Investing.com -- OMV's (ETR:OMVV) shares fell on Tuesday following its trading update that posted disappointing performance and signaled further headwinds ahead.
At 6:40 am (1040 GMT), OMV was trading 1.9% lower at €38.92.
The update, which covers the third quarter of 2024, hinted at small but incremental cuts to consensus estimates, with negative revisions expected in light of underperformance in key areas.
Jefferies in a note flagged the factors driving the underwhelming results. The brokerage pointed out that the company’s Fuels and Feedstock segment was hit by several one-off events, notably the temporary halt of operations at the Burghausen refinery, which weighed on margins and sales volumes.
OMV’s indicator margin of $5.0 per barrel came in above Jefferies’ forecast of $4.8, but still fell short of the broader consensus expectation of $6.1 per barrel. Utilization rates also disappointed, with OMV reporting 84%, well below the 90% Jefferies had anticipated.
While some aspects of OMV’s Chemicals & Materials segment provided modest upside, these were not enough to offset the overall drag from other divisions.
Polyolefin sales volumes increased by 0.06 million tonnes quarter-over-quarter, largely driven by joint ventures, but the impact on the bottom line was limited.
The company’s margins for monomers and polymers saw slight improvements, yet overall results were dampened by external factors, including disruptions in energy production.
Energy headwinds, particularly in Libya, proved to be a significant challenge. OMV’s production of 332,000 barrels of oil equivalent per day narrowly beat Jefferies' estimate but was still below consensus expectations.
Libya’s political instability and operational disruptions added considerable pressure, with an estimated EBIT impact exceeding €200 million.
Although OMV managed to partially offset some of the losses with higher production volumes elsewhere, the net result still pointed to a material financial hit.
Analysts at Jefferies had already anticipated some of these difficulties but noted that the extent of the disruptions and their impact on profitability exceeded prior expectations.
The analysts emphasized that energy disruptions and the temporary halt at Burghausen contributed to a softer outlook for the remainder of the year.
Sales volumes for energy products, although slightly better than forecasted, remained pressured, with OMV reporting 300,000 boe/d in sales against Jefferies’ expectation of 306,000 boe/d.
The trading update also mentioned ongoing volatility in commodity pricing. OMV's average realized crude price of $78.4 per barrel was above Jefferies’ forecast of $75.5, though it failed to meet the consensus of $76.8.
Similarly, gas prices came in above estimates, with OMV reporting an average realized price of €24.9 per MWh, compared to Jefferies' €22.6.
The uncertainty surrounding OMV’s exposure to geopolitical risks, combined with operational setbacks and mixed pricing performance, has rattled investor confidence.
With the company’s results due on October 29, market sentiment remains cautious, and the potential for further downside revisions to earnings estimates looms large.
The Austrian government holds a 32% stake in the company, while Abu Dhabi’s IPIC owns 25%, making OMV’s strategic moves closely watched by both local and international stakeholders.
As Jefferies mentions, OMV’s exposure to volatile geopolitical regions like Libya and Romania, combined with operational disruptions, suggests a challenging road ahead.