Eni Reports 49% Drop in Q2 Profits, But Beats Expectations
Italian energy group Eni has announced a 49% decline in its adjusted net profit for the second quarter of this year, primarily due to weaker commodity prices. However, the company’s gas business performed strongly, surpassing analysts’ expectations.
In the second quarter, Eni’s adjusted net profit amounted to 1.94 billion euros ($2.13 billion), down from 3.81 billion euros in the same period last year. Despite the decrease, it exceeded the analyst consensus of 1.64 billion euros.
The company raised its 2023 guidance for its gas business (GGP) after it significantly contributed to Eni’s results in Q2, achieving an adjusted operating profit of 1.1 billion euros. This figure was more than double the projected 0.5 billion euros.
Eni swiftly replaced Moscow’s gas supplies with fuel extracted from African countries following Russia’s invasion of Ukraine last year. This move strengthened its position in the gas markets.
The company attributed the strong performance of its gas division in the last three months to trading activity related to its extensive gas portfolio, as well as re-negotiations and settlements related to contracts.
Eni now anticipates the gas business to generate adjusted earnings before interest and taxes (EBIT) of between 2.7 billion and 3.0 billion euros for the year, compared to the previous guidance of 2.0-2.2 billion euros.
The company also improved its full-year outlook for its low-carbon unit, Plenitude, and reduced its capital expenditure plans for this year to below 9 billion euros from the previous estimate of 9.2 billion euros.
Despite the weaker oil and gas prices, Eni maintains its expectation for adjusted EBIT of 12 billion euros for this year.
Rewarding Investors
In contrast to Shell and TotalEnergies, Eni reported strong second-quarter results, with adjusted EBIT and net income surpassing market expectations. Royal Bank of Scotland described the new guidance for the gas division as a significant improvement compared to market forecasts.
Eni’s shares rose by 1%, outperforming Milan’s blue-chip index, despite facing a 30% decline in crude oil prices and a drop of over 60% in gas prices and refining margins compared to the same period last year.
Despite the challenging outlook for commodity prices, Eni plans to continue its share buy-back program initiated in May.
Eni CEO Claudio Descalzi stated, “Considering our first-half results and continuing business performance that drives raised guidance, we have a solid position from which to pay our first quarterly installment of the raised 0.94 euros per share 2023 dividend in September and continue our 2.2 billion euro buy-back.”