Interview with the Chairman of the Executive Board

“Success is important. But what really matters is the future.”

A conversation with Alfred Stern, Chairman of the Executive Board and CEO of OMV

Mr. Stern, what’s the first things that come to your mind when you think about 2022?

First of all, I share the disbelief of everyone at the Russian attack on Ukraine. I clearly see the pain that it causes every day. I also think about the fact that, in February 2022, OMV swiftly reacted to this unprecedented situation and tackled the various consequences – thanks to our employees, who were still dealing with the ongoing effects of the COVID-19 pandemic and had to throw themselves straight into the next challenge. That deserves huge respect. But I don’t want the entirely new direction and transformation of our Company to get lost in all of that. We initiated this path during the difficult environment of the previous year and have been following it consequently ever since.

Was it immediately clear what had to be done regarding Russia?

For us, there was no option but to immediately reevaluate our entire Russian business in line with the sanctions. We removed Russia from our core regions, and decided to make no further investments there. Additionally, we undertook value adjustments for our activities in Russia and conducted a strategic assessment of our shareholding in a natural gas field. We are considering all options in this regard, including sale and withdrawal, but we’re also aware that doing that in the current legal environment is an extremely taxing endeavor. At the same time, however, we’ve also been focusing on securing the supply to our customers. We have succeeded in doing this by using alternative sources of supply, securing transport capacity, and pursuing a consistent storage strategy. The gas task force we set up for this purpose performed and continues to perform incredible work in this regard.

OMV’s new strategic direction was almost overshadowed by the outbreak of war. Was it also superseded by the events?

Not at all. We obviously had to make tactical adjustments, but the strategy was confirmed with all of its cornerstones. As a result of the war, it became clearer than ever that the world needed a new footing for its energy supply. With the importance of sustainability in mind, we need to reduce our use of resources, of fossil fuels, by replacing them with alternatives, and to find a quicker way to drive forward the circular economy. We describe in our Strategy how that might work, and implementing it is a top priority.

With the development of the Strategy 2030, you’ve also redefined OMV’s very reason for being.

We have chosen a fundamentally different path, analyzed future global developments, and asked ourselves what OMV will look like in ten, twenty, or thirty years’ time. The result is summarized in our purpose “Re-inventing essentials for sustainable living”: we see it as our duty to develop solutions to help us not only to ensure our quality of life, but more importantly to enable more people to share this sense of well-being with the smallest possible carbon footprint. Stemming from this aspiration, 2023 sees the establishment of our revised corporate structure and OMV’s new strategic direction in all three business segments: the gradual replacement of fossil-based energy sources through sustainable operations in the new Energy business segment; the goal for the Fuels & Feedstock segment, as a leading provider of sustainable fuels and chemical feedstocks, to contribute to climate-friendly mobility and materials management; and for the Chemicals & Materials business to become both a world leading provider of special polyolefin solutions and a leading Company in the field of circular economy.

»The significance of energy companies has taken on a whole new dimension. Our industry is one of the key levers for a successful reversal of climate change.«

ALFRED STERN
Chairman of the Executive Board

There is also criticism. How do you convince people of the reliability of your strategy?

From our point of view, there is no more meaningful path for OMV to take toward a sustainable future. The Energy business segment is proving its worth as the financial driver of our transformation. The sustainable direction of Fuels & Feedstock is taking shape. The same applies for Chemicals & Materials. We only presented the Strategy 2030 a year ago. Operationally, we’ve launched two promising geothermal projects in Austria and Germany and recently entered into an agreement to form a joint venture to develop the geothermal potential in the Vienna Basin. We’ve been able to celebrate initial success in terms of sustainable aviation fuels, are putting our ReOil® 2000 plant into operation in Schwechat with a processing capacity of 16,000 t this year, and are working on the global licensing of the technology. Also in Schwechat, Borealis is planning a further plant for advanced recycling, and this year we will complete the largest electrolysis plant in Austria, which will produce 1,500 t green hydrogen per year. Financially, we are in a very strong position to invest in growth. By 2030, an average of 40 percent of our investments will be in sustainable projects. All of this shows that we are consistently taking the path we have chosen.

Geopolitical tension and climate change are placing OMV increasingly in the spotlight of public interest. How do you handle this?

The significance of energy companies has taken on a whole new dimension. Our industry is one of the key levers for a successful reversal of climate change. At the same time, we need to help ensure a secure and affordable energy supply – now more than ever in the wake of the Russian attack on Ukraine. If we want to fundamentally realign a company under these conditions, we need not just a few but all stakeholders on board – no matter whether they’re owners, the capital market, the procurement or sales market, employees, prospective employees, politicians, the media, or the general public.

The current environment is generating high profits, which are controversially being referred to as “excess profits.” What’s your opinion?

The 2022 business year was an exceptionally successful one and the generated returns will need to be deployed in a focused manner: on the one hand for a secure energy supply in the future, but predominantly also for the sustainable, successful development of the Company over the long term. That requires enormous investment in research, development, and innovative production processes. Of course, we also want our shareholders to participate appropriately in the success of the Company. That’s why we will propose OMV’s highest ever regular dividend of EUR 2.80 to the Annual General Meeting this year, and on-top of that a special dividend of EUR 2.25. In order to ensure an appropriate participation also over the long term, we have modified our dividend policy and introduced the special dividend as an additional instrument. With this modified dividend policy we aim to distribute approximately 20 to 30 percent of the cash flow from operating activities including net working capital effects, if sufficient funds are available and the Company’s leverage ratio is below 30 percent.

You described the Chemicals & Materials business as the future growth driver of OMV. What makes you so sure of this despite the current weak market?

The market will grow, especially considering the increasing number of people living in economic prosperity. At the same time, we need to keep an eye on dwindling resources and the ever-growing threat to the climate. And this is where our C&M business will play a key role, through the accelerated development and production of high-quality, sustainable chemical and plastic products, which ensure the efficient use of resources and increase energy efficiency of solar panels, wind farms, electricity transmission, and mobility solutions – to name just a few examples. Furthermore, we will make use of OMV and Borealis’ expertise in the area of mechanical and chemical recycling of plastics in order to take a leading role in the global circular economy. We need to succeed in decoupling economic growth and consumption of resources. This will help to lower emissions and reduce waste. Overall, this offers enormous market potential that we want to capitalize on as much as possible.

A strategy has long-term targets. As the war on Ukraine shows, time and again, unforeseen events have huge implications. How is it possible to know at all times that you’re on the right path?

That’s very true. As a company, you also need to be able to act on developments at short notice. A well thought out strategy provides the necessary scope and flexibility to do this. The OMV strategy has proven itself in this regard over the past twelve months. At the same time, however, we must never lose sight of the overarching goal, and that is and will remain simultaneously addressing the climate crisis and the ever-increasing consumption of energy and resources. This demands new solutions. For this reason, the long-term success of a company depends on its ability to harness sustainability as a driver of innovation and growth. We have made sustainability the starting point and the core element of our strategy, and therefore the foundation of our successful development.

Vienna, March 9, 2023

Alfred Stern m.p.