Wintershall's profits fall by a third in 2015
Company attributes fall in earnings to lower oil prices and asset divestment
Wintershall’s profits in 2015 fell by about a third from the year before on the back of low oil and gas prices.
Germany’s main exploration and production company reported earnings before interest and tax (EBIT) of $1.22bn, down from $1.6bn in 2014.
Although the company’s profits have exceeded $1bn for five consecutive years, its 2015 net income after minority interests fell to just above $1bn.
“2016 is certainly not the year to be setting new records for sales and profits,” said Mario Mehren, CEO and chairman of Wintershall.
Speaking at the company’s annual press conference in Kassel, Germany, where Wintershall’s headquarters are based, Mehren said he based future plans for investment on an average oil price of $40 per barrel and a currency exchange rate of 1.10 dollars to the euro.
“At the time, we know that 2016 will bring many uncertainties and will be a year of transition. The oil price is difficult to forecast,” he said.
Sales and EBIT are expected to drop even further in 2016, which the company CEO described as a difficult year for profits.
The company’s sales fell to $14.6bn due to an asset swap between Wintershall and Russia's Gazprom at the end of September 2015, which restored in Wintershall’s giving up its gas trading and storage business.
On the plus side, the $389mn sale was able to partially cushion the impact from lower oil prices on the company’s financial results.
“Volatility at low prices has become the new norm. We have to live with the low oil and gas prices and we cannot fully compensate for these by raising production. Hence, strict cost management, the reduction of investments, focused innovation and operational excellence are crucial now,” Mehren said.