to the prior year quarter as margins in March got squeezed due to the conflict in the Middle East. NAFTA prices rose more strongly over the course of the month than olefin contract prices set at the beginning of March. Polyolefin margins increased by 28% as polyolefin contract prices could be raised strongly in March. reflecting concerns regarding the security of supply following the breakout of the conflict in the Middle East. Although the extreme market volatility and ongoing conflict in the Middle East presented significant challenges, OMV achieved a solid performance and once again demonstrated resilience thanks to its integrated business model. In energy, hydrocarbon production came in seven percent lower than the prior year quarter as the middle east conflict impacted output we increased our fuel sales volumes thereby reinforcing our position as a supplier of choice in the downstream sector and in chemicals Total polyolefin sales volumes, which included the joint ventures, decreased only slightly year-on-year despite logistical constraints in a challenging environment. Our clean CCS operating result came in at more than €1 billion, though this was down 12% year-on-year. A stronger chemicals result could not offset the lower energy contribution, while the fuel segment set a similar level to the prior year quarter. Clean CCS earnings per share amounted to 1 euro. Cash flow from operating activities reached almost 800 million euros. The decrease year on year and compared to the previous quarter was predominantly attributable to the significant net working capital build of around 850 million euros. Excluding net working capital effects, the operating cash flow was substantially higher than in both periods, largely driven by a higher pricing environment while also benefiting from timing effects. Before I discuss OMV's results in more detail, I would like to turn to the Port Rouge International Transaction, which represents one of the most significant strategic steps in OMV's history and a pivotal move in the implementation of our Strategy 2030. On March 31st, OMV and XRG APNOX International Investment Arm announced the successful creation of Porouge International. The combination of Porealis and Porouge and the subsequent acquisition of Nova Chemicals has resulted in the formation of the fourth largest polyolefin player worldwide, posting substantial scale and reach across the Americas, Europe, the Middle East, and Asia. These regions are pivotal in determining future demand growth and long-term industrial relevance. Perugia International will be jointly owned by OMV and Exergy, with each holding a 50% share. To balance the shareholding, OMV injected €1.5 billion into the new company. Our partnership is founded on clear governance, shared responsibilities, and most importantly, a shared ambition to create long-term value and future growth. It is also a reflection of our belief in the value of this platform, which repositions OMV's chemical segment to deliver substantial global potential. we recently also announced the executive leadership team which unites decades of senior leadership experience across the international chemicals commodities and refining sectors with deep commercial and operational knowledge and the proven track record of strategic execution the combined businesses have historically delivered average pro forma EBITDA of approximately $4.5 billion, despite recent years being more challenging. We expect EBITDA to increase significantly and reach more than $7 billion through the cycle. This will represent a significant enhancement in terms of earnings quality and cash flow generation, thereby also substantially strengthening OMV's long-term value creation. It will be achieved primarily by growth projects. where we see strong progress and near-term execution, but will also be supported by considerable synergies and the expected normalization of the chemicals markets. The asset usage agreement announced last month further underpins this growth path. It enables Boruch PLC to operate and market the substantial Boruch 4 volumes, which will add 1.4 million tons of polyethylene fully online. Lastly, the new company achieved strong investment grade credit ratings, demonstrating substantial confidence in the balance sheet and the sustainability of future cash flows. Boruch International is a leader in operational excellence. The strong results of Boruch International are also the result of the disciplined and consistent approach to managing its assets. Recent years showed that Boruch International is among the best operators in the industry, proven by both asset availability and plant utilization. The company has consistently operated at utilization levels above the industry average, supported by high asset availability and the use of advanced technologies to optimize maintenance costs and production planning. Over the past five years, this focus has yielded significant outcomes. bringing the pro forma average utilization rate close to 90% compared with an index average of just over 80%. This is supported by a modern, well-maintained asset base underpinned by substantial past investments. This higher utilization rate directly translates into stronger operational leverage, better customer service levels, more resilient cash flows, and better financial outcomes through the cycle. But one thing also has to be clear. Operational excellence does not stop at asset level. It is also founded on an unwavering commitment to health, safety, and asset integrity. Product quality and pricing are of paramount importance to the strength of Boruch International. Boruch International's innovative positioning, consistently high quality of its products, and substantial share of specialty products in its portfolio are clearly recognized by its customers, which directly impacts commercial outcomes. Over the past five years, Performer price premiums of almost 20% have been consistently achieved when compared with local market benchmarks. This is a structural advantage and not just a cyclical one. It forms a solid foundation and contributes significantly to the strength and resilience of the company's margins. which have demonstrated stability across various market conditions in previous years. It is crucial that this premium pricing remains consistent throughout the entire cycle, and Borussia International has consistently demonstrated its ability to maintain premiums even at the bottom of the cycles. This underscores the technological innovation capabilities and the vital function of its products, as well as substantial customer trust. This commercial strength is closely linked to the aforementioned operational excellence. Reliable supply, consistent product performance, and strong customer relationships all reinforce the ability to price sustainably at the premium. Let me turn to the historical earnings performance of Perugia International. Margins at Perugia International have been structurally higher than those of competitors, both when markets were strong and when conditions turned out to be more challenging. When comparing the performer EBITDA margins with those of specialty chemicals category leaders, and global chemical players, the difference becomes clear. In strong market environments, Boruch International's margins are ahead of its peer group. But most importantly, in weaker market conditions, EBITDA margins remain high and close to 20%, well above the broader industry level. For 2025, the margin level of Perugia International remained twice as high as above the industry average across global chemical players. Specialty chemicals leaders were in the same ballpark, despite their materially different business models. Between 2021 and 2025, Borussia International proved to be the most profitable player through the cycle. And even at the bottom of the cycle, the margin profile was comparable with the very best in the specialty chemicals industry. This performance reflects everything we have already mentioned, operational discipline and advantaged feedstock. premium product positioning based on proprietary technologies, and scale. It is the core reason why this platform delivers sustainable value no matter the market environment. Let me now turn to OMV's performance in the first quarter of 2026. The clean operating result of the energy segment declined year on year by 21% to 723 million euros. The main driver of this was a lower result in exploration and production, which primarily reflected negative market effects and reduced sales volumes. In addition, the prior year quarter was supported by a positive one-time effect of 48 million euros as a result of an arbitration award. The realized crude oil price remained virtually unchanged year on year, averaging $72 per barrel, while Brent increased by 7% to $81 per barrel. This was largely attributable to different pricing mechanisms that in some countries have a delay of two months. All these average realized natural gas price fell by 19% to 31 euros per megawatt hour. The stronger decline than the European benchmark, the DHE, which decreased by 13%, was mainly due to the composition of the portfolio. Hydrocarbon production declined by 7% to 288,000 barrels of oil equivalent per day. This was predominantly due to the temporary shut-ins caused by the conflict in the Middle East and natural decline in New Zealand and Romania. Production in Libya was slightly higher, which partially offset the declines elsewhere. Absolute production costs decreased as a result of various cost reduction measures. However, unit production costs rose to $11.6 per barrel. This increase resulted mainly from unfavorable exchange rate effects and lower production volumes. Sales volumes decreased by 31,000 to 252,000 barrels of oil equivalent per day, to a large extent due to lower production caused by the conflict in the Middle East and the lifting schedule in other countries. The gas marketing and power result decreased by 30 million to 72 million euros. The main driver of this was the missing positive effect of the arbitration award received in the first quarter of 2025. Gas West was further impacted by a lower storage result following decreased summer-winter spreads. The contribution of Gas East rose strongly, supported by the power market deregulation in Romania, effective from July 2025. The clean CCS operating result of the fuel segment remained largely constant at 113 million euros. Substantially stronger refining indicator margins were offset by several factors. Amongst them were operational one-off hedging losses amounting to around 100 million euros related to equity production due to global disruptions in crude flows. Lower utilization and the lower contribution from the marketing business were also offsetting. The European refining indicator margin more than doubled to $13.9 per barrel in the quarter. However, planned shutdowns, particularly in March, limited the ability to capitalize on the high March margins. Because of these maintenance activities, the refinery utilization rate declined from 92% in the prior year quarter to 87%. The marketing business contribution declined substantially as retail performance was impacted by lower fuel unit margins due to higher oil product quotations triggered by the conflict in the Middle East. increased fuel sales volumes could only partly offset this. The commercial business result also decreased because of lower margins. Though higher sales volumes and a slightly improved contribution from the aviation business mitigated this to a certain extent. The contribution from APNOC refining and APNOC global trading improved to 7 million euros mainly attributable to a better trading result. However, this was partly offset by impacts resulting from the conflict in the Middle East. The clean operating result of the chemicals segment rose sharply to 245 million euros, driven by improved polyolefin margins and the stop of borealis depreciation. In our European business, we recorded unfavorable market effects totaling 20 million euros, reflecting lower olefin indicator margins, partly compensated for by higher polyolefin margins. Inventory effects were positive. The utilization rate of our European crackers was stable at 91%. Nevertheless, the result of OMV-based chemicals decreased due to weaker olefin margins and lower putadiene results. The contribution from Borealis, excluding joint ventures, rose to 223 million euros, to a large extent driven by the stop of depreciation. In addition, the results of Borealis-based chemicals and polyolefins increased. Borealis-based chemicals benefited from higher light feedstock advantage and positive inventory effects. The contribution of polyolefins grew because of better margins and increased sales volumes, driven by improved specialty sales volumes in the energy and mobility sector. Earnings from our joint ventures decreased by 10 million euros, mainly due to a lower contribution from Boruche. The rouge performance was impacted by low pricing in January and February, as well as logistics disruptions and cost increases in March caused by the conflict in the Middle East. Thank you for your attention up to here, and I would like to now hand over to Reinhard.

Thanks, Alfred. Good morning, and welcome also from my side. Let's turn to some more financial details of OMV's first quarter. Starting with cash flows, our first quarter operating cash flow, excluding networking capital effects, was very strong at 1.6 billion euros, considerably higher than the previous quarter and the prior year quarter. The main drivers were substantially stronger refining margins and improved gas and power Eastern Europe contribution, as well as higher prices in fuels, which are not visible in the clean CCS to the CCS adjustment. Cash flow further benefited from realized gas derivatives. It is important to note that the higher prices also affected networking capital with the opposite effect. Higher prices together with increased inventory levels led to substantial networking capital build of approximately 850 million euros. As a result, cash flow from operating activities for the quarter was around 800 million euros. Organic cash flow from investing activities in the first three months of the year was around 900 million euros related to ordinary ongoing business investments and major growth projects such as Neptune Deep, the PDH plant in Belgium, the Southern HVO plants in Romania, and green hydrogen in Austria. As a result, the organic free cash flow before dividends for the first quarter of 2026 came in at minus 125 million euros. Our balance sheet remains very strong. The impact of the Borus international transaction on our leverage ratio was fairly limited. It rose from 14% to 17% at the end of the first quarter. This was mainly attributable to the impact of the Borealis deconsolidation on our equity and net debt, as well as the capital injection of 1.5 billion euros into Bruges International to equalize OMVs and Exergy's shareholdings. I think it is worth highlighting that even after this game-changing transaction, our leverage ratio remains well below the mid- and long-term threshold of 30%. This reflects our commitment to maintaining a robust capital structure and healthy balance sheet. At the end of March, OMV had a cash position of 3.5 billion euros and 3.1 billion euros in addition in undrawn committed credit facilities. Given the significance of Perugia international transaction, I'd like to briefly explain the impact on reported numbers. Clean CCS net income amounted to €495 million in the first quarter of 2026, only slightly lower compared with the €561 million a year before. The deconvalidation of Borealis led to a gain in the amount of €886 million, which reflects the difference between the fair value and the book value of Borealis at the time of deconsolidation. This gain is recognized in net income and reported as a special item. As a result, it is not included in the clean CCS net income or the clean CCS result. Thus, reported net income rose to more than €1.6 billion in the first quarter of 2026, largely impacted by the gain from the consolidation. In the prior year quarter, reported net income was €288 billion. Let me now briefly walk you through the general financial implications of the Bourges international transaction going forward. In the first quarter, most financial metrics have been reported under the previous group structure in line with the previous quarters. This applies to the clean operating result, net income, and operating cash flow. At the same time, the balance sheet already captures the technical effects of closing. This includes the 1.5 billion euro capital injection into Borussia International and the deconsolidation of Borralli's cash balances. From the second quarter 2026 onwards, Borealis will be fully deconsolidated, and the new company, Perugia International, will be accounted for at equity. This means in operating result and net income, we will report or release share of Perugia International's net income. In operating cash flow, we will reflect dividends received from Perugia International. And on the balance sheet, Bruges International will be shown as an equity-accounted investment, as it is already shown at the end of the first quarter of 2026. This structure results in cleaner financials, stronger cash generation visibility through dividends, and a more resilient earnings profile going forward. In addition, in the appendix, we provided high-level pro forma figures for the years 2024 and 2025, which show OMV excluding Borealis and Barouche. That should help you with modeling. Let me end with the outlook for this year. Recent escalations in the Middle East including military activities and restrictions on shipping through the Strait of Hormuz, has significantly increased volatility in global energy markets. While we are constantly monitoring the latest developments, it remains difficult to predict the environment as a trajectory of the regional conflict is highly uncertain. In light of these events, we currently forecast an average stated brand price for 2026 of between $85 and $95 per barrel. The average DHE gas price is estimated to be around 45 euros per megawatt hour, while the OMV average realized gas price is expected to be in the region of 35 to 40 euros per megawatt hour. In energy, we expect average oil and gas production for 2026 of between 280,000 and 290,000 barrels of oil equivalent per day, reflecting the current situation in the Middle East and subject to the timing and extent of the lifting of restrictions on the shipping through the Strait of Hormuz. Unit production cost is now expected to be around $11 per barrel. In fuels, the refining indicator margin is projected to be between $10 and $15 per barrel, a range that reflects current market disruptions and uncertainties. These disruptions are also leading to a significant widening of crude oil differentials to dated Brent, which are not reflected in the OMV refining indicator margin or in the full-year sensitivities and thus could have a material adverse impact on the fuels business. We anticipate the utilization rate of our European refineries to be above 90%, with no major maintenance turnarounds planned at our refineries in the remainder of the year. Total fuel sales volumes are expected to be higher than last year, while retail and commercial margins are projected to be below the level seen in 2025. Moreover, several European countries have implemented or are considering implementing initiatives to limit or reduce margins in the fuel business as a means of mitigating the surge in fuel prices. In chemicals, we expect the ethylene indicator margin to be above 550 euros per ton and the propylene indicator margin to be above 420 euros per ton. This increase reflects the current market situation in Europe with inherent supply disruptions and increases in restocking activities. The utilization rate of the olefin tracker is expected to be around 90% in 2026. There are no major turnarounds planned for the rest of the year. The clean tax rate for the full year is currently expected to be at the same level as in the first quarter of 2026, so slightly below 50%. Thank you for your attention. Alfred and I will now be happy to take your questions.

Thank you, Reinhard and Alfred. Let's now come to your questions. As always, I'd ask you to limit your questions to only two at a time so that we can take as many questions as possible. You can always, of course, rejoin the queue for a follow-up. We start the Q&A session with Guy Levy from Morgan Stanley.

Hi, good morning. Thank you for taking my questions. If we could start talking a little bit about refining, perhaps if you could tell us about the refining margins that you're seeing at the moment, and also looking at the remainder of the year, the company highlighted risks to the fuel segment on the back of the volatility of crude differentials. I wondered what can you do in advance to hedge or protect yourself against those type of risks? And then secondly, to you on refining, thinking about storage, could you perhaps say a few words about current storage levels, your ability to procure crude over the coming months? If you could just remind us how much of your crude supplies come from spot transactions vis-à-vis long-term agreements that you might have, that would be great. Thank you.

Okay. Thank you, Guy, for your question. Let me start a little bit with refining margins. As you could see, the refining indicator margins, in particular in Europe, we saw after the closure of the Strait of Hormuz that they went up dramatically, I would say, and then after that some normalization happened, but continuing at a high level. We have seen April now to start at about $16 per barrel. I think there's a couple of different things, I think, that probably play into this. The basket of crudes and the crude pricing, of course, is quite a volatile thing. At OMV, we had very limited exposure, physical exposure, to crudes coming out of the Strait of Hormuz. our crude baskets were more focused on other crudes with a significant amount actually from Kazakhstan and then other crudes. So our expectation we have now for the rest of the year given a pretty broad range of $10 to $15 per barrel. because we see really a significant volatility on the way forward around kind of an average assumption in that range. Maybe to the storage of the crudes, the storage of crudes for the production to the refineries is actually rather limited, right, to a few weeks of storage. So then if you look at our refineries, we are actually here in the Austrian refinery connected through a pipeline to the Adriatic Sea. Also, the refinery in Germany is connected to that pipeline. Here in Austria, we also have some equity production, which makes about 10 percent of the feed. And then in Romania, refinery, we are about integrated with 70 plus percent into equity production from the oil production in Romania with the oils there. I don't know, I'm hedging if Reinhardt has anything to add.

Yeah, very briefly. Of course, in the downstream area, we do apply some hedging in order to mitigate risks. Of course, we also need to keep some flexibility in order to take also advantages. And then we also suffered from hedge in March. a loss of around $100 million, and that was simply due to the situation that oil that was going to be lifted and transported to the Strait of Hormuz was physically not available while a hedge was on there, and therefore one leg of the hedge disappeared, which had to be covered in the situation of rising oil prices. However, that's a not uncommon situation. On the other hand, some of the hedges also protected us from further damage.

Understood. Thank you so much. Thank you so much.

Thank you, Guy, for your questions. We now move on to Michele de la Viña, Goldman Sachs.

Thank you very much, and congratulations on the very good results given the unstable situation. There were two areas I wanted to concentrate on. First of all, on Borouge, I was wondering, is there a simple way to think about how the new ownership and reported structure would affect net income? Let's say, how much higher or lower that would be if the new reporting structure had already been in place in Q1 for OMV? And then secondly, I wanted to ask you about jet fuel availability. This is certainly a concern going into the summer. Austria actually seems to be better prepared for it than some of the other European countries. But what is your view on the visibility, especially as we go into the late summer, on the availability of jet fuel and the potential for dealing with relatively low amount of inventory days? Thank you.

Thank you, Michele, for your excellent and your good question. I will start with the excellent one because I can answer it, and then I will ask Reinhard for help on the good question about the net income reflection. Jet fuel, it is indeed like this, Michele, In Austria, so maybe let me start differently. We can say at the moment we can supply all our contract customers with jet fuel, also including the required mandate of 2% renewable fuel addition, the SAF addition, and that covers the big airports, of course, in Munich, in Austria, and then in Bucharest, and a couple of smaller airports across that thing. So our contract customers, we are covered. and because we are able to actually produce about the most part of that by ourselves. In general, we do, of course, see in particular in Europe, but also globally, that there is a shortage of jet fuel. There was significant amount of jet coming out of the strait going to Asia, but also Europe heavily depends on imports of jet fuel. So from an OMV perspective, we can supply and provide security of supply to all our contract customers. And we, of course, try then to also maximize our business around those airports that I just mentioned before. And now for the good question.

Yeah, Michele, it's not so difficult. So far, what we have shown in a net profit is a fully consolidated net profit of Borealis that also included the net profit of 36% of Boruche. Now, in the net profit attributable to stockholders, we, of course, only showed the 75% of borealis, so 75% of that full consolidation, because 25% were minorities of APNOC. Now, the situation with Bohus International changes. that we consolidate at equity, which is 50% of the net profit of Perugia International. And that consists of 50% of Borealis, so a little bit less of Borealis, 50% of Perugia, That is more than we had. And 50% of NOVA, that's completely new, and that plays a role because what we currently see in the current environment, NOVA has a positive business environment at the moment, so we can also expect that there is a good contribution of NOVA now for the rest of the year.

Thank you. Thank you.

thanks michaela and the next questions will come from josh stone ubs yeah thanks and uh good morning and the points to my voice i've seemed to have lost it today so uh hopefully you can bear with me uh two questions one on chemical margin outlook uh curious what you're seeing in the u.s market in particular given your now ownership of nova and also is this a part of base data to finally make some money so it's curious what you're thinking there And secondly, on UAE, your net production capacity is around 50,000 miles a day in the upstream, something like that. If you were asked to, do you think you can actually produce more from these fields? And also I'm asking, given the headline recently about the UAE leaving OPEC. Thank you.

Thank you, Josh, for your questions and all the best for getting better. I tried to answer the questions. I hopefully understood everything correctly. So the margins, the chemical margins in the U.S., As Reinhard just explained, right, with NOVA being in there with 50%, but then there's also BayStar that was previously part in the Borealis results. These entities benefit, let's say, of the current crisis of the Middle East. What we have seen because of the closure of the Strait, right, it's not just oil and gas and oil products. It is also a significant amount of chemical products that came through there, in particular also polyolefin products. But it's also been a significant amount of naphtha, so chemical feedstock that has come out and mainly went to Asia for the production there. So there's shortage on this. In our view, the markets of Borussia International products have switched from being somewhat long to being short now. And with this, we have seen significant price increases across the globe, actually, and so also in the U.S. the prices for the products have gone up. And with this, the margins have also expanded for those products. And in the U.S. in particular, what I think is maybe a slightly different there is that, of course, U.S. gas prices on Henry Hub that is also a reference for ethane pricing that has not moved as much as gas prices in other regions. So there will be some benefit of this mover, will benefit from this with better margins, but also the Bay Star Joint Venture will be able to benefit from these better margins. And also there is, of course, the opportunity or the potential opportunity that global shortfall in volumes can then be supplied from some of this production. I hope that answers your question. The second question that you had on the production in the UAE, I would confirm that last year the average production there was about 50,000 barrels per day. We, of course, in March, as we reported here, this was affected by the supply chain issues. with lower production coming out of the asset there. And at the moment this is back online into production. How this will continue exactly I think is a bit volatile depending on the situation in the Middle East. Hence also our guidance for the full year of a total production between 280 and 290. Thank you, Josh, for your questions. We now come to Ram Kamat from Barclays. Ram, please go ahead.

Hi. Thanks for taking my question. My question is largely on the chemicals. As polyolefin prices have recovered strongly at the end of the first quarter and fish stock tied to polyolefin rates have also rising, in a market where supply drives pricing and volumes are softer, how should we assess the effect on the margins? And the second one, possibly on Baruch for ramp-up, whether the current situation in the Middle East has impacted the ramp-up phase. And if you can comment also on the feedstock pricing mechanism, particularly for Baruch Hur, as I understand it would be a new price mechanism that possibly the company will be entered into with the suppliers. So if you can comment on that, thank you.

Thank you for your question, Ram. Maybe I just start with the polyolefin price environment or maybe let me expand this a little bit because it's an integrated supply chain so there's olefin and polyolefin prices. And what we have seen in March is that NAFTA prices went up quite significantly, feedstock prices went up significantly, while at the same time, olefin prices were then to a large degree locked in from price discussions at the beginning of the month. Now, this has changed significantly in April because olefin prices have raised strongly in April. They've gone up by like 400%. to 500 euros per ton and that is leading to a significant price expansion. The polyolefin prices, they reacted a little bit faster already in March and the margins expanded there. But again, in beginning of April, so in March also the contract prices have gone up, which helped that situation to expand the margins. In April, we have now seen additional price increases also in polyolefins with further expansion of the margins. At the moment, we have seen still continuing good demand, and it's more a question now of supply capability to make sure to be able to supply the demand. with Porouge International, they are actually in a very strong position with this, with their assets distributed quite well globally, and with more than 70% of their production in advantaged feedstock position. as I also presented. So this is the situation now. We will see how this is on the way forward. I do want to highlight again, I don't want to go into all the same again, but as you could see, the EBITDA margins, the margin capability of Perugia International is really exceptional. We are with Perugia International is significantly ahead the competitors in their own field, but they are more playing from a margin level in specialty chemical kind of margin environment. So that we anticipate to continue raising the combination of a good technology platform that gives innovative products that can get price premiums plus the good feedstock position. On the Bois Rouge 4 ramp-up, I can explain that throughout the year, so there's multiple production assets that are there. And the plan has been and continues to be that throughout the year we are bringing online the different assets to then have all of the assets online before the end of the year. As it so is with all these huge assets, There can always be some delays, but currently our plan stays the same. And I can also report that the first asset, an XLPE line, has already been brought online for this. On the feedstock, I want to emphasize again that about 70% of the feedstock in in Borussia International is based on advantaged feedstock that will continue to be in this way with some modification on the Borussia assets on the way forward where there will be some adjustments but these will be compensated with additional capacities that are coming on stream with Porush on the way forward.

Thank you.

Thank you, Rem, for your questions. We now move to Sasi Chilukuru from Jefferies.

Hi, thanks for taking my questions. I've got two left on these. The first was coming back to your refining margin indicator guidance. You've raised it to $10 to $15 per barrel, but I like the widening of the crude oil differentials to have a material adverse impact. I was just wondering if you could quantify the level of these adverse impacts you have seen in April so far or currently. The second one was regarding the dividends from your JVs. Are you expecting any dividends from ad-hoc refining and trading this year? And from Buruj International, I was just wondering if there was any risk to that updated dividend payments and also the timing for these payments to OMV. Thanks.

Sassi, thanks. I can start with the question of the dividends. In terms of the dividends from JVs, of course, we are expecting also a dividend from Adnok Refining and specifically also Adnok Global Trading. This is two entities where we have participations in, and while we are seeing that Adnok Refining, of course, also bears some of the burden of the conflict, we are seeing for the rest of the year rather a stabilizing development in that, whereas Adna Global Trading is doing a great job and is earning very good money, and we are expecting also dividends from that side. On the BRUCHE international dividends, we have announced that the anticipated dividends were in that way that we are taking only 50% of the anticipated minimum dividend in 2026. Why is that? Because the uncertainty around the situation in Middle East provided some safety measures of safeguarding the balance sheet, making sure that also this excellent rating that we have in the group stays in that way. However, we are not expecting that there are any further modifications to that, so we are expecting, of course, the other 50 percent, and we are expecting that for the second half of the year.

And let me take your question on the refining indicator margins. As I described, we saw in the first quarter, let's say January, February, quite different than March. We saw a significant increase in refining indicator margins. But important, and I think that's your question then, to realize this is a very crude measure, right? A very rough measure of taking the fuel prices. It's a little bit more complicated in reality how we see this, and the market distortions are also quite significant on the way forward. For the second quarter, We expect some, let's say, adverse effects, one from increased crude differentials that will depend on how these geopolitical issues and risks continue. We do definitely see tighter supply conditions. which we of course are continuously optimizing to make sure that we get ourselves in the best possible position. In addition, we do see local supply dynamics working out And increasingly also in Europe in particular, regulatory interventions and price caps that are affecting then also the results. And for this reason, we have also left the gap of the 10 to 15 to reflect this. And we will, of course, be managing to optimize our result in that volatile environment. Thanks, Sassy. And the next questions will come from Matt Lofting, JP Morgan.

Thanks for taking the questions, and appreciate the update, gents. Two things, if I could. First, I mean, you highlighted through the update the strength of the balance sheet, which is quite right. And I guess the loss of volatility, but the outlook for cash flows is better net-to-net than was expected at the beginning of the year. So going back to the update that was provided to the last month on cash, BGI and sort of the revisions to the next steps. I just wanted to understand the thinking in terms of the feed-through on the lower BGI dividend payment to NB and that impacting, I think, the dividend that you expect to pay to your shareholders by 0.6 to 0.7 euros per share for FY26. and why that perhaps couldn't be protected more strongly through the higher cash flows on the rest of the business and whether there is still scope to revise that view and take a more positive sort of stance on that. And then second, I think there was some reports earlier this month on Austria being one of the countries that was pushing the EU to look at revised EU windfall tax measures on the energy sector in the context of the price shock. Could you just share your understanding of the current status and situation there?

Thank you.

Yeah, thanks, Matt. Maybe let me take the first question regarding the outlook on dividends. A question that you raised was whether our improved outlook on cash flows would somehow put the 0.6 to 0.7 euros, 60 to 70 cents lower dividends into question. And I would say, why not? But it's too early to say. Yeah, this is something where we believe that with the higher dividends that we could pay from operating cash flows, if the operating cash flows move up, then there is a part of the compensation of that 60 to 70 cents that we will miss from Borussia International. So I wouldn't be too pessimistic to say the view of the first quarter or from the beginning of the first quarter on overall OMB dividends could not improve over the time. But nevertheless, there will be a little bit shift, if we are lucky, from dividends coming from the PGI, which will be 60 to 70 cents lower. to dividends coming from our operating cash flow where we dividend out 20% to 30%. And that could be a part mitigation compared to the view from the beginning of the year. But, of course, the structure as we have described it stays exactly the same.

Let me try on the windfall tax. Maybe I stick with the facts a little bit here. Indeed, Austria was one of the signatories of a letter that was sent to Brussels up until this point that our information is that not more than that has actually happened and a letter being sent. And hopefully also in Europe, we will continue to pursue free market economy kind of principles with the possibility to manage this difficult supply and demand situation that we have around this. So at this point, I have no additional information about this. Thank you. Thanks, Matt. We now move to Oleg Galbur from OdoBHF.

Good afternoon, and thank you for the presentation. I have one question which has two parts. Investors are keen to understand the overall impact of the Middle East crisis on OIMV and I hope you can help us provide them with a bit more detail. Firstly, could you please update us on the current status of the oil production in the UAE and capacity utilization at Borus? Specifically, to what extent is the closure of the Strait of Hormuz affecting OIMV's ability to produce And more importantly, to sell crude oil and petrochemicals products produced in the UIA. And secondly, while you mentioned that Nova Chemicals is benefiting and is expected to positively contribute to these results, I hope you can tell us how are Borealis results being affected by the current market environment, which is characterized by significantly high feedstock costs, particularly for Borealis. Thank you.

Okay, Oleg, thank you for your question, and let me maybe pick up here and try and go through your questions. As you say, we also participate in assets in the Middle East. And we are a joint venture owner in the oil production there together with APNOC. The production there was reduced in March, but it is now back in production and also then supplying the local demand there. And we expect that this will also be optimized in the month before. On Borussia I can tell you that In the first quarter, we had an asset utilization of high 90%, close to 100%, and continues to also be able, so they had a pre-existing contingency plan on exporting products in case of the waterways not being available and they activated this mechanism and with this in March they were able to export more than 90% of the production in March through these alternative logistic channels. sorry, more than 60 percent, I think I misspoke here, more than 60 percent through those alternative logistic channels. The additional production volumes, they put in storage for shipment done in the second quarter of this year. And, of course, they will continue to maximize their production levels as well. So there's alternative evacuation routes in order to keep up and storage capability to keep up the high production levels. on NOVA Chemicals and Borealis. Maybe let me focus a little bit on the European market here because also that has quite has developed accordingly. There was very significant price corrections in the European market. We actually see that monomers, ethylene, propylene are quite short and that there is significant demand. We have seen modest price increase in ethylene and propylene in March. but then a significant step up of €400 to €500 per tonne in April now. I've also reported that our utilization of our crackers was about 91% the Borealis and OMV crackers together, which is about more than 10% higher than the European average utilization rate. That's because all the crackers are either integrated into the OMV refineries, or they have a light feedstock advantage on the Portarelli side. So that's for the olefins. But then also on the polyolefins, we have seen that the contract prices have gone up. We've actually seen also some closing of the gaps between spot and contract prices, which is always an indicator of tight markets. And now in April, again, the prices have gone up again. around 1,000 euros per ton for both polyethylene and polypropylene in the prices. So that is significant increases in the prices reflecting the market tightness, and we have also seen the demand levels to be good so that Porealis and now Porush International is able to take advantage of the better market environment.

Thank you very much.

Thank you, Oleg. Next is Adnan Danani from RBC.

Hi, thanks for taking my questions. Two for me, please. Just the first one, the European gas market. Can we just get your latest views? Obviously, we're now facing a second crisis in the energy market in four years, and presumably there's going to be more focus on domestic energy security in Europe. As a major producer of gas in Europe, how do you see that opportunity set for you in the coming years? And then related to that, any update on your search on Neptune Deep lookalikes? And then just a question for Reinhardt, maybe, just on the results this morning. significant timing effects in your cash flow that benefited and drove quite a material beat versus market expectations. Just wondering what the moving parts are there and do you expect those time effects to revert going forward? Thank you.

Thank you, Adnan. I will start with the gas, and then I will ask for help from Reinhard on the timing effect on the cash flows. The gas market, indeed, it's also quite a volatile kind of market environment. We are now giving an outlook of an increased average price for THC for the German market benchmark of about 45 euro per megawatt hour. The first quarter was around 41, 42 euros per megawatt hour. That consisted of lower January and February, and then significantly increased March versus the bump that we got in March. It has come down a little bit again to 45, 46 in the beginning of April, but then yesterday's announcement again added increased the price again up. So a very volatile situation. As you know, the Qatar LNG represented a significant amount of LNG coming to the global markets. Most of the shipments here did go to Asia, but as it is a global market, we have seen an increase in the prices. We have We have seen here that after 24, 25 was slightly higher than 24 in the average annual price for the TAG, but now it's gone up again back to more like the 23 type of levels. European storages are on the low side and we do see some intermittent windows where we can lock in some winter spread and increase the storage. So we have seen a little bit over the last week increases of the storage, but it's still on the low side. And we see the forward curves. They are more on the flat side to making that refilling of the storages more complicated, and I see a certain risk that getting towards the winter then that we will potentially enter with lower storage levels and if the demand then in the coming winter goes up, prices will then also strengthen in the market. From an OMV perspective on the storage levels, Austria is here in a special situation because Austria has, in total, about one year of demand storage capacity. And with this, the storage requirement is a bit lower at 35%. And we are already above that storage requirement. So from that perspective, on the way forward, we will commercially optimize what we are doing here. And then Neptune Deep, you asked, of course, here on the project, we continue to be on plan on executing on the project. As we have reported previously, the first four wells on the more shallow end They have been drilled and we have now started the drilling on the further six wells on the deeper end of things and advancing also with the platform and all the things are on plan so that we are still looking at the original time plan 2027 startup. I do think that is the right moment to come because we see the wedge of import requirements into Europe opening up year over year on the way forward. So that will come into a good time to improve security of supply in the market that will be priced mainly from LNG import differentials.

And, Adnan, regarding timing effects in cash flow, let me start with saying OMV has once again shown that we have a very strong and resilient cash flow. We have come up with $1.6 billion, a little bit above $1.6 billion of operating cash flow, excluding networking capital, and almost $800 million of operating cash flow, including the networking capital effects. Now, the timing effects, you can more or less differentiate three different factors. One, of course, is the networking capital effects. This net working capital is an effect that came with the sudden increase of the prices where we both had on the inventories, but also in the netting of the payables and receivables, a significant negative impact, so a buildup of net working capital that negatively influenced the cash flow in first quarter. However, that's a little bit of a savings account. and according to the development of the prices, this will come back if prices normalize again. So, therefore, I see that as a positive timing effect. On the other hand, there's a little bit of an opposite effect in the CCS, in the valuation effects regarding our inventories. There we have seen a gain from the CCS in the result that of course then also is visible in the cash flow. And if we see then prices going down again, this time difference effect also will go away. We are talking here about 250 million positive from the first quarter. And the third element actually is gas derivatives. This is really a timing effect where we have seen a positive effect, so something between 100 and 150 million in the first quarter. And this over time, when these derivatives then can be resolved, will have the adverse effect coming a little bit over the three quarters distributed. So, yes, it will come back, but it will have a smaller impact on this. But in total, again, the basis cash flows have been resilient and strong, and I think this is what we'll also keep for the rest of the year.

Thanks, Adnan. And now we come to Satnan Ali from HSBC.

Hi there. Thanks for taking my questions. The first one, I just wanted to ask, I see for the first time it looks like for country-level productions that you've grouped together, the UAE and the Kurdistan region of Iraq. I just want to get a sense of your decision behind making that. And secondly, just overall, it's been two months since the conflict started. Just kind of your thoughts on what you think you've managed well and what you think you could have done better. Thank you.

Maybe let me start with the first question, why we grouped together Middle East, simply because this is a region that breathes and lives with geopolitical situations in that region. So if we would do that asset by asset, it would still have the same kind of volatility. So, therefore, we have grouped that together. We are talking here about our asset participations in Kurdistan region of Iraq, KRI, on the one hand side, and our participations in the SARB and in the Umlulu fields in Abu Dhabi. that together had a volume of around 60,000 barrels altogether. And you have seen in the past it's 50,000 from UAE, it's 10,000 from KRI. And we still see that putting that from a region together makes more sense to look at the volatilities that we have. Just to give you an example, temporarily we have been impacted in both of these regions from the Gulf War. And as soon as these things is improving and being resolved, both will come back to full volumes. The real difference is KRI is gas and the Emirates volumes are oil. Otherwise, for the impact that we'll show with that, they are very easily connected.

Yeah, and let me maybe try and follow up on what we think we have done well and what we could have done better. Maybe we, so I think it was really timely to close on the Borussia International transaction and as we tried to describe, this is transformative for OMB. It will be very important on the way forward. It is a very strong company that we put forward. If we could have done that even earlier, that would have been good, but I think it's a fantastic step on the way forward that will be important for our integrated business model in the future to come. I also, we have not talked about this specifically, but I do want to remind you we have our cash flow efficiency program that we are executing on, and part of that is also our cost reduction program. This is good online, and we continue to move forward because we believe this is still efficiency productivity is a key driver that we need to do on the way forward, even if prices have gone up and are higher today. On what we could have done better, I would say that hedge that Reinhardt described before, where one leg was missing in the end. If we had had somehow the information that the Strait would close, I would have loved to forego that piece, quite honestly. But this is part of our normal business. And as Reinhard said, it's not unusual and was also compensated on some positive effects on the other side. And the last, but this is only half serious, quite honestly, if you remember a few years ago, we, Borealis, divested their fertilizer business. And I still think that was a very important strategic move at the time and will continue to be so because it was mainly a European-focused, it was only a European-focused production for ammonia or nitrogen-based fertilizer, but at this moment, of course, Fertilizer globally is quite short and the prices are high. That would be something that at this moment could be quite fun. Thank you. Thanks, Satnan, for your questions. We now are at the end of our conference call and would like to thank you for joining us. If you have any further questions, please contact the investor relations team. We will be happy to help.

Goodbye and have a nice day.

Thank you very much and have a great day.

Thank you. Bye-bye.

That concludes today's teleconference call. A replay of the call will be available for one week. The replay link is printed on the invitation or alternatively, please contact OMV's Investor Relations Department directly to obtain the replay link.