Consolidated sales in Q2/16 amounted to RON 3,633 mn and were 20% below Q2/15, mainly due to lower petroleum products sales, following the further decline in oil prices and lower quantities sold (as a consequence of the Petrobrazi refinery planned turn around), and due to lower sales of natural gas. These negative effects were partially offset by higher sales of electricity. Downstream Oil represented 75% of total consolidated sales, while Downstream Gas accounted for 22% and Upstream for 3% (sales in Upstream being largely intra-group sales rather than third-party sales), the PMC Petrom report issued on Wednesday reads.
Clean CCS EBIT of RON 229 mn was below the value recorded in Q2/15 of RON 657 mn, reflecting mainly the unfavorable oil price environment. Clean CCS EB IT for Q2/16 is stated after eliminating net special charges of RON (55) mn and inventory holding gains of RON 44 mn, while Q2/15 is stated after eliminating net special income of RON 82 mn (mainly from a legal dispute) and inventory holding gains of RON 47 mn.
The Group’s EBIT for Q2/16 amounted to RON 218 mn, well below the result recorded in Q2/15 of RON 786 mn, driven by lower sales revenues and lower operating income, as Q2/15 was positively influenced by the outcome from a legal dispute. These effects were only partially offset by the decrease in exploration expenses, mostly due to lower expenses in the Neptun block, and by the favorable development of provisions for outstanding receivables in the gas business.
The net financial result in Q2/16 was showing a loss of RON (86) mn, compared to a gain of RON 43 mn in Q2/15, as Q2/15 was positively influenced by a special income from a legal dispute.
Consequently, the profit before tax for Q2/16 of RON 132 mn was significantly lower than the RON 829 mn recorded in Q2/15.
Corporate income tax level of RON 15 mn led to an effective tax rate of 12% in Q2/16, the report further reads.
Mariana Gheorghe, CEO of OMV Petrom S.A.: “In the first half of 2016, the difficult market environment adversely impacted our financial results, outweighing the effects from improved operational performance as well as strict cost discipline and cash management. The Upstream clean EBIT mostly reflected the drop in oil and gas prices, partly mitigated by the reduction in production costs. The Downstream clean CCS EBIT slightly improved, as a result of the favorable development of provisions for outstanding receivables in the gas business, which offset the effects of weaker refining margins and the planned refinery turnaround.
As the difficult market conditions persisted, we have continued our tight cost and capital expenditure management. Our CAPEX decreased by 35% vs. 6m/15, reflecting the completion of Neptun drilling and also the strict selection of investment projects. Moreover, the efficient cost and cash management helped us maintain a strong balance sheet and a single-digit gearing ratio.
Consultations regarding upstream oil and gas taxation are expected to continue in the second half of the year. As previously stated, a stable, predictable and investment-friendly fiscal and regulatory framework is a key requirement for our future investments, both onshore and offshore.”