VIENNA (Reuters) - Oil and gas group OMV (OMVV.VI) reported a lower-than-expected 86% fall in second-quarter operating profit due to strict cost management and said it was trimming its spending plans in response to the global economic downturn.
Clean current cost of supplies (CCS) earnings before interest and tax (EBIT), which exclude special items and inventory gains or losses, came in at 145 million euros (131.62 million pounds) in the three months to the end of June, the group said.
Analysts had on average forecast a drop to 52 million euros from the 1.05 billion euros a year earlier.
Like rivals, OMV has faced a collapse in oil and gas prices. It swung to a net loss of 152 million euros in its exploration and production business in the quarter but booked a profit of 309 million euros in the downstream unit, which refines and processes oil and gas.
“We view the results as a positive for the stock, demonstrating good resilience in downstream earnings despite an extremely challenging environment, and generating positive free cash flow, highlighting the strong cash-generating ability of the business,” Berenberg bank said in a note.
Shares in OMV, which said on Tuesday its board recommended a cut in its proposed 2019 dividend to 1.75 euros a share from 2 euros, traded 0.3% lower at 28.72 euros at 0740 GMT while the sector index .SXEP was down 1.2%.
Major energy companies including BP (BP.L), Eni (ENI.MI), Exxon Mobil (XOM.N), Royal Dutch Shell (RDSa.AS) and Total (TOTF.PA) are expected to swing into a second quarter loss after coronavirus lockdowns destroyed fuel demand, hammered crude prices and squeezed margins.
OMV cut its spending target to 1.7 billion euros this year from 1.8 billion.
The company expects its 2020 refining margin to fall to around $3 per barrel after previously guiding for $4. Margins are falling because demand for refined oil products such as gasoline, diesel and jet fuel has dropped due to global travel restrictions and business disruptions.
OMV said it expected the Brent crude price LCOc1 to average at $40 a barrel this year. It lowered its expectation for the realised gas price to below 10 euros per mega watt hour.
Reporting by Kirsti Knolle; Editing by Louise Heavens and Edmund Blair