ENI NET PROFIT DOWN BY 27%

ENI - Eni results for the second quarter and half year 2019

26/07/2019 07:45. Yesterday, Eni's Board of Directors approved the Group results1 for the second quarter and first half of 2019 (unaudited). Commenting on the results, Claudio Descalzi, CEO of Eni, remarked:

"In the first half 2019, Eni delivered excellent operating and financial results, making substantial progress towards the achievement of the full-year targets outlined in its industrial plan. Group cash flow before changes in working capital increased by 20% notwithstanding a less supportive trading environment than in the comparative period and largely funded capex, which remained under control in line with our financial discipline, cash return to shareholders, which in addition to the payment of the 2018 dividend, can now also count on the share buy-back programme. Therefore, net borrowings decreased by a further 5% to €7.87 billion excluding accounting lease liabilities. We expect to generate additional organic cash surplus in the near future owing to our expectation that Brent will exceed our level of cash neutrality, which at approximately 55 $/barrel is forecast to remain below actual oil prices. Our industrial performance had underpinned these results. In the Upstream, our operating model designed to minimise the time-to-market obtained another great success in Mexico with the start-up of Area 1 in less than a year following approval of the plan of development. We expanded our production capacity organically, by growing mainly in Egypt where the Zohr field is approaching full plateau. The Gas&Power segment has continued to strengthen its performance thanks to the enhancement of the long-term gas portfolio, of which a significant step was the renewal of the gas agreement with Sonatrach. The gas retail business reported robust results by enlarging its customer base by 130,000 delivery points. The R&M and Chemicals businesses managed to withstand an unfavorable trading environment recovering in the second quarter, especially in the oil marketing. Our sustainability key performance indicators are showing steady improvement, in line with targets and we highlight the start-up of the Gela Green refinery. Based on these results and prospects, it is my intention to reaffirm to our Board of Directors the proposal of an interim dividend of €0.43 per share."

Group results

• Adjusted operating profit: €2.28 billion for the second quarter, down by 11% q-o-q (€4.63 billion in the first half, down by 6%). Excluding the impact of the loss of control over Eni Norge on the 2018 results to allow a-like-for-like comparison, and net of scenario effects and IFRS 16 accounting, the Group adjusted operating profit increased by 9% in the quarter (up by 7% in the first half).
• Adjusted net profit: €0.56 billion for the quarter, down by 27% q-o-q (down by 24% excluding IFRS 16 accounting effects). €1.55 billion in the first half, down by 11% (down by 8% excluding IFRS 16 accounting effects).
• Net profit: €0.42 billion and €1.52 billion in the quarter and the first half, respectively.
• Robust growth in cash flow before working capital at replacement cost4: €3.39 billion, up by 43%, and €6.8 billion, up by 23%, in the second quarter and in the first half of 2019, respectively. These increases remain still remarkable even when excluding IFRS 16 accounting effects and discounting from the comparative periods certain extraordinary items which negatively affected the result by approximately €500 million: up by 18% to €3.3 billion in the second quarter; up by 9% to €6.5 billion in the first half of 2019.
• Cash flow provided by operating activities: €6.61 billion in the first half, up by 27% (€4.52 billion in the second quarter, up by 49%), which was negatively affected by an extraordinary payment to settle an arbitration outcome (€330 million).
• Capital expenditure and investment, net: €3.79 billion in the first half, net of the purchase of reserves in Alaska and Algeria (IFRS 16 effects were immaterial).
• Net borrowings: €7.87 billion before the effect of IFRS 16; down by 5% from 2018 year-end. Including IFRS 16, net borrowings was €13.59 billion, of which around €2 billion pertains to the share of lease liabilities attributable to joint operators in Eni-led upstream project.
• Leverage: 0.15 before the effect of IFRS 16, lower than the values at December 31, 2018 and March 31, 2019. Including IFRS 16, leverage was 0.27, or 0.23 excluding the aforementioned share of lease liabilities attributable to joint operators.
• Buy-back: the buy-back program of the Eni share started at the end of May; as of June 30, 2019 3.69 million of shares have been repurchased for a total consideration of €52.4 million.
• 2019 interim dividend proposal: €0.43 per share5, out of a full-year dividend forecast of €0.86 per share.

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Earlier:

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