OMV's Q1 Pressures Mount as Iran Conflict and BGI Delay Weigh on Outlook

OMV faces a tough Q1 with oil price volatility, weak refining margins, and a delayed IPO for its key chemical venture, impacting its 2026 dividend.

The Austrian energy and chemicals group OMV heads into its first-quarter reporting season facing a perfect storm of operational and strategic pressures. A historic plunge in oil prices, collapsing refinery margins, and a delayed IPO for its flagship chemical venture are set to define the figures due on April 30.

Geopolitical Shockwaves Hit Hard

A US-Iran ceasefire agreement triggered a dramatic sell-off in crude markets, sending the price of Brent crude tumbling by 13 percent to below $95 per barrel. Excluding the Covid-19 pandemic, this marked the largest single-day drop since the Gulf War in 1991. While prices recovered to over $99 within 24 hours, the volatility directly pressures OMV's upstream business, which had been buoyed by previously high energy prices.

The broader Iran conflict had already inflicted damage. Disrupted crude flows led to one-off hedging losses of approximately €100 million. CEO Alfred Stern noted the situation in the Strait of Hormuz—a chokepoint for around 20 percent of global oil and gas shipments—posed a more severe burden on energy markets than the war in Ukraine. Goldman Sachs forecasts Brent at $90 for the second quarter but warns prices could remain above $100 for the entire year if the vital sea lane stays closed.

Refining and Production Weakness

The company's downstream segment is also under strain. The refining margin per barrel collapsed from €10.76 to €6.65. An additional €150 million burden hit the Fuels segment due to lower end-customer margins and planned maintenance shutdowns, though refinery utilization improved to 92 percent.

Upstream production fell to around 310,000 barrels per day, a 12 percent decline. This was primarily driven by OMV's strategic retreat from the Asia-Pacific region, including the sale of its Malaysia stake, SapuraOMV, to TotalEnergies for nearly €900 million.

Chemical Anchor Faces Headwinds

Strategically, OMV is banking on its new chemical joint venture, Borouge Group International AG (BGI), created from the merger of Borouge, Borealis, and NOVA Chemicals. The company, jointly owned with ADNOC subsidiary XRG, is now the world's largest pure-play polyolefins company. Management expects it to contribute roughly €140 million per quarter starting in Q2, with mid-term synergies exceeding $500 million annually.

However, the timing is challenging. Citing industry-wide overcapacity and a global downturn cycle in chemicals, RBC Capital Markets downgraded OMV to "Underperform" and cut its price target from €50 to €46. Barclays reduced its quarterly operating profit forecast by 14 percent. In response, OMV and ADNOC have temporarily capped the BGI dividend at 50 percent of the originally planned amount to strengthen the new entity's balance sheet, a move that will reduce OMV's own dividend for 2026 by an estimated €0.60 to €0.70 per share. The planned IPO for BGI in Abu Dhabi has been postponed to 2027.

Leadership and Dividend in Focus

Amid this operational turbulence, a leadership transition is approaching. Alfred Stern will step down as CEO on August 31, 2026. The core shareholders, ÖBAG and ADNOC, have recommended Emma Delaney, a long-time BP executive, as his successor, with a start date of September 1, 2026. She would be OMV's first female CEO, taking the helm of a company with €24 billion in annual revenue. With standard notice periods for international executives being at least six months, the window for an orderly handover is narrowing.

For the 2025 financial year, the dividend proposal remains unchanged at €4.40 per share, comprising a €3.15 regular payout and a €1.25 special dividend. Shareholders will vote on this at the Annual General Meeting in Vienna on May 27, with an ex-dividend date of June 8.

Despite a year-to-date share price gain of around 22 percent providing some cushion, the full Q1 report will reveal the sturdiness of OMV's foundation as it navigates falling commodity prices, a weakened chemical market, and unresolved leadership questions.