This is Petrom’s first loss since its 2004 privatization. The company, in which the Romanian government holds 20% interest, said it doesn’t plan to distribute dividends to shareholders.
Last year’s earnings were severely affected by considerable loss in the fourth quarter, when the company incurred a cost of RON1.9 billion from asset impairments due to lower oil prices.
Further decline in oil prices and market volatility prompted OMV Petrom’s to revise its oil price estimates for the short and long term. The company now sees Brent oil at $40/barrel in 2016, $55 in 2017, $65 in 2018, $70 in 2019, and $75 starting 2020. Revised estimates required impairments of RON1.92 billion in the fourth quarter on producing assets, adding to impairments of RON786 million in the third quarter.
“In 2015, the steep drop in oil price severely affected our group’s results. Negative contribution from Upstream was partially compensated by strong Downstream performance. Throughout the year, we responded swiftly to the weakening of market fundamentals and contained costs to stay competitive, while reducing investments by 38% compared with 2014,” said OMV Petrom CEO Mariana Gheorghe.
She added the company will continue to adjust its activity to maintain a strong balance sheet in a continued depressed market environment and company management plans to propose that no dividends be distributed for 2015.
OMV Petrom sales declined 16% in 2015, to RON18.14 billion from RON21.54 billion in 2014, mainly due to lower revenue from fuel sales, prompted by the oil price drop, which offset the quantitative growth in sales.
OMV Petrom said its 2015 EBIT stood at negative RON530 million, from an EBIT of RON3.34 billion in 2014.
The company estimates it will invest EUR700-800 million in 2016, 10-20% less than in 2015, of which around 85% will go into Upstream, while exploration investments will be cut by 50% compared with 2015.
In the fourth quarter alone, OMV Petrom posted a loss of RON1.68 billion, more than five times the loss reported in the fourth quarter of 2014. Its fourth-quarter sales dropped to RON4.52 billion from RON5.35 billion in the same period the previous year.
OMV Petrom had 16,038 employees at the end of 2015, 5% less than in 2014.
OMV Petrom is owned by Austria’s OMV, which holds 51% interest, while the Romanian state owns 20.64%, and investment fund Fondul Proprietatea (FP.RO) owns 19%.