February 16 (SeeNews) - Romania's top oil and gas group, OMV Petrom [BSE:SNP], said on Thursday it posted a 1.038 billion lei ($241 million/228 million euro) net profit in 2016, recovering from a 690 million lei loss in the previous year.
The group's consolidated sales for 2016 decreased by 10% to 16.24 billion lei, largely due to lower petroleum products sales, following a further decline in oil prices and slightly lower quantities sold, as well as reduced gas sales, OMV Petrom said in its unaudited financial statement submitted with the Bucharest Stock Exchange, BVB. However, these negative effects were partially offset by higher sales of electricity, it added.
"In 2016, the market environment remained volatile and challenging, which translated into a decrease of Clean CCS earnings before interest and taxes (EBIT), offsetting the benefits of our continued cost discipline. Cost savings of around 500 million lei were achieved at group level," CEO Mariana Gheorghe said in the statement.
OMV Petrom expects capital expenditure for 2017 to be around 800 million euro ($843 million), about 40% higher than a year earlier, with some 85% dedicated to the upstream segment. In 2016, the group cut investments by 34% to 2.57 billion lei.
Also, the company's executive board plans to propose a dividend of 0.015 lei per share for the 2016 financial year, after skipping dividends in 2015.
OMV Petrom's consolidated earnings before interest and taxes (EBIT) in 2016 was positive at 1.46 billion lei, compared to a loss of 530 million lei in 2015, due to strong drop in oil price.
In the upstream segment, OMV Petrom's EBIT was positive at 401 million lei following a loss of 1.8 billion lei in 2015, mainly achieved by reducing production costs. The move more than compensated for the production decline impact, but could not fully offset the lower prices effect, the statement showed.
In the fourth quarter alone, the group's EBIT stood at 335 million lei, compared with a loss of 1.8 billion lei in the same period of the previous year.
Total hydrocarbon production shrank 2% to 63.7 million barrels of oil equivalent (boe) in 2016, while domestic crude oil and natural gas liquids production was 29.15 million barrels, 4% lower than the output in 2015.
Exploration expenditures plummeted 76% to 338 million lei in 2016, mainly due to reduced activity in the Neptun Block.
In the downstream segment, EBIT rose 28% to 1.29 billion lei. Total refined products sales fell slightly by 2% to 4.93 million tonnes. Gas sales volume dropped by an annual 2% to 50.36 TWh, while net electricity output was up 10% to 2.93 TWh.
At the end of 2016, OMV Petrom Group employee numbers were 8% lower than a year earlier, standing at 14,769.
In mid-October, Romanian investment fund Fondul Proprietatea [BSE: FP] sold a 6.4% stake in OMV Petrom for 682 million lei in four separate transactions. Before the sale Fondul Proprietatea owned 19% of OMV Petrom.
Blue-chip OMV Petrom was trading 0.70% higher at 0.2870 lei at 0932 CET on Thursday on the Bucharest Stock Exchange.
(1 euro=4.5071 lei)