Austrian oil, gas giant OMV reports heavy Q1 drop in profits, revenues

Austria's largest oil and gas company OMV announced Wednesday strong drops in both overall revenues and profits for the first quarter of 2016 on the back of continued low oil and gas prices.

The company said its revenues dropped 31 percent to 3.99 billion euros (4.56 billion U.S. dollars), while its earnings before interest and taxes fell by 79 percent to 48 million euros (54.88 million dollars) compared to the same quarter in 2015.

In addition, it saw a 42 percent slump in net profits to 95 million euros (108.6 million dollars), but this drop was significantly lower than analysts' expectations, some of which were as high as 77 percent.

Downstream revenues from refinement and gas station businesses made up a large part of the slump despite a three percent increase in oil production.

OMV CEO Rainer Seele said the unusually low oil and gas prices that continued into the first quarter would see the company continue to concentrate on "cash and costs" as laid out in its strategy.

The company has cut its investments by about a third and exploration costs by a quarter.

At present there is "still too much oil on the market," and the overcapacity in Europe means that refinery margins will be lower than in 2015, Seele said, adding that he expects the brent crude oil price to average about 40 dollars per barrel in 2016. Endi