With Group sales of EUR 62 bn and 22,300 employees as of the end of 2022, the OMV Group is Austria’s largest listed industrial company and the 413th largest public company in the world.
OMV has a mission to become a leading provider of sustainable fuels, chemicals and materials by 2030, focusing on circular economy solutions to deliver a net zero target by 2050.
By taking this path, OMV expects to deliver an operating cash flow excluding net working capital effects of around EUR 6 bn by 2025 and at least EUR 7 bn by 2030, a ROACE of at least 12%, and to grow the distributions to its shareholders.
The OMV Group
OMV operates in the following main businesses:
Energy
OMV is active in the exploration, production and storage of oil and gas in Central and Eastern Europe, the Middle East and Africa, the North Sea, and Asia-Pacific.
Average daily production in 2021 included production from a joint venture in Russia and amounted to 486,000 boe/d with a focus on natural gas (~60%) -as of March 1, 2022, Russian entities are no longer consolidated.
The Energy segment includes the traditional Exploration & Production (E&P) business as well as the entire gas business and the new Low-Carbon business focused on geothermal energy and carbon capture and storage (CCS).
Fuels and Feedstocks
OMV produces and markets fuels as well as feedstock for the chemical industry, operates three refineries in Europe, and holds a 15% stake in a refining joint venture in the UAE. OMV operates around 1,700 filling stations in eight European countries. In addition, the activities include Gas & Power Eastern Europe where it also operates a gas-fired power plant in Romania.
Fuels & Feedstock combines the previously distinct Executive Board areas of Refining and of Marketing & Trading.
Chemicals and Materials
OMV, through its subsidiary Borealis (75% ownership), is one of the world’s leading providers of advanced and circular polyolefin solutions and a European market leader in base chemicals, fertilizers, and plastics recycling. Together with its two major joint ventures – Borouge (with ADNOC, in the UAE and Singapore) and Baystar™ (with TotalEnergies, in the USA) – Borealis supplies products and services to customers across the globe.
Polyolefins are the largest market segment in producing plastic goods. Demand for virgin polyolefins will continue to grow at a rate above global GDP until 2030,
driven by the Asian market. Polyolefins will remain essential for various industries, including packaging, construction, transportation, healthcare, pharmaceuticals,
and electronics.
Chemicals & Materials continues to cover the entire chemicals value chain, including responsibility for capturing value from the circular economy.
OMV stock: Advantages of Investing
More diversified, resilient and profitable than traditional up-mid-downstream energy companies.
Large portfolio of key patents in recycling activities and circular economy.
Plastic recycling: ReOil® is a patented chemical recycling technology developed by OMV, which converts end-of-life plastic waste into pyrolysis oil, a valuable resource.
In 2018, OMV became the only Austrian company listed on the Dow Jones Sustainability Index with a AAA ESG Rating.
At the end of 2020, OMV started the production of Austria’s then-largest photovoltaic plant with 11.4 Megawatts of power.
Sustainable Aviation Fuel (SAF): SAFs are biofuel that can be used interchangeably with conventional jet fuel and require no modifications to engines and airframes, a so-called drop-in solution. Starting from 2025, in EU, all airlines are required to use no less than 2% of SAF in their flights; the share will be increasing every year. Sustainable aviation fuel is foreseen to account for about 65% of carbon mitigation efforts by 2050.
MOV signed agreements for the supply of Sustainable Aviation Fuels with several airline companies including Lufthansa, WizzAir, Ryanair, Air France-KLM
Building a large network of eMotion charging point stations for electric vehicles.
Acquisition by Borealis of Rialti S.p.A, a leading European producer of recycled polypropylene compounds (pending regulatory approval).
Portfolio of joint ventures in different fields, including development of geothermal energy.
Progressing dividend policy anchored to the Group’s operating cash flow and subject to a leverage ratio below 30%.
Reduced debt and financial leverage. High credit rating (A).
Even in the IEA’s Net Zero Emissions by 2050 Scenario, oil demand for non-energy use falls by only 6% by 2050 vs. 2021 levels (vs. a decline of almost 80%
for oil demand overall).
Oil demand for chemical production is expected to increase, primarily originating from rising demand in emerging markets and closely linked to GDP development.
By 2030, oil demand for chemical production will rise by about 2% per year. Approximately 80% of chemical and plastic demand growth will be concentrated in emerging markets, mainly Asia, until 2030 and beyond. This region represents most of the global population growth and the corresponding potential for improving
living standards.
Investing in OMV stock: Risks and Matters to Follow Up
The impact of the Russia-Ukraine war is particularly unknown for OMV which had stakes in Russia and was, among other things, one of the financial investors of the Nord Stream gas pipeline between Russia and Germany.
Weak half-year results in 2023.
Resignation of Supervisory Board Chairman (Mark Garrett).
The current transformational period, as the Group targets zero net emissions, may lead to mixed results. In this context, OMV is seeking to divest its Oil and Gas E&P assets in the Asia-Pacific region.
Investigation reports find process irregularities in all three partial investigations but finds no sufficient legal basis for actionable misconduct by former CEO Rainer Seele.
Possible breaches of duty and resulting potential claims for damages against the former CEO Rainer Seele were investigated in the following areas: 1) conclusion of a side agreement with an OMV executive, 2) conclusion of a sports sponsorship agreement with the Zenit St. Petersburg football club in 2018, and 3) the amendments to the gas supply agreements with Gazprom Export in 2018.
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Recent organizational restructuring started on January 1st 2023. OMV and Borealis CEOs have been in charge only since 2021.
Spike in tax payables in 2022 due to significant increase in taxable income in Norway.
The European refining industry is likely to face ongoing headwinds in the form of higher utility and fuel costs vs. the other refining hubs, especially those in the US and the Middle East.
Low Rhine river water levels might cause logistic issues.
SOURCES:
https://www.omv.com/en/about-us/company
https://en.wikipedia.org/wiki/OMV
https://en.wikipedia.org/wiki/Borealis_AG
OMV Annual Report 2022
Photo by Andreas Gücklhorn on Unsplash