Austria’s OMV tops up dividend on surging profit

By Kirsti Knolle

BERLIN (Reuters) -Austria’s OMV on Thursday proposed a 24% dividend increase after surging oil and gas prices and its exploration in Russia helped it to nearly quadruple its fourth-quarter core profit.

OMV also said it has received a 455-million-euro binding offer for the nitrogen business of its subsidiary Borealis from Switzerland-headquartered EuroChem, which aims to expand its global production and distribution capacities.

The sale could be a step towards OMV’s new corporate strategy, which – according to media reports – could split its business into energy and chemicals. OMV has said it would present its plans in March at the latest.

Clean current cost of supplies (CCS) earnings before interest and tax (EBIT), which exclude special items and inventory gains or losses, rose to 2 billion euros ($2.26 billion) in the three months through December, slightly missing analyst forecasts of 2.12 billion euros and compared to 524 million euros in 2020.

Surging crude and gas prices produced a windfall for top oil companies in 2021, in stark contrast to the previous year when energy prices collapsed after the coronavirus pandemic hit travel and economic activity.

OMV’s average realized natural gas price in the fourth quarter almost tripled compared with a year earlier due to high demand and uncertainty about the start of the Nord Stream 2 gas pipeline and political tensions between Russia and Ukraine.

Russia is one of OMV’s core regions, contributing largely to the company’s exploration and production business. JP Morgan analysts estimate that OMV’s average net asset value exposure to Russia is at around 9%.

OMV said it planned to pay a 2.30 euros per share dividend for 2021, in line with a sector trend.

Companies including BP, Royal Dutch Shell and TotalEnergies have focused on returning cash to shareholders as they begin a shift towards low-carbon and renewable energy.

OMV forecasts the average Brent crude price this year to increase to $75 per barrel from $71 in 2021. The average realized gas price is seen above 25 euros per megawatt hour after 16.5 euros per MWh last year.

($1 = 0.8855 euros)

(Reporting by Kirsti Knolle; Editing by Maria Sheahan and Shailesh Kuber)