OMV on the Capital Markets

2022 was a difficult year for global equities. High inflation, the Ukraine war, and Chinese COVID-19 lockdowns were the main culprits. Oil and gas stocks strongly outperformed the market, mainly due to high commodity prices. While OMV fared better than the ATX and the wider European market, it lagged behind its peers, weighed down by concerns triggered by the Ukraine war.

Financial markets

High inflation rates, the Ukraine war, and China’s zero-COVID-19 policy were the main reasons why the performance of European equities was exceptionally weak in 2022. With the global MSCI World Index and Europe’s STOXX 600 down 18% and 13% respectively according to Bloomberg, the yearly performance was the worst since the global financial crisis in 2007/2008.

Fixed income could not help in the same way as it often does when equities are down. The high inflation rate drove central banks around the world to hike interest rates. The resulting tighter liquidity and raised volatility negatively affected bond market performance. On the flip side, interest on traditional “risk-free” savings accounts recovered in such a way that they are once again an attractive investment vehicle for the first time in over a decade.

In a comparison of all sectors, energy equities performed best in Europe and the United States. This was mainly a consequence of surging energy prices, which were principally caused by supply concerns fueled by the war in Ukraine.

On the crude oil side, the strength of the Brent price in the first half of 2022, driven by strong demand and Russian supply concerns, turned into a gradual decline mid-year that lasted through the remainder of the year. This was caused by the interest rate hikes and the COVID-19 lockdowns in China, which weighed on demand. However, the 2022 average of the Brent price was clearly above that of the three respective prior years.

Benchmark prices for natural gas spot trading at European hubs continued at a record-high level during most of 2022, with a surge to unprecedented levels toward the end of the summer. Prices were mainly driven by the fear of a supply shortfall during the winter heating season, as it was unclear whether European storage operators would receive sufficient volumes from Russia and whether it can potentially be replaced by deliveries from alternative sources like LNG and piped gas from Norway.

Only toward the end of the year did European natural gas spot prices recede back to normal levels, as it became clear that storage facilities would be filled sufficiently and a looming supply shortfall would most likely be averted. Added to that was the unusually mild weather at the beginning of winter and the perspective of expanding supply from sources other than Russia, with Germany’s first LNG import terminal commencing operations in December.

OMV share performance

Starting the year at EUR 49.95, OMV’s share price was approaching EUR 60 in mid-February (year high of EUR 58.26 reached on February 11). With the subsequent outbreak of the Ukraine war, the stock lost almost a third of its value within less than three weeks. However, while having to change the consolidation method for its Russian operations, OMV could prove to investors that the company was able to continue to operate with high profits despite the changed circumstances. By early June, on the back of solid results and a higher dividend payment (EUR 2.30 per share), OMV’s share price was back above EUR 55 each.

In the following weeks, the financial consequences of the technical incident at the Schwechat refinery in conjunction with the general natural gas supply insecurity in Europe and the natural gas trading difficulties created by the war in Ukraine led to a new downturn in OMV’s share price, resulting in the year’s low of EUR 36.02 on September 23.

Persistent exceptional profitability, improving visibility regarding the supply of natural gas during the heating season, and the introduction of a new and additional special dividend option and the announcement of one helped the share price recover to the high forties during the final two months of the year.

OMV’s share price closed the year at EUR 48.10. The average daily trading volume of OMV shares in 2022 was 420,539 shares (2021: 451,538). At year end, OMV’s total market capitalization stood at EUR 15.7 bn, compared to EUR 16.3 bn at the end of 2021.

OMV share price performance 2022

In EUR

OMV’s share price declined by 3.7% across 2022, thus showing a slightly better performance than the wider Euopean market (FTSE Eurotop 100: –7.1%) and a significantly better performance than the Vienna Stock Exchange’s blue chip index ATX (–19.0%). However, the stock underperformed compared to the European oil and gas sector (FTSEurofirst 300 Oil & Gas +26.9%). Assuming dividend reinvestment, the total shareholder return for the year was 0.8%. Measured over a five-year period, OMV generated a better return. A EUR 100 investment in OMV stock at year end 2017 with continuous dividend reinvestment in further OMV stock would have grown by an average annual return rate of 2.7% to EUR 114 at year end 2022.

OMV shares: long-term performance compared with indices

Average annual increase with dividends reinvested¹

¹ Source: Bloomberg. The annualized return for the holding period is assuming dividends are reinvested at spot price.

Proposed regular dividend of EUR 2.80 and special dividend of EUR 2.25 per share for the business year 2022

On June 3, 2022, OMV’s Annual General Meeting approved a regular dividend of EUR 2.30 per share for 2021, as well as all other agenda items, including the new Remuneration Policy for the Executive Board and Supervisory Board, the Long-Term Incentive Plan 2022, and the Equity Deferral 2022. Supervisory Board elections were also held.

For the upcoming Annual General Meeting (to be held May 31, 2023), the Executive Board will propose a regular dividend of EUR 2.80 per share, plus a special dividend of EUR 2.25 per share for 2022. This represents an annual increase of the regular dividend of 22%. Based on the total amount of dividends paid (regular plus special) of EUR 5.05 per share, the dividend yield calculated using the closing price on the last trading day of 2022 amounts to 10.5%.

Amended dividend policy

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

In addition, OMV has added special dividends as a new, additional instrument to the existing dividend policy. If the leverage ratio is below 30%, OMV aims to distribute approximately 20–30% of the OMV Group’s operating cash flow (including net working capital effects) per year to its shareholders through its regular dividend, as a priority, and additionally, if sufficient funds are available, through the new instrument of a special dividend. In case of a leverage ratio of 30% or higher, OMV’s progressive regular dividend will be maintained, but no special dividend shall be paid.

OMV shareholder structure

OMV’s shareholder structure remained relatively unchanged in 2022 and was as follows at year end: 43.1% free float, 31.5% Österreichische Beteiligungs AG (ÖBAG, representing the Austrian state), 24.9% Mubadala Petroleum and Petrochemicals Holding Company (MPPH), 0.4% employee share programs, and 0.1% treasury shares.

Shareholder structure

In %

An analysis of our shareholder structure carried out at the end of 2022 showed that institutional investors held 30.8% of OMV’s shares. At 33%, investors from the United States made up the largest regional group of institutional investors. The proportion of investors from the United Kingdom amounted to 24%, German shareholders made up 11%, and those based in France 9%. The share of investors from Austria was 6%, and Norwegian investors represented 2%.

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 2022, OMV held a total of 201,674 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 continued to be ranked as best in class in various ESG ratings in 2022. OMV received an AAA, the highest score, in the MSCI ESG Ratings assessment for the tenth year in a row. This places OMV among the top 10% of oil and gas companies globally. OMV also maintained its Prime status in the ISS ESG rating with a score of B–. This ranks us among the top 10% of oil and gas companies in terms of ESG performance. OMV’s Sustainalytics ESG Risk Rating now stands at 27.4 (from 26.7 previously), with a confirmed medium risk rating. This puts us in the top seventh percentile of oil and gas producers. OMV was also recognized by CDP with a score of A– (Leadership) in the Climate Change category for the seventh year in a row, earning us a place among the 20 best oil and gas companies in this ranking.

Besides these outstanding achievements, OMV has maintained its inclusion in several ESG indices. Most notably, OMV was included in the Dow Jones Sustainability™ Indices (DJSI World and DJSI Europe) for the fifth year in a row as the only Austrian company. OMV attained a score in the 97th percentile of its industry in S&P Global’s Corporate Sustainability Assessment (CSA), the basis of the DJSI, in 2022. The DJSI World Index represents the top 10% of the largest 2,500 companies in the S&P Global Broad Market Index based on long-term economic, environmental, and social factors. OMV was included in several other S&P indices, such as the S&P Europe 350^®, which is based on the S&P Global CSA (like the DJSI). OMV is included in many MSCI indices, such as the prestigious ACWI ESG Leaders Index and the ACWI Low Carbon Leaders Index. Furthermore, OMV maintained its position in the FTSE4Good Index Series, which is used by a wide variety of market participants to create and assess responsible investment funds, and maintained its inclusion in the STOXX^® Global ESG Leaders index (based on OMV’s assessment by Sustainalytics).

Credit ratings: Fitch upgraded outlook

OMV is rated A– by Fitch and A3 by Moody’s (both with a stable outlook). While Moody’s did not take any rating action during 2022, Fitch confirmed OMV’s A– rating and revised its outlook from “negative” to “stable” on March 28, 2022. Fitch’s outlook revision reflects its expectations of OMV’s strong financial performance based on its higher oil and gas price assumptions, and OMV’s new strategy gradually focusing on chemicals and materials, as well as sustainable fuels. This was confirmed on October 14, 2022. Moody’s confirmed its rating and outlook for OMV in early 2023.

Analyst coverage

During 2022, the total number of sell-side analysts covering OMV’s share increased to 22, up from 21 at the end of 2021. This development further improves the visibility of OMV in the financial community. AlphaValue and Bank Pekao joined the list of covering brokerages, while Concorde Securities discontinued coverage. The majority of recommendations are “buy” or equivalent, with a share of 62% of all recommendations at the end of 2022. “Hold” recommendations slightly decreased to 33% and there was one “sell” recommendation (compared to 0 last year), representing a share of 5% of all recommendations. Following the share price development, the average target price for OMV decreased slightly to EUR 58.80 at the end of 2022, from EUR 59.83 per share a year earlier.

Investor Relations activities

OMV’s Investor Relations department continued the intensive dialogue with the capital market during 2022. The main event of the year was the presentation of OMV’s new Strategy 2030 at a Capital Markets Day held virtually on March 16. In the days that followed, a multitude of virtual conversations took place, giving OMV’s executives a chance to lay out the details of the new strategy to analysts and investors.

Beginning in June 2022, easing pandemic restrictions allowed the gradual restart of a selection of in-person meetings with international investors, always in strict compliance with the respective health and safety regulations. In addition to these in-person meetings, the familiar routine of virtual meetings remained in place, reducing the time, costs, and carbon emissions of Investor Relations activities.

In December 2022, OMV organized a governance road show with the Chairman of the Supervisory Board, both virtually and physically, in London and Frankfurt, continuing the dialogue with the governance experts of some of our largest shareholders.

Overall, the Investor Relations department again fulfilled its mission to provide comprehensive insight into OMV’s strategy and business operations to all capital market participants, thereby guaranteeing equal treatment of all stakeholders. In this way, OMV’s Executive Board was able to continue the constant dialogue with investors and analysts in Europe, North America, and Asia throughout 2022, regardless of the restrictions imposed to control the pandemic.