The Oil Industry of Serbia (NIS) has announced another quarter of poor profitability, leading to the likelihood that shareholders will receive significantly reduced dividends next year. Throughout most of the third quarter, crude oil prices experienced a downward trend, decreasing by approximately 16%. However, the average Brent price for the first nine months of the year remained slightly above the average for the same period in 2023.
In the third quarter, NIS reported a 9% drop in revenue, totaling 106.2 billion dinars, while revenue for the first nine months was nearly identical to the previous year’s, amounting to 304.6 billion dinars. The decline in sales was attributed to a 4% decrease in turnover, which would have been even more pronounced if this year’s results from Petrohemija had not been consolidated. Additionally, lower sales prices contributed to the revenue decline.
Key performance indicator EBITDA fell by 58%, down to 11.7 billion dinars in the third quarter, while it dropped by 39% to 34.5 billion dinars for the first nine months.
Net profit for the period from July to September plummeted by 85% to 2.7 billion dinars due to increased financial and tax expenses, and for the first nine months, it decreased by 75% to 8.0 billion dinars. Petrohemija reported a loss of 5.1 billion dinars in the first nine months, significantly impacting consolidated profits. The net profit of the parent company, which had previously been the basis for dividend payments, was 14.0 billion dinars for the first nine months, a decrease of 60% year-over-year.
One positive note in the balance sheet was the operating cash flow (OCF), which rose by 14% in the quarter to 30.1 billion dinars, and increased by 85% to 40.0 billion dinars over the first nine months.
In terms of operational metrics, oil and gas production fell by 5%, with a 1% decline over the nine-month period. Meanwhile, the refining volume at the Pančevo refinery increased by 7%, mitigating a 9% drop earlier in the year due to maintenance. Overall, turnover for the first nine months was down by 9% compared to the same period last year.
NIS continued to grow its capital investments, which surged by 70% to 37.3 billion dinars in the first nine months. The company’s total bank debt rose by 7% since the beginning of the year, reaching 585 million euros.
During the presentation of its business results, the company also announced its first bond issuance, aiming to raise 5.9 billion dinars (around 50 million euros) through a five-year euro-indexed bond with an annual coupon rate of 6.5%.
NIS shares closed at 812 dinars, the same level as at the start of the year, while the Belex15 index has increased by nearly 30% in the same period.
