4 – Segment Reporting

Changes in segment reporting

Starting with Q1/22 the OMV Group structure was reorganized, which involved the transfer of Gas Marketing Western Europe, which includes Supply, Marketing, Trading and Logistics, from Refining & Marketing to Exploration & Production in order to extract synergies from the entire end-to-end gas value chain. Internal reporting and the relevant information provided to the chief operating decision-maker in order to assess performance and allocate resources has been updated to reflect the current organizational structure.

Business operations and key markets

For business management purposes, OMV is divided into three operating Business Segments: Chemicals & Materials, Refining & Marketing, and Exploration & Production, as well as the segment Corporate and Other (C&O). Each segment represents a strategic unit and operates in different markets. Each Business Segment is managed independently. Strategic business decisions are made by the Executive Board of OMV. With the exception of C&O, the reportable segments of OMV are the same as the operating segments.

The Chemicals & Materials (C&M) Business Segment is one of the world’s leading providers of advanced and circular polyolefin solutions and a European market leader in base chemicals, fertilizers, and plastics recycling.

OMV Group has a production capacity, including joint ventures, of 7.5 mn t base chemicals, 5.9 mn t polyolefins, 0.4 mn t compounding and 4.3 mn t fertilizers. The majority of production is located in Europe, with two overseas manufacturing facilities in the United States, one in Brazil and one in South Korea. In addition, OMV holds minority stakes in various equity-accounted investments, the most significant ones being Borouge (United Arab Emirates) a Borealis’ joint venture with ADNOC that operates the largest petrochemical complex in the world and the Baystar joint venture (Pasadena, United States) which serves the customer base in the North American markets and operates Port Arthur Refinery with the production capacity of 0.5 mn t OMV share.

OMV group is pursuing various initiatives in mechanical and chemical recycling and renewable polyolefins. A new polyethylene plant based on Borstar technology on the site in Pasadena is currently under construction with the target to deliver a broad range of products to meet the growing global demand of sustainable and high energy efficient plastic products.

The Refining & Marketing (R&M) Business Segment refines and markets crude oil and other feedstock. It operates the refineries Schwechat (Austria), Burghausen (Germany) and Petrobrazi (Romania) with an annual capacity of 17.8 mn t. In these refineries, crude oil is processed into petroleum products, which are sold to commercial and private customers. The activities of this business segment also cover supply and marketing of gas in Eastern Europe and the Group’s power business activities, with one gas-fired power plant in Romania.

OMV has a strong position in the markets located within the areas of its supply, serving commercial customers, and operating a retail business of approximately 1,800 filling stations.

OMV holds minority stakes in various equity-accounted investments, the most significant one is the 15% participation in ADNOC Refining (United Arab Emirates) with annual capacity of 7.1 mn t OMV share.

Exploration & Production (E&P) engages in the business of oil and gas exploration, development and production and focuses on the regions Central and Eastern Europe, North Sea, Middle East and Africa and Asia-Pacific. In addition, E&P is engaged in gas supply, marketing, trading, and logistics in Western Europe.

Group management, financing and insurance activities as well as certain service functions are concentrated in the Corporate & Other (C&O) segment.

One of the key measures of operating performance for the Group is Clean CCS Operating Result. Total assets include intangible assets as well as property, plant and equipment. Sales to external customers are split up by geographical areas on the basis of where the risk is transferred to the customers. The net revenues of commodity trading activities within the scope of IFRS 9 and hedging results are reported in the country in which the reporting subsidiary is located. Accounting policies of the operating segments are the same as those described in the summary of significant accounting policies, with certain exceptions for intra-group sales and cost allocations by the parent company, which are determined in accordance with internal OMV policies. Management is of the opinion that the transfer prices of goods and services exchanged between segments correspond to market prices. Business transactions not attributable to operating segments are included in the results of the C&O segment.

The disclosure of special items is considered appropriate in order to facilitate analysis of ordinary business performance. To reflect comparable figures, certain items affecting the result are added back or deducted. These items can be divided into four subcategories: personnel restructuring, unscheduled depreciation and write-ups, asset disposals and other. Furthermore, to enable effective performance management in an environment of volatile prices and comparability with peers, the CCS effect is eliminated from the accounting result. The CCS effect, also called inventory holding gains and losses, is the difference between the cost of sales calculated using the current cost of supply, and the cost of sales calculated using the weighted average method after adjusting for any changes in valuation allowances. In volatile energy markets, measurement of the costs of petroleum products sold based on historical values (e.g. weighted average cost) can have distorting effects on reported results. This performance measurement enhances the transparency of results and is commonly used in the oil industry. OMV, therefore, publishes this measure in addition to the Operating Result determined according to IFRS.

Segment reporting information of earlier periods has been adjusted consequently to comply with IFRS 8.29. The tables below depict the segment reporting information as restated after the reorganization and reported in 2021:

In 2022 special items for unscheduled depreciation and write-ups were mainly driven by the revaluation of the fertilizer business, partly offset by the non-cash net impairment charges related to E&P assets. For further details on write-ups and impairments see Note 7 – Depreciation, amortization, impairments and write-ups.

Special items for asset disposals were related to the sale of the German filling station business in May 2022 and the Borouge IPO on ADX (the Abu Dhabi Securities Exchange). For further details see Note 6 – Other operating income and net income from equity-accounted investments and Note 16 – Equity-accounted investments.

Other special items mainly consisted of non-cash valuation effects related to the reassessment of reserves redetermination rights of the Yuzhno Russkoye field in Russia and the effects of deconsolidation of the Russian entities. For further details see Note 2 – Accounting policies, judgements and estimates, section ‘Impact of Russia’s invasion of Ukraine and related significant estimates and assumptions’. In addition, other special items consisted of temporary hedging effects and the release of a provision in the LNG business.

Not allocated assets contained goodwill in amount of EUR 342 mn (2021: EUR 322 mn) related to the cash-generating unit ‘Middle East and Africa’ and EUR 210 mn (2021: EUR 198 mn) related to the cash generating unit ‘SapuraOMV’ as these CGUs are operating in more than one geographical area. In 2021, not allocated assets also included goodwill in the amount of EUR 9 mn related to cash generating unit ‘Refining West’.