OMV Aktiengesellschaft (OMV) Earnings Call Transcript & Summary

Welcome to the OMV Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. At this time, I would like to refer you to the disclaimer which includes our position on forward-looking statements. These forward-looking statements are based on beliefs, estimates and assumptions currently held and by information currently available to OMV. By their nature, forward-looking statements are subject to risks and uncertainties that will or may occur in the future and are outside the control of OMV. Therefore, recipients are cautioned not to place undue reliance on these forward-looking statements. OMV disclaims any obligation and does not intend to update these forward-looking statements to reflect actual results, revised assumptions and expectations and future developments and events. This presentation does not contain any recommendation or invitation to buy or sell securities in OMV. I would now like to hand the conference over to Mr. Florian Greger, Senior Vice President, Investor Relations and Sustainability. Please go ahead, Mr. Greger.

Yes. Thank you very much. Good morning, everyone. Thank you for joining this conference call at short notice. We will discuss OMV and ADNOC's combination of Borealis and Borouge and the subsequent acquisition of NOVA Chemicals by the joint venture to create a global polyolefins leader. With me on the call are OMV CEO Alfred Stern; our CFO, Reinhard Florey; and Martijn van Koten, executive vice president for Fuels & Feedstock and OMV's Chemicals business. Following their presentation, the 3 gentlemen are available to answer your questions. Let me now hand over to Alfred.

Thank you, Florian. Ladies and gentlemen, good morning and thank you for joining us today at short notice. I'm delighted to announce that, after quite some time of dedicated efforts, OMV and ADNOC have successfully reached a binding agreement to combine Borealis and Borouge, along with a simultaneous acquisition of NOVA Chemicals. It is a strategic move that, together with our long-standing partners and shareholders at ADNOC, we have considered carefully for quite some time. We firmly believe that this is a step that adds material accretive value for our shareholders. This is a significant moment for OMV. These 2 simultaneous pivotal transactions represent a crucial step towards the implementation of our Strategy 2030. OMV will hold a substantial share in the new entity, Borouge Group International, the world's fourth largest polyolefin business, with equal shareholdings and joint control alongside ADNOC. This excellent opportunity allows OMV to accelerate its Chemicals strategy, enabling us to scale, diversify and significantly enhance our feedstock position. Our Chemicals segment is now well positioned to deliver substantial global growth potential in the midterm. Both transactions will create considerable value for our shareholders, being both free cash flow and clean CCS EPS accretive, while OMV's leverage ratio will stay well below 30%. The dividends from Borouge Group International will strengthen our distributions to shareholders; and will reinforce our strong dividends within the oil, gas and chemical sectors. By 2030, the contribution of Chemicals to our group clean CCS EPS is expected to increase substantially, more than 40%. We are reaffirming our target of achieving an OMV Group clean CCS EPS of EUR 10 per share as announced at our Capital Markets Day in June last year. I will begin by explaining our strategic rationale behind these 2 transactions. Following that, Reinhard will provide more details about the transaction structure. Finally, I will conclude by outlining the benefits for OMV shareholders. This strategic partnership with ADNOC in polyolefins, which builds on 25 years of successful partnership between us, will position the new company as the fourth largest polyolefins player globally with access to the largest, most attractive and fastest-growing markets across the Americas, Europe, the Middle East and Asia. It will benefit from a highly competitive cost position, with around 70% of its production capacity in feedstock-advantaged regions. Our best-in-class technologies and strong innovation capabilities will strengthen and future-proof our portfolio mix of specialty and commodity polyolefins. The newly formed company will serve as a substantial platform for organic growth in polyolefins supported by a robust pipeline of near-term projects. We anticipate substantial EBITDA synergy potential of approximately $500 million per annum on a run rate basis by 2030. The combined strengths will position the company well to generate attractive through-the-cycle shareholder returns. We expect a net-to-OMV floor dividend of around $1 billion per year, underscoring the financial benefits of this strategic partnership. Overall, we believe this transaction represents a compelling combination from all perspectives: strategic, operational and financial. Fundamentally, this transaction is deeply anchored in our strategy and delivers material benefits to OMV's shareholders. We will own 46.9% of the world's fourth largest polyolefins leader, with 70% of its production located in top-quartile feedstock-advantaged regions. This strategic positioning allows us to capitalize on favorable market conditions and drive continued sustainable growth. Consequently, we will be exposed to a larger, more diversified and more resilient polyolefins company. We will hold equal shares in the company with joint control, significantly enhancing the value of this nonconsolidated holding. These transactions will simplify OMV's Chemicals holdings while preserving the industrial integration with our Fuels & Feedstock business. From a strategic perspective, this is a truly excellent and compelling opportunity to accelerate Strategy 2030, achieving goals that we would not have been able to accomplish independently. Executing 2 large-scale transactions simultaneously allows OMV to benefit from real step change in scale and geographic diversification. These transactions create immediate value for OMV, as they are free cash flow and clean CCS EPS accretive. In the same time, OMV maintains its investment-grade credit rating and keeps leverage ratio well below 30%. Moreover, it strengthens OMV's shareholder distributions through the substantial dividends from Borouge Group International net to OMV. If we examine OMV's exposure in Chemicals through the lens of EBITDA, we can see a significant increase. Currently, OMV owns 75% of Borealis, which translates to a 27% share in Borouge and a 30% share in Borouge 4. When we add the pro rata EBITDA of these entities, we arrive at a through-the-cycle combined EBITDA of approximately EUR 2.3 billion. Looking ahead to the pro rata EBITDA of the future entity Borouge Group International, we see a significantly higher figure of EUR 3.2 billion for our share. It is important to note that this perspective is not based on IFRS standards as we currently consolidate 100% of Borealis. And in the future, we will consolidate Borouge group internationally -- Borouge Group International at equity. However, this illustration serves to showcase that, despite deconsolidating the Chemicals business from our books, we will have a significantly more substantial business. This strategic move underscores our commitment to enhancing our position in the chemicals sector and delivering greater value to our shareholders. I understand that you may have many questions regarding the impact of these 2 significant transactions on OMV's 2030 targets. To address these, we are planning to hold a Capital Markets Day in the second half of this year. Let me now talk you briefly through the structure of the deal, and we will delve into more details later. Borealis and Borouge are being combined to create a new holding company, Borouge Group International, focused on polyolefins. It will be jointly controlled and owned by OMV and ADNOC, both holding 46.9% with joint control, following a EUR 1.6 billion cash injection from OMV. To be precise: This is not a payment to ADNOC but into the new company. The company will be headquartered and domiciled in Austria and listed on the Abu Dhabi Securities Exchange. There is the intention for a dual listing on the Vienna Stock Exchange later on. Simultaneously, Borouge Group International will acquire NOVA Chemicals for $13.4 billion funded through acquisition debt. Both transactions will be closed simultaneously. And we expect to complete in the first quarter of 2026, subject to regulatory approvals. In 2026, Borouge Group International plans to undertake a cash capital increase of up to $4 billion to further strengthen the investment-grade credit rating profile and position the new company for inclusion in the relevant MSCI index. At the end of 2026, Borouge 4 is envisaged to be recontributed to Borouge Group International once fully operational. The recontribution cost comprising CapEx and interest expense is estimated at $7.5 billion. This strategic combination brings together 3 highly complementary and very successful businesses to create an innovative, differentiated global leader in polyolefins. Borealis is the second largest player in the European polyolefins market, ranked in the top quartile of the Solomon benchmark in terms of net cash margin of its crackers. It boasts best-in-class technology and strong innovation capabilities which enable a substantial share of high-margin specialty products in its portfolio. Borouge ranks as the second largest polyolefins producer in the Middle East. It significantly benefits from a first-quartile feedstock cost position and best-in-class margins, with direct access to customers, and plays a key role in the rapidly growing Asia Pacific region. Borouge's world-scale and modern facilities leverage the latest Borealis Borstar technology. NOVA Chemicals ranks fifth in North America in terms of production capacity. It benefits from a first-quartile feedstock cost position and possesses proprietary differentiated technology across the most valuable segments. The combination of these 3 companies is driven by compelling industrial logic. By leveraging the strengths of each regional leader, the new company will emerge as a polyolefins powerhouse. As you are already familiar with Borealis and Borouge, I would like to take a moment to talk you through why the acquisition of NOVA is highly strategic to us. NOVA Chemicals is a leading independent integrated polyolefin producer in North America. The company operates 3 manufacturing sites, 2 in Canada, located in Alberta and Ontario; and 1 in Louisiana, U.S.A. NOVA Chemicals significantly benefits from access to advantaged ethane feedstock and proprietary technologies, positioning it as a leader in advanced packaging solutions. NOVA Chemicals presents a tremendous opportunity to significantly gain scale and expand Borouge Group International's presence in North American markets to become a truly global polyolefins powerhouse. Its technology and leadership in advanced packaging solutions are highly complementary to Borealis' technology platforms, greatly enhancing the group's access to feedstock-advantaged regions. NOVA offers tangible growth prospects supported by strategic investments such as AST2 and operational initiatives. The compelling synergies with Borealis and Borouge will further drive value creation across the new group, ensuring a stronger, more competitive position in the global market. As I mentioned earlier, the new company will become the fourth largest player in the industry, including its share of capacity in Borouge 4. If we consider only companies with a truly global reach, excluding Sinopec and CNPC, the new company would rank as the second largest global player, behind only ExxonMobil. Borouge Group International will benefit from full olefin-to-polyolefins backward integration across all regions, leveraging its own production capacities and cost advantaged long-term contracts with ADNOC and OMV for feedstock supplies. I want to explain how the combined strengths of the 3 complementary companies would integrate in terms of operations and financials on a pro forma basis, providing you with an idea of the scale of the new company. Looking at 2024 sales. Borouge Group International's pro forma total revenue would have been approximately $17.2 billion, with a well-balanced portfolio both from a regional and end market perspective. Around 40% of sales would have been generated in Europe, with 20% to 25% of sales coming from the Americas and Asia, respectively. Consumer and packaging will account for 60% of our sales volumes, while energy and infrastructure will contribute around 30%. The remaining sales will be distributed among transportation, industrial and other sectors. The portfolio will contain a high share of innovative, differentiated products that command a price premium in the market. Based on the average over the period between 2020 and 2024, the EBITDA would have been $4.5 billion with an EBITDA margin of approximately 26%, positioning Borouge Group International as a best in class within the polyolefins industry. This is the result of the excellent market access; and strong, innovative and differentiated product portfolio based on proprietary technologies. The free cash flow would have been around $2.9 billion, resulting in a free cash flow-to-EBITDA margin of 61%. The new entity's olefins capacity as of 2024 would have been 11.4 million tonnes per annum and its polyolefins capacity would have been around 12.2 million tonnes per year. The combined workforce would exceed 11,000 people. This represents an incredible platform for us to grow and advance together. I've already shown that, on average from 2020 to 2024, the combined EBITDA would be substantial, approximately $4.5 billion. However, this is just the beginning. Borouge Group International has tremendous growth potential, with EBITDA projected to exceed $7 billion through the cycle. This significant step-up leverages the strategic advantages of the combined entity and underscores the robust growth trajectory, supported by derisked and well-invested near-term growth projects and recovery to mid-cycle levels. We expect NOVA Chemicals to deliver substantial growth. From an average performance of $1.1 billion EBITDA between 2020 and 2024, we anticipate an increase to $1.8 billion per year through the cycle even without considering synergies. This growth will be driven by several key factors: firstly, the AST2 project, a new polyethylene plant combined with a cracker expansion, which is expected to contribute approximately $250 million; secondly, an efficiency program that is already underway, projected to add around $200 million. Lastly, market cycle normalization is expected to contribute to the overall growth, bringing the total to $1.8 billion per year through the cycle. As market conditions improve and demand for polyolefins continues to rise, NOVA will be well positioned to drive a sustained growth. Now let's take a look at the combined performance of Borealis and Borouge as well. From 2020 to 2024, these 2 entities achieved an average EBITDA of $3.4 billion per year. This impressive performance sets a strong foundation for future growth, which will be further bolstered by several key organic growth projects and market dynamics. The PDH Kallo project and the expansion of ethylene and polyethylene capacities in Borouge are expected to contribute an additional $400 million in EBITDA per year. The Borouge 4 project is anticipated to add around $900 million per year. Additionally, market cycle normalization is projected to bring in approximately $600 million per year. Altogether, these factors will elevate the through-the-cycle EBITDA of Borealis and Borouge to around $5.3 billion per year, showcasing the significant growth potential and strategic advantages of the combined entity. Incorporating the benefits from the identified synergies, the through-the-cycle EBITDA of Borouge Group International is projected to significantly exceed $7 billion per year. One of the factors in the growth I have outlined is the increase in the market demand for polyolefins, which is expected to rise substantially over the next decade. Borouge Group International will be ideally positioned with its suite of proprietary technologies to capture the market growth in more differentiated and innovative segments. Several megatrends are anticipated to drive this demand, including population growth, urbanization, limited supply of natural resources, an increase in health care applications and evolving waste management dynamics. These factors will boost the demand for both virgin and recycled polyolefins. In advanced developed markets like the Americas and Europe, demand is expected to grow by approximately 2% to 2.5% per year until 2035. Asia, which accounts for 75% of the entire global demand, is anticipated to experience growth of around 4.4% per year. Another key factor in the growth of Borouge Group International independent of market demand is the substantial pipeline of organic growth opportunities. Firstly, Baystar, a 50-50 joint venture with TotalEnergies based in Texas, features an integrated ethane-to-polyethylene production complex with a capacity of 1 million tons per year. The latest plant, Bay 3, incorporates third-generation Borstar proprietary technology licensed in North America for the first time and is currently in operational ramp-up phase. We expect this year a high utilization rate and significant increase of sales volumes. The project is expected to generate a through-the-cycle EBITDA of around $500 million to $600 million per year. Secondly, NOVA's Advanced SCLAIRTECH technology facility, the AST2 plant, a polyethylene plant with capacity of 425 kilotons per year. This facility is also in operational ramp-up phase and is expected to have a through-the-cycle EBITDA of around $250 million per year. Thirdly, the PDH plant in Kallo, Belgium, with a capacity of 740,000 tonnes per year, is expected to start in the first half of 2026. The propylene produced will be used as feedstock for growing European demand, driven by its versatile applications in industries such as packaging, automotive, construction and consumer goods. The project is expected to generate a through-the-cycle EBITDA of around EUR 200 million per year. Fourthly, expansion in the UAE of the second ethylene unit, EU2; and the PE4 and [ PE5 ] plants. The plants would add a combined 430,000 tonnes per year by 2028, with an estimated revenue of around $300 million per year. And finally, Borouge 4, comprising an ethane cracker with an annual capacity of 1.5 million tonnes and a polyethylene plant of 1.4 million tonnes. As previously outlined, Borouge 4 will be recontributed to Borouge Group International once the project is fully operational. These additional capacities will play a key role in meeting the growing polyolefins demand in Asia. Borouge 4 is expected to have a through-the-cycle EBITDA of around $900 million per year. Another lever of improving the earnings is the expected synergies. We anticipate delivering around $500 million in annual EBITDA synergies from these 2 transactions by 2030. About 60% of these synergies will be delivered from improved procurement terms, cost optimization and corporate-level benefits from global organization. The remaining 40% will come from cross-selling opportunities, optimizing our asset network and enhancing the product list and destination mix. We expect to realize around 75%, thus close to [ EUR 400 million ], of these synergies within 3 years of completion. To achieve these synergies, we anticipate incurring onetime implementation costs of approximately $150 million. OMV and ADNOC are completely aligned and are committed to working closely together to ensure a smooth integration process to fully capitalize on the full synergy potential, leveraging our 25-year track record of successful cooperation to achieve this. The company's extensive range of proprietary technologies will provide a significant competitive advantage. These include Borstar, a unique process and catalyst technology enabling molecular design; Borlink, which helps linking grids and energy sources regionally and globally, where Borealis is #1 globally; Borceed, a technology needed for closing the gap between classic thermoplastic products and rubbers; as well as Borcycle, a recycling technology. NOVA's technologies include the Advanced SCLAIRTECH process, a breakthrough technology that combines innovations in reactors and catalysts to produce premium polyethylene resin; and SYNDIGO, a mechanically recycled food contact resin for the food packaging market which I mentioned earlier. With a combination of more than 16,500 granted patents and 7 well-invested innovation centers globally, Borouge Group International will solidify its global leading position in R&D and innovation. Chemically recycled feedstock from OMV's proprietary ReOil technology will continue to drive progress in circular chemicals through cooperation agreements between OMV and Borealis. The new company will leverage the established technology platforms and European market leadership of Borealis, combined with NOVA's innovative technology, to advance its market leadership in circularity. Borealis already has a recycling capacity of around 200,000 tonnes per year, including facilities such as mtm plastics in Germany, Ecoplast in Austria and RIALTI in Italy. Additionally, NOVA is currently constructing a state-of-the-art recycling center in Connersville, Indiana. This facility will recycle post-consumer plastic films into recycled polyethylene on a commercial scale using its proprietary SYNDIGO technology. The plant is expected to become operational in 2025 and will add around 45,000 tonnes of recycling capacity per year. Our vision for the new company Borouge Group International is to become a leading global integrated polyolefin company strategically positioned as a major player focused on innovative, value-added segments and high-growth markets. The company targets to be a leader in technology and circular solutions, prioritizing customer-focused innovation and expanding into high-value segments through premium and specialty products, leveraging Borealis' outstanding expertise and market leader position. One of its significant competitive advantages is that 70% of its production capacities will have top-quartile and cost-advantaged feedstocks. Considering all these factors, Borouge Group International is committed to a robust dividend policy and will be well positioned to generate attractive shareholder returns through the cycle. And now let me hand over to Reinhard.

Thank you, Alfred. Ladies and gentlemen, good morning from my side as well. I will now provide more details about the transactions. The process will involve 3 steps, with the first 2 steps occurring simultaneously. Step 1 involves the combination of Borealis and Borouge, while step 2 entails the acquisition of NOVA Chemicals. Both steps are expected to close before the end of first quarter of 2026. Step 3, which is the recontribution of Borouge 4 to the newly formed Borouge Group International, will follow thereafter, currently estimated to be completed by the end of 2026. The first step involves the combination of Borealis and Borouge into a new holding company, Borouge Group International, with OMV and ADNOC as equal partners. OMV and ADNOC will each hold 46.9% of the shares and have joint control in the new entity. To equalize the shareholdings, OMV will inject EUR 1.6 billion in cash into the new company. OMV will consolidate its share of Borouge Group International's net income at equity in the new OMV clean CCS operating result. The dividends received from Borouge Group International will be accounted for in OMV's cash flow from operating activities. Borouge 4 is currently owned by Borealis, 40%; and ADNOC, 60%. Prior to the completion of the combination, OMV and ADNOC will assume the current Borealis share and the related shareholder loan. As a result, OMV will own 30%, and ADNOC 70%, until the recontribution into Borouge Group International. OMV and ADNOC will continue to fund development CapEx through to completion, while Borouge will maintain operational management of the assets, including the marketing of the volumes. Simultaneously with the first step, Borouge Group International will acquire NOVA Chemicals from Mubadala for a purchase price of $9.3 billion and an enterprise value of $13.4 billion. The valuation is based on NOVA's through-the-cycle EBITDA of $1.8 billion per year, resulting into a transaction multiple of 7.5x, in line with previous transactions in the sector in North America. Upon completion, NOVA Chemicals will be fully consolidated into Borouge Group International. To finance this acquisition, Borouge Group International will utilize debt financing while maintaining the investment-grade credit metrics, with the view to refinance through the capital markets. Following the acquisition of NOVA Chemicals, Borouge Group International will be listed in Abu Dhabi, with plans for a future dual listing on the Vienna Stock Exchange. The new entity will offer a share exchange to Borouge's current free-float shareholders. Assuming full acceptance of the share exchange, Borouge Group International will be owned 46.9% by OMV, 46.9% by ADNOC and 6.1% by free-float shareholders. Borouge 4 is envisaged to be recontributed to Borouge Group International by the end of 2026 once it is fully operational. At the time of the recontribution, OMV will hold 30% share and ADNOC will hold 70% share. Following the recontribution, Borouge 4 will be fully consolidated into Borouge Group International. The through-the-cycle EBITDA of Borouge 4 is expected to be around $900 million per year, thanks to its strong profile in specialty products as its benefit of the state-of-the-art first-generation Borstar technology. Therefore, this strategic move is anticipated to be accretive to both earnings and dividends per share for Borouge Group International. The recontribution of this asset will be at cost essentially covering the CapEx spend and interest expenses. The total amount is estimated to be around $7.5 billion. However, OMV and ADNOC will retain flexibility on the timing and funding of this recontribution, taking into account overall market conditions and credit rating of Borouge Group International. The new company aims to achieve a strong investment-grade credit rating profile, maintaining a through-the-cycle net leverage of up to 2.5x EBITDA. This commitment to financial robustness will ensure our long-term stability and enable us to capitalize on future opportunities. The acquisition of NOVA Chemicals will be funded through acquisition debt at the time of completion, with a view of -- to refinancing through the capital markets. In 2026, Borouge Group International plans to undertake a cash capital increase on the market of up to $4 billion, in which OMV and ADNOC will not participate. This capital increase will further strengthen the investment-grade credit rating profile and increase the free-float position of the new company, for inclusion in the relevant MSCI index, enhancing its visibility and attractiveness to global investors. As outlined earlier, OMV and ADNOC will retain flexibility on the timing and funding of Borouge 4 recontribution, taking into consideration overall market conditions and the credit rating of Borouge Group International. In addition, the company may consider potential stock issuance to OMV and ADNOC of up to $700 million as part of the funding mix. Borouge Group International's strong balance sheet with effective debt management will ensure the fulfillment of dividend commitment. Borouge Group International will have 2 -- a 2-tier Board structure according to Austrian corporate governance. The equal shareholding structure will enable joint control between OMV and ADNOC, allowing both parties to have equal decision-making rights in all strategic matters. In order to facilitate synergy extraction and integration, in particular in relation to NOVA, certain special rights will temporarily be assigned to ADNOC. The Supervisory Board will have 5 representatives from OMV, 5 representative from ADNOC and potentially 5 employee representatives. Headquarters and tax domicile will be in Austria, while ADNOC will have the right to nominate the Chairperson of the Supervisory Board. And OMV will nominate a Vice Chairperson. All decisions will be made by a simple majority vote. The Supervisory Board will advise and oversee the executive board on the management of Borouge Group International and approve major business decisions. The executive board will be unanimously nominated based on merit following a structured selection and hiring process aligned with international governance practices. Let me now provide you with a detailed overview of Borouge Group International's dividend policy. The dividend policy will be based on 90% of net income, with potential upside for additional distributions based on free cash flow. Borouge Group International will establish a floor dividend per share equivalent to 16.2 fils dividend per share of Borouge PLC. This floor dividend per share will be maintained in the event of a capital increase. Based on the expected share structure at closing in 2026, this translated to a total annual floor dividend of around $2.2 billion for Borouge Group International. For OMV, this equates to a net floor dividend of approximately $1 billion, representing a significant value driver for the company, with additional upside potential from future growth and market opportunities. This robust dividend policy underscores the commitment of the new company to delivering consistent and attractive returns to its shareholders. Having signed the binding agreement yesterday, we expect to complete transaction steps 1 and 2 until the end of the first quarter of 2026. As we would expect, this is subject to relevant regulatory approvals. Until completion, Borealis and Borouge will continue to pay dividends according to their current schedules and commitments. And we will continue to provide updates on the transaction progress as required. And with this, I will now hand it back to Alfred.

Thank you, Reinhard. As I already outlined in the beginning of our presentation, these transactions bring significant benefits for OMV shareholders. I want to address these advantages in more details. One of the most attractive elements of both transactions is the highly positive impact they will have on OMV's access to advantaged feedstocks. This strategic shift will significantly transform our regional production shares, positioning us for enhanced competitiveness and profitability. Currently, 60% of our polyolefins production is based in Europe, where feedstock costs are relatively 5x higher than in regions like the Middle East and North America. With these transactions, we will dramatically shift our production footprint. We will move from having 60% of our production in Europe to having 70% of our production in the Middle East and North America. On the left side of the chart, you can clearly see the significant difference in feedstock costs between Europe and these advantaged regions. This transformation will provide us with greater resilience against regional market fluctuations. By diversifying our production base and reducing our reliance on high-cost European feedstocks, we will be better equipped to navigate market volatility and sustain our growth trajectory. In combination with a suite of proprietary technologies that we use to achieve a high share of innovative, differentiated specialty products, we are in excellent position to capture attractive market opportunities. With these transactions, we will also streamline the current shareholding structure into a simpler and more efficient model featuring joint governance. The new entity will be publicly listed. This will enhance transparency and ensure a more direct flow of dividends to OMV, thereby improving financial clarity and shareholder value. Free cash flow accretion is another significant benefit for our shareholders. The bridge on the left provides a pro forma illustration of how this deal would have been free cash flow accretive in 2024. On the right side of the chart, you can see that our post-deal leverage ratio in 2026 will remain well below the 30% ceiling. The increase from 12% leverage ratio at the end of 2024 to an estimated 22% post deal is primarily driven by the deconsolidation of the Borealis equity. It is important to note that the cash outflow for OMV is limited to EUR 1.6 billion, which represents OMV's equity injection into Borouge Group International to equalize OMV's and ADNOC's shareholdings in Borouge Group International. We are committed to further reducing the leverage ratio over the midterm, ensuring a strong balance sheet and financial stability. Reduced organic CapEx, realized cost savings from our group-wide efficiency program as well as the start-up of the mega gas project Neptun Deep will be key drivers. This commitment reflects our dedication to maintaining a healthy financial position, which will enable us to capitalize on future growth opportunities and deliver sustained value to our shareholders. I want to take a moment to explain why we are so positive about this deal from a shareholder returns perspective. After the closing, the cash flow we will receive from Borouge Group International as dividends represents a higher-quality, more resilient stream of cash flow. This is due to Borouge Group International being a globally diversified company compared to the current, more volatile free cash flow from our Chemicals operations. As I mentioned earlier, Borouge Group International will provide a substantial minimum contribution of approximately $1 billion net to OMV. To reflect the deconsolidation of the Borealis operating cash flow and the substantial incoming dividends from Borouge Group International, we will review the current dividend policy for potential adjustments. Our guiding principle will be to ensure that OMV shareholders continue to benefit from competitive returns. We will continue to use both a progressive regular dividend and an additional variable dividend, reaffirming our commitment to delivering attractive shareholder returns. Of course, for the financial year 2025, there will be no change to the OMV dividend policy. We will announce dividends in February 2026 as planned. Ladies and gentlemen, this transaction is anchored in advancing our strategy. It will allow us to accelerate our ambitions to strengthen, expand and diversify OMV's Chemicals portfolio while maintaining high cash flow generation and our progressive dividend policy. It is a momentous step forward for OMV, as it addresses the 3 objectives in our Chemicals strategy all at once: use our strength in polyolefins to grow; geographically expand and diversify, with the aim to improve the feedstock mix; and make the business more sustainable through scope 1 and 2 emission reductions and by advancing circular chemicals. We maintain our commitment to achieving net 0 on scope 1 and 2 and 3 by 2050 and our mid- to long-term target of at least 12% for the group's clean CCS ROACE. We are really excited by the transformative impact and future growth potential of the creation of Borouge Group International for OMV and the benefits it will bring to our shareholders. Allow me to summarize the key takeaways. First and foremost, we are accelerating OMV's Chemicals strategy 2030, creating significant value for our shareholders. This strategic move positions the new company as a truly global polyolefins champion with 46.9% ownership in the fourth largest polyolefins company worldwide. We will hold equal shares and joint control with ADNOC in this new entity, ensuring joint governance and decision-making. This partnership will materially enhance our feedstock position, providing us with a competitive edge and more resilient earnings. The transactions are expected to generate substantial synergies. Additionally, they are free cash flow and clean CCS EPS accretive to OMV, further strengthening our financial performance. Importantly, these initiatives will strengthen OMV's shareholder distributions while maintaining our investment-grade credit rating. This ensures that we continue to deliver attractive returns to our shareholders and uphold our financial stability. Right now we are concentrating on the successful completion of the transactions, which we are targeting for first quarter of 2026. Upon completion, our focus will shift to integrating these 3 businesses. To ensure a smooth and effective integration, we start the work now with the establishment of a project management office to oversee and plan the integration process. Delivering a successful and seamless completion and integration process will be critical to realizing the considerable synergies we anticipate and ensuring that OMV maximizes the benefits of this transformational transaction. Thank you for your attention. And now Reinhard, Martijn and I will be happy to take your questions.

Thank you, Alfred and Reinhard. Now come to your questions. [Operator Instructions] We'll start the Q&A with Matt Smith, Bank of America.

Congratulations on getting this complex deal over the line. [ Kind of ] my first question focuses on the dividend. I mean you gave us a reconciliation for 2024 in terms of how this is -- deal is free cash flow accretive. And it's also very much picking up on your comments, the emphasis that the Borouge group, the new Borouge group, will give you a higher-quality and more resilient stream of cash flows than before, so I guess I'm just trying to link that back to the dividend. Should we expect this to be accretive to shareholders in terms of an absolute dividend level going forward? Or is this more about sort of shifting the mix between ordinary, special, variable to give greater stability to the current level? And then perhaps I could tack onto that: Are we likely to get a view on that with the CMD? I think you said you'll likely host a CMD in the second half of the year. Or will that all be saved post deal to February 2026? So if that's okay on the first question. And then the second one, I want to just pick up on those synergy number, $500 million on the EBITDA level. You listed a few sort of sources of that synergy, which is very helpful. I just wondered if -- is there any -- are any of those individually really the driving force behind that synergy? Could you give us a bit more color and also reflect on the timing of when they're likely to be achieved, please?

Thanks, Matt, for your questions. This is Reinhard. Let me give you a little bit more details to the dividend. If we say this is an accretive transaction, we are expecting that this is also accretive to the dividend for the OMV shareholders in the mid- to long term. Why am I so confident about that? First of all, we see that this is a dividend that OMV will receive at a floor level, with an upside to even higher dividend from the new Borouge Group International, at $1 billion-plus, yes. So this is very, very strong cash inflow that we can add to our own generated free cash flows that we have here. And of course, you could argue, given the current dividend policy, everything is related to operative cash flow, which with the deconsolidation of Borealis would suffer probably a little bit of a blow. And you're absolutely right. Therefore, we plan to come up on the Capital Markets Day with a precise definition of how we plan to translate also the dividend that we get from the Borouge Group International to OMV, to translate that into the way how you can anticipate also the dividends going ahead. I can assure you this will be rather more than less. And this will be an even more resilient and even more, I would say, upside-oriented distribution policy that we will have.

Thank you, Reinhard. And I will take your second question, around synergies, and maybe comment on the Chemicals markets day. I think this transaction here is really a major step forward in our Chemicals strategy implementation. We have also made significant progress in other areas; just to mention, Neptun Deep or some of our more transformational projects like SAF, geothermal and circular chemicals. And we think it would be useful to give an update then how this moves forward. And for sure, we will integrate other information such as dividends there as well. Just to make sure again to mention: For 2025, we will pay out 2025 dividends to our current valid dividend policy, where we say we will pay out 20% to 30% of our operating cash flow as the total of regular and variable dividend. That -- because the closing of this transaction will only happen then in the Q1 2026, right? Then on the synergies, I would like to summarize there. You're correct. We have a $500 million per year run rate that we want to achieve by 2030. 75% of this, we want to get to within the first 3 years of -- after completion. And the -- we see about a split of 40%, 60% of these synergies, where 60% is more cost items that can come from the procurement areas, from supply chain optimization, from operational, in our production operations optimization but also from corporate-level benefits from a global organization. And the other 40% are then coming from cross-selling opportunities from optimizing our asset network and from enhancing also the production portfolio. As I outlined, the 3 companies all have individual strengths. And by using the assets there, we can squeeze out more of existing assets. We can optimize the products portfolio on the different assets to achieve higher price premiums in the market. We can use then the global market access to then also use regional kind of benefits that we can have to optimize netback margins for the different entities.

We now move on to Josh Stone, UBS.

[ Obviously ] I offer my congratulations for getting this agreement with ADNOC. And it's been a long process in -- I'm sure there must be some relief in the room. First question, on the dividends and the flow of dividends from the JV back to the parent. I just want to ask. What confidence do you have that this is truly a floor dividend for OMV, noting that the JV is planning to be used as an acquisition vehicle? And many of us on the call remember ADNOC Refining and when dividends weren't received for 3 years, so maybe you could spell out why. Why is this time different? And what assurances you've had that these dividends will indeed flow back to OMV as you expect. And then second question. You've disclosed a pro forma EBITDA for 2020 to 2024. Are you able to disclose what the starting point is, though, for 2024; and then ultimately the growth you expect from that level and from new projects at current margins and then getting back to mid-cycle levels; and ultimately your confidence to return to mid-cycle EBITDA, in -- particularly in reference to NOVA given that appears to be the basis for the value or the EV paid on that deal?

Josh, just coming back to the dividend. Why do we think that this is not only confidence but really a reliance on the flow back directly to the shareholders? Because we have designed this vehicle in a way that it is coming with a clear investment-grade credit rating and that the acquisition part of the strategy now is envisaged already in all these numbers with the NOVA acquisition and the acquisition of B4. So this is the current state. This is not something to say, okay, there is the next billion-dollar transaction around the quarter. This is, first, to be consolidated and to be made into a super successful group in the next years. And we have also indicated that we will strengthen the balance sheet by this up to $4 billion equity raise in the capital market, which then provides a very stable basis that also the group can afford to have this dividend policy, which is an aggressive dividend policy. 90% of net profit, with an upside even to free cash flow, I think, is respectable. This can happen if you have such a strong balance sheet. And all the means for that have been outlaid by Alfred and myself today. So we are absolutely confident that this dividend flow will come at a floor, plus, yes. So over the years, when all the projects that are being organically developed like AST2, like the Borouge 4 start-up, like the PDH2 and the Baystar area -- so there's a lot of opportunities that we have. And on top, of course, come the dividend as EBITDA impact of $500 million -- sorry, the synergies. Your second question was about the pro forma EBITDA. We have given you the average of the '20 to '24 EBITDAs, with a level of $4.5 billion. We have also given you a very clear bridge from the $4.5 billion to the above $7 billion so that we see that this is not a reliance just on the market coming back, although we admittedly are in a trough of the cycle at the moment. And we are expecting the chemical markets to pick up over the next year significantly, but it mainly relies on the projects already in place and already today tangible and visible that have been put in place, both in Borealis, in Borouge and in NOVA. And that is the calculation of the mid-cycle EBITDA that we have. And I can also tell you, of course, at some stage, the 2024 numbers can be shared, but they are more or less at the same level as the average '20 to 2024.

We now come to Sasikanth Chilukuru from Morgan Stanley.

Congratulations on the deal as well. The first one I had was on the CapEx for Borouge group as well. So just wondering if you could talk about what do you think is the right level of maintenance CapEx for this company and also what we can think about the EBITDA conversion to free cash flow as well. If you could -- any comments on that would be helpful. The second one was on the potential cash proceeds from -- to, into OMV from the recontribution of Borouge 4. I understand the comments on timing, but I just wanted to check the magnitude of the proceeds. Is it $2.25 billion that we should be looking at, 30% of that in the $7.5 billion? Or are there any other deductions that kind of go into it as well before it comes to OMV?

Sasi, thanks for your questions. The CapEx of Borouge group as it will be created is not entirely transparent before we have the ability to see what kind of synergies, what kind of abilities to bring together the production facilities and make sure that we have the best possible setup, so please bear with us, to the Capital Markets Day where more of that details will be shared, but in the preliminary calculations, the ability that ultimately from an operating cash flow there is enough free cash flow to pay the dividend is actually a given. And we can rely on that. Then your question was on the cash contribution of B4 and actually what will happen there. So if you take Borouge 4 as we speak: Borouge 4 has a financing which is a mix of equity by the 2 shareholders, so Borealis, respectively, OMV and ADNOC; some shareholder loans; and some external financing. And if we put those things together, the equity and the shareholder loans are roughly half. And the external financing are roughly half, together. So what you can see is that, of course, with the recontribution, this half of the equity and the shareholder loans will flow back to the current shareholders. And the debt that we are currently bearing on our balance sheet will then be contributed to the company. I hope that helps you to understand a little bit the mechanics on the B4 recontribution.

Indeed it does.

The next questions come from Giacomo Romeo, Jefferies.

2 questions for me. One, if I may go back to the Borouge dividend flow-through. Because I think it's an important point given that in the past there have been some issues with dividend level of companies you -- of stakes you've acquired. The -- can you please clarify if the dividend level is going to be subject to any sort of limits, being it on Borouge leverage or cash flow threshold? And the second question is you mentioned a $700 million stock issuance potential for Borouge. Is this $700 million combined for you and ADNOC? Or it's $700 million each. And is it only related to Borouge 4? Or it could be considered potentially as part of the full "up to the $4 billion" equity issuance that you will have to do as part of the NOVA acquisition.

Thanks, Giacomo. First of all, regarding the dividends, let's have a look at the track record of Borouge dividends, so far. And this has been excellent. It has not been only stable. It has been extremely resilient all over the cycle, even the chemicals cycle. And it has been always according to the dividend policy, so examples that you may have in mind definitely do not apply to the Borouge environment. And when you were talking [ about ] the $700 million of a potential share issuance for additional equity, this is referring to a combined number. This is not $700 million each. This is $700 million. And you have to imagine that this roughly is oriented on the current equity value that Borealis, respectively, OMV, have in the Borouge 4; and that, of course, times 2 because, to keep all the shares always equal, each party would always do the same. And this is just a value for orientation and it is not something that we have to do. It is something that we might want to do. And there is, I think, your question in that context also. What is the limits? What is more or less the caveats that you could see on the dividend payments? And what we say is we want the Borouge international group to be investment-grade rated. And this is the basis for the financing. This is the basis also for the OMV credit rating. And it is also the ability of the group to have a consistent strong balance sheet. Now this balance sheet will be strengthened by the recontribution of B4. With some element of equity that I have anticipated, it definitely will be strengthened by the up to $4 billion capital raise. And it will also be strengthened from the very beginning on by the equalization payment from OMV that goes directly into the company, going into the balance sheet of the company. That is why we see that the lower than 2.5x multiple on the mid-term range for this group seems absolutely credible. And this is why we are confident on the dividends that carry no other limitations then, that we aim to be investment grade rating.

Thank you, Giacomo, for your questions. We'll now move on to Henry Tarr, Berenberg.

It's around the CapEx for OMV Group and, I guess, the setup of the new entity beyond the potential equity issuance at this point. Then the idea is that Borouge Group International, I guess, will be self-funding equity and debt within itself, but what does that then mean for OMV CapEx? And what was the figure that was going into sort of Borealis through 2024 as a starting point?

Henry, thanks. I think this is a very relevant question because, of course, OMV wants in its further strategy to strengthen the energy sector and the F&F sector; and also, of course, keep this strategy -- extremely strong strategy execution part, with the creation of this giant in polyolefins, up. Now when it comes to the headroom that we have after the EUR 1.6 billion, Alfred has shown you that our leverage ratio will increase, but it will stay significantly below the 30% that we have seen for ourselves as a threshold. So we will be at the peak at about 22%. This leaves another 8% of headroom in a way that is on top of our normal CapEx. And please keep in mind that also our normal CapEx will be reduced for the CapEx of Borealis, which was in 2024 around 900 million. So you can imagine that both these factors do not create too much of an headache for us to be able to have both the organic CapEx and fully considered for the 2 segments that we have in the fully consolidated area but also headroom for additional strengthening and growth measures which we have also in our strategy for enhancing our position in energy and in F&F.

The next questions will come from Matt Lofting, JPMorgan.

I think we all know it's been a long road to get to this point, so congratulations on getting there. I wanted to just ask first on the EBITDA outlook, the $7 billion-plus, how you see the profile over the coming years to sort of getting to that number and when you think you could get to it. I'm sort of mindful, from the perspective of delivering some of the growth projects, that these bigger assets can take time to ramp up. They can take time to stabilize, et cetera. We've seen that in instances like Baystar over the course of recent history. And then secondly, delivery of the more positive view on the EBITDA contribution from NOVA from the acquisition seems a cornerstone of that outlook, so I wondered if you could just sort of share the key deliverable over the coming years in NOVA to do that and also the extent to which there's any risk of impact on NOVA's business from U.S. tariff proposals.

Okay, Matt, thank you for the question. Let me try and answer these. So the EBITDA growth that we have foreseen is really a, let's say, composite of different activities that we have. Number one, it's about implementing the growth projects that we have in place. And then secondly, it's making sure that we complete and ramp up Borouge 4. It's then, thirdly, the implementing efficiency programs, in particular in NOVA. And then it is also about normalizing cycles in the polyolefin market. And then last but not least, it's about the implementation of the synergies that I mentioned. Now let me go -- because I think your question was focused on the growth programs. The significant, let's say, 5 growth projects that we have is the Baystar project that you mentioned. In NOVA, it's the AST2 plant that has been finished and is in the ramp-up phase now. Just like the Baystar, the PDH Kallo project, that is 90-plus-percent complete in building but where the start-up is planned now for the first half of 2026. Then it's a debottlenecking in Borouge 1, 2, 3 of the cracker and 2 polyethylene plant. That is planned to be completed by 2027, 2028. And then it's Borouge 4 that is also quite advanced in the execution and where we are planning the start-up now in 2026. These are substantially the big growth projects that we have. And what we are trying to do there is, of course, to continuously learn and improve in the way how we start those up and get to a fast and speedy ramp-up, but as you could see, right, the start-ups are phased over the next couple of years, with some of them coming already or being in execution like Baystar and AST2; others being finished then 2026; and some, the smaller ones around the debottlenecking in Borouge cracker and polyethylene plants, more '27, '28. Then your other question was around the tariffs that we are looking at. Of course, this is a rather volatile situation. NOVA Chemicals is the fifth biggest polyethylene producer in North America, with 3 production locations, 2 of them in Canada, 1 in the U.S. And we'll see how that turns out exactly and what the length of such potential things could be. We do have some discussions and some protections in the agreements there on the way forward.

Thank you, Matt. The next questions will come from Jonathan Lamb, Wood & Company. Jonathan, I'm not sure whether you are in the line...

Yes. Can you hear me?

Okay, now we can hear you.

Okay. I just have one. It's about how Borouge Group International is going to be accounted for in your financials. So it's going to be consolidated or not consolidated. I'm not sure I heard the details on that.

Sure, Jonathan. The share in Borouge Group International of 46.9% will be accounted for as at equity, so this means we are not accounting EBITDA as EBITDA, but we are counting in -- net profit in our EBITDA, EBIT and net profit. And we are not accounting in operating cash flow, but we are accounting for the dividends in our operating cash flow, free cash flow and then ultimately the financial numbers. So that is how it is being done. It is not a fully controlled company. Therefore, it will not be fully consolidated.

The next questions will come from Bertrand Hodee, Kepler Cheuvreux.

Congratulation for this long-awaited deal. I just wanted to reconcile. What was the cash flow from OMV in 2024 linked to Borealis? According to my math, this was about EUR 1 billion, where you had to deduct 100 million -- EUR 900 million of CapEx, so free cash flow EUR 0.1 million. And then you received a close to or around $500 million of dividends from Borouge. What I'm trying to -- so at a cash flow level, roughly the contribution from Borouge and Borealis combined in 2024 was around, let's say, ballpark 1.5 billion. So that will be replaced over time with a $1 billion dividend. So my -- or minimum. I agree. So my question is you have currently a policy of returning 20% to 30% of cash flow. Are -- you hinted that this would be updated, but should I be right in my thinking that, in any case, this ratio will be likely revised sharply up? That's the first question. Then in terms of free float. So my understanding is that, before the NOVA acquisition being completed, the free float will be around 6%, as you've disclosed, but subsequent to the $4 billion capital increase on which you will not participate, are we right to think that the free float will rise to around 18%? And if not, what I'm missing...

Thanks, Bertrand. First of all, you're absolutely right in your observations, when it comes to the operating cash flow that, of course, with the deconsolidation there will be a shift in the operating cash flow. And this shift will be reflected in the new dividend policy. And I cannot anticipate now, as we were just not even 24 hours before -- after concluding this transaction, how this will be exactly looking like, but this is exactly what I have promised to be provided in the next Capital Markets Day. And from the magnitude. In 2024, our operating cash flow in Chemicals was 1.3 billion. And this, of course, is the operating cash flow. And the free cash flow in Chemicals have been 0.5 billion because we always consolidate Borealis, which means the operating free -- the free cash flow of Borealis plus what Borealis received as a share of dividends from Borouge. So we -- as Borealis is not fully consolidating Borouge, you only get an at-equity part, which on the cash flow side is, of course, only the dividend. So therefore, the idea that ultimately more free cash flow will end, from the Chemicals part, in our pockets with this floor of USD 1 billion is clearly a given. Now your second question was the free float, 6%. Your suggestion was 18%. This is not exactly the number that I have in mind, but you are right that there will be a slight dilution from both shareholders, OMV and ADNOC. But we will be well above 40% each in that even after up to $4 billion equity increase.

Okay, so -- but above 40% means that, well, you will be 80% both, so free float will be below 20%, so am I missing a big chunk by saying 18%?

No. I'm not saying that you are missing anything, but of course, it is hard to determine right now what the capital market value of that company will be. And in the end -- and this is the assumption that you have to take when you're saying what is the value that is being injected, in terms of how it turns out in the free cash flow. Therefore, I -- in the free float. And therefore, I'm saying I'm maybe not quite there with 18% because I believe in a strong valuation of that, but as -- you are right. The free float will be clearly below 20%.

Okay...

And Bertrand, what -- I just want to build on Reinhard. I think he explained everything around the dividend policy. I just want to make sure that I also say right here that we understand the accounting mechanics of this. And we will review for the necessary potential adjustments. And we will come forward as soon as possible to clarify this, but I want to make sure to clearly express here that the guiding principle will be to ensure that OMV's shareholders continue to benefit from competitive returns. This is part of our shareholder value proposition.

We now come to Oleg Galbur, ODDO BHF.

Congratulations on the successful closure of transaction. I have 2 rather short questions left on my list. The first one is can you share your view on the timing of a potential dual listing of Borouge Group International on Vienna Stock Exchange. And secondly, it might be too early to ask, but do you already have an idea what could be the impact of this transaction on OMV's corporate income tax since the company will be headquartered in Austria?

Thanks, Oleg, for the question. Regarding the timing of the dual listing, I think it's important to keep in mind the sequence in which things have to develop. So the first step would be that the current listing of Borouge is being transformed into a listing of Borouge Group International, the newly formed group. The second step is that, in the course of the capital increase that we plan, the inclusion in the MSCI index in the sense of the Abu Dhabi emerging markets part of the MSCI will be the next step. And after that, the preparations for the inclusion into index in the Austrian stock exchange in Vienna will start, so realistically speaking, if we are starting at somewhere at -- in or at the end of first quarter 2026, we will probably end with a listing in 2027, in the course of that year. At least that is the target and that is the aim of both parties to make sure that this happens. Then your second question was...

Corporate tax...

The impact on corporate income tax. First of all, the corporate income tax on dividends is mostly a little bit lower than the corporate income tax on operations, but we have to see that all that in Austria plays together with, of course, some strengthening business on the Energy part and the F&F part. So I still would argue the higher impact on the level of our corporate income tax is the oil price and the gas price because there you would see most of the variation and the volatility in our basis for taxation. And of course, I would see in principle also some positive movement of the corporate income tax to a replacement of a fully consolidated Borealis to now income, from just net profit and dividend, as the free cash flow.

We now come to the end of the conference call. We would like to thank you for joining us on such short notice. Should you have any further questions, please contact the investor relations team. We will be happy to help. Have a nice day. Goodbye.

Thank you very much. Goodbye.

Thank you. Bye-bye.