Austria’s OMV chemicals, materials Q4 operating profit sinks on margins, demand

LONDON (ICIS)–OMV’s fourth-quarter (Q4) clean operating result for its Chemicals & Materials division sank 89%, year on year, to €57m on weaker margins and demand, the Austrian energy and petrochemicals major said on Thursday.

Chemicals & Materials (€m)	Q4 2022	Q4 2021	Change
Operating result	71	67	6%
Clean operating result	57	512	-89%
European polyethylene (PE) indicator margin	€370/tonne	€458/tonne	-19%

KEY POINTS
A stronger result contribution from OMV base chemicals was more than offset by substantial negative inventory valuation effects in the nitrogen and polyolefins business, a strong decline in polyolefin indicator margins in Europe, lower sales volumes in Europe, and a lower contribution from the Borealis joint ventures (JV), OMV said.

The contribution of Borealis excluding JV dropped sharply by €360m to minus €23m versus €337m in Q4 of 2021.

Results were weighed by negative inventory valuation effects that were around €200m lower compared to Q4 of 2021, lower polyolefin indicator margins compared to the strong levels of the final quarter of the previous year, and lower polyolefin sales volumes in Europe, said OMV.

The contribution of the Borealis JVs decreased by €119m to €19m versus €138m in Q4 of 2021, mainly due to a negative contribution from its Baystar JV with Total in the US as well as a lower contribution from Abu Dhabi’s polymers complex Borouge, OMV said.

“The favourable impact of a stronger US dollar managed to partially compensate for these effects. Additionally, the successful listing of 10% of Borouge’s total issued share capital on 3 June 2022 lowered financial and operational contributions in comparison to Q4 2021,” said OMV.

PE sales volumes from Borealis’ JVs decreased by 6%, while polypropylene (PP) sales volumes from JV grew by 33%.

Compared to Q4 2021, sales volumes at Borouge grew, with PP sales volumes in particular benefiting greatly from the full ramp-up of the new PP unit (PP5).

The ethylene indicator margin Europe increased by 7% to €535/tonne (Q4 2021: €498/tonne), while the propylene indicator margin Europe declined by 12% to €443/tonne (Q4 2021: €506/tonne).

While ethylene experienced support from lower supply, propylene saw pressure from ample supply because of high refinery runs, OMV noted.

The European PE indicator margin declined by 19% to €370/tonne (Q4 2021: €458/tonne), while the European PP indicator margin decreased substantially by 42% to €398/tonne (Q4 2021: €690/tonne).

The utilisation rate of the European steam crackers operated by OMV and Borealis decreased by nine percentage points to 83% (Q4 2021: 92%), mainly due to lower overall European demand, OMV added.

OUTLOOK
In 2023, the ethylene indicator margin Europe is expected by OMV to be around €530/tonne (2022: €560/tonne).

The propylene indicator margin Europe is expected by the company to be around €480/tonne (2022: €534/tonne).

The PE indicator margin Europe is forecast by OMV to be around €350/tonne (2022: €390/tonne).

The PP indicator margin Europe is expected by the company to be around €400/tonne (2022: €486/tonne).

Front page picture: OMV’s headquarters in Vienna
Source: APA-PictureDesk GmbH/Shutterstock