OMV on the Capital Markets

European equity markets surged in 2019, mainly backed by loose monetary policy. The US-China trade conflict and the political process leading to UK’s exit from the European Union dominated headlines during most of the year, with progress visible for both toward year-end. The OMV stock closed the year at EUR 50.08, a 31% increase compared to year-end 2018.

Financial markets

Bouncing back from a challenging year 2018, European equity markets surged throughout 2019. The reference index STOXX 600 was up 18.9% in dollar terms, slightly underperforming the MSCI World (+23.1%). All major geographical indexes rose, and almost all sectors were up during the year. Looser monetary policy was a significant driver behind equity market performance globally, with the Fed cutting interest rates three times in 2019. The European Central Bank also further cut the base rate into negative territory (-0.5%) and restarted the quantitative easing program, buying EUR 20 bn in bonds per month from November.

Despite the geopolitical tensions, stock markets performed strongly in 2019. The US-China trade talks dominated the headlines. An agreement between the two superpowers was reached, reducing the scope of tariffs, with China promising to increase purchases of US goods and services. Some new tariffs were imposed, however. In Europe, the UK-focused FTSE 250 was among the top-performing indexes in dollar terms. Its performance was supported by optimism around a trade deal between the European Union and the United Kingdom, as the terms of the UK’s exit became clearer, and uncertainty waned significantly.

The 2019 price performance of stocks in the oil & gas sector was depressed by the expectation that crude oil prices would weaken through 2020. This was due to a slowdown in global demand and growing non-OPEC production (largely from the United States). Environmental, social, and governance (ESG) issues were also a major topic impacting the sector, most notably with the world’s largest sovereign fund, Norges, set to reduce its dependency on the oil sector by selling circa USD 6 bn worth of equity holdings in crude producers.

OMV share price performance and volume

OMV’s share price closed the year 31% higher compared to the previous year’s close. Assuming dividend reinvestment, the total shareholder return was 36%. OMV’s share price started the year at EUR 38.25 and breached the EUR 50 threshold by late April. After that, the price declined and troughed at around EUR 42 in mid-June. In the second half of the year, OMV’s stock recovered impressively, hitting the year’s high of over EUR 54 in early November. The last two months of the year were dominated by a slight decline, and the stock closed at EUR 50.08 at the end of December. The daily trading volume of OMV shares in 2019 averaged 350,172 (2018: 385,176). At the end of 2019, OMV’s total market capitalization was EUR 16.4 bn compared to EUR 12.5 bn at the end of 2018.

OMV share price performance 2019

OMV shares outperformed benchmark indexes and peers markedly in a recovering market environment, after having underperformed the market in 2018. In 2019, the Austrian ATX gained 16%. Over the same period, the FTSE Eurotop 100 global industry benchmark grew by 22%, while the FTSEurofirst E300 Oil & Gas index only increased by 5%. Measured over a five-year period, the return generated by OMV shares outperformed index returns. An investor who acquired OMV stock worth EUR 100 at the end of 2014 and reinvested the dividends in additional shares saw the value of the investment increase to EUR 270 at the end of 2019, with an average annual return of 22%.

OMV shares: long-term performance compared with indexes
Average annual increase with dividends reinvested ¹

¹ Based on the Total Return Index (RI) from Datastream; compound annual growth rate method used to calculate the average annual increase with dividends reinvested

Proposed dividend of EUR 2.00 per share for 2019

On May 14, 2019, OMV’s Annual General Meeting approved a dividend of EUR 1.75 per share for 2018 as well as all other agenda items including the Supervisory Board elections, the Long-Term Incentive Plan 2018, and the Matching Share Plan 2019. The Executive Board will propose a dividend of EUR 2.00 per share for 2019 at the next ordinary Annual General Meeting on May 19, 2020, an increase of 14% over the previous year. The dividend yield, based on the closing price on the last trading day of 2019, amounts to 4.0%.

Dividend policy

OMV is committed to delivering an attractive and predictable shareholder return through the business cycle. According to its dividend policy, OMV aims to increase dividends every year or at least to maintain the level of the respective previous year.

OMV shareholder structure

OMV’s shareholder structure remained relatively unchanged in 2019 and was as follows at year-end: 43.0% free float, 31.5% Österreichische Beteiligungs AG (ÖBAG, representing the Austrian government) ¹, 24.9% Mubadala Petroleum and Petrochemicals Holding Company (MPPH), 0.4% employee share programs, and 0.2% treasury shares.

Shareholder structure

In %

An analysis of our shareholder structure carried out at the end of 2019 showed that institutional investors held 29.5% of OMV’s shares. At 30%, investors from the United States made up the largest regional group of institutional investors. The proportion of investors from the United Kingdom amounted to 25%, while shareholders from France held 10%. Norwegian, German, and Austrian investors held 5% each.

Geographical distribution of institutional investors

In %

OMV Aktiengesellschaft’s capital stock amounts to EUR 327,272,727 and consists of 327,272,727 no-par-value bearer shares. At year-end 2019, OMV held a total of 542,151 treasury shares. The capital stock consists entirely of common shares. Due to OMV’s adherence to the one-share, one-vote principle, there are no classes of shares that bear special rights. A consortium agreement between the two major shareholders, ÖBAG and MPPH, contains arrangements for coordinated action and restrictions on the transfer of shareholdings.

Environmental, Social, and Governance (ESG) performance

OMV places great importance on working with ESG rating agencies. OMV is committed to acting responsibly towards the environment and society. Our accomplishments in this regard are reflected in further improvement of our already robust ESG performance in 2019. Most notably, RobecoSAM recognized OMV as an Industry Mover in its Yearbook 2019. OMV demonstrated the largest proportional improvement in sustainability performance compared to the previous year out of the top 15% of companies in the industry. Also, OMV received the highest “AAA” score in the MSCI ESG Ratings assessment for the seventh year in a row. This places OMV among the best 10% of oil and gas companies. OMV also maintained its Prime Status in the ISS ESG rating with a score of B–. This positions us among the 5% best oil and gas companies in terms of ESG performance. OMV was also recognized by CDP with a score of A– (Leadership) in the Climate Change category, earning us a place among the 14 best oil and gas companies in this ranking. We were also assigned the highest Level 4 rating for carbon management quality by the Transition Pathway Initiative.

Besides these outstanding achievements, OMV has maintained its inclusion in several ESG indexes. Most notably, OMV was included in the Dow Jones Sustainability Index (DJSI World) for the second year in a row as the only Austrian company in the index. This sets OMV among the top 10% oil and gas companies in terms of ESG ratings. OMV received the highest “AAA” score from the MSCI Global Sustainability Index for the sixth year in a row and was reconfirmed as a constituent of two MSCI indexes: the ACWI ESG Leaders Index and the ACWI SRI Index. Furthermore, OMV was affirmed as a member of the FTSE4Good Index Series, which is used by a wide variety of market participants to create and assess responsible investment funds. OMV also maintained its inclusion in the STOXX^® Global ESG Leaders index, based on OMV’s assessment by Sustainalytics, and in the ECPI^® indexes. After being reappraised by EcoVadis – a platform analyzing the ESG performance of suppliers – OMV maintained its Silver supplier status.

Good credit ratings

The OMV Group is evaluated by rating agencies Moody’s and Fitch. On June 28, 2019, Moody’s confirmed OMV’s A3 issuer rating with a stable outlook. On December 19, 2019, Fitch confirmed OMV’s rating of A– with a stable outlook. The rating affirmations reflect OMV’s growing oil and gas output and an improving production growth outlook following the recent acquisitions, as well as a strong balance sheet and a prudent fiscal policy.

Analyst coverage

At the end of 2019, OMV was covered by 22 sell-side financial analysts who regularly publish research reports on OMV. This ensures OMV good visibility in the financial community. At the end of 2018, 80% of these analysts had issued a “buy” recommendation, with the remainder advising “hold.” As 2019 came to a close, almost 60% of the analysts still recommended their clients to buy OMV stock after a price gain of 31% over the year. About one-third of analysts issued a “hold” recommendation, while only two analysts suggested selling OMV shares. The average target price receded marginally from EUR 57 per share last year to EUR 56 at the end of 2019.

Investor relations activities

Ensuring active, candid dialogue with the capital market is a top priority at OMV. The Investor Relations department’s mission is to provide comprehensive insight into OMV’s strategy and business operations to all capital market participants, thereby guaranteeing equal treatment of all stakeholders. Throughout 2019, OMV was in constant dialogue with investors and analysts in the interest of presenting OMV’s progress towards completing its 2025 strategy. In addition, OMV organized two international investor group visits in Vienna to provide insight into Upstream and Downstream activities, a group lunch for Austrian investors, as well as a sell-side analyst lunch in London with the participation of 20 sell-side analysts. OMV organized three governance roadshows with the Chairman of the Supervisory Board in London, Frankfurt, and Vienna. This established a dialogue with the governance experts of some of the major shareholders. Finally, the Executive Board and the Investor Relations department strengthened and deepened relationships with analysts and investors through numerous road shows and conferences across Europe, North America, and Asia.