Eni SpA posted a first-quarter profit that beat estimates on strong gas trading, but trimmed its full-year earnings guidance due to lower prices for the fuel.
(Bloomberg) — Eni SpA posted a first-quarter profit that beat estimates on strong gas trading, but trimmed its full-year earnings guidance due to lower prices for the fuel.
The Italian oil and gas giant said it expects 2023 adjusted operating profit to be €12 billion ($13.2 billion), down from previous guidance of €13 billion. Cash flow from operations was trimmed by roughly the same amount to €16 billion.
Eni is among the first oil majors to report earnings in a season that’s expected to deliver sizable cash flows even as profit falls from last year’s record levels. So far, companies have been using the profit bonanza to reward investors and pay down debt and there’s little sign of that changing, despite speculation about whether there’ll be a pivot to faster growth through big deals.
The company reaffirmed the previously announced increase in its dividend to €0.94 a share and plans for €2.2 billion of share buybacks, pending shareholder authorization at a May 10 meeting. Its shares were little changed at 13.41 euros as of 10:08 a.m. in Milan.
“Eni has delivered an excellent set of operating and financial results despite a weakening scenario,” Chief Executive Officer Claudio Descalzi said in a statement on Friday. “We remain financially disciplined as a necessity to meet the challenges of the energy market and deliver value for our shareholders.”
First-quarter adjusted net income was €2.91 billion, according to the statement, beating the average analyst estimate of €2.3 billion. Its gas business reported an adjusted operating profit of €1.37 billion, 47% higher than a year earlier and well above estimates, thanks to “optimization and trading activities,” according to the statement. The exploration and production division’s adjusted operating profit of €2.79 billion also beat estimates.
“Eni continues to benefit from strong trading opportunities in the European gas market,” according to a note from Morgan Stanley. “Following several quarters of misses, upstream oil and gas production was strong this quarter.”
The adjustment to Eni’s full-year earnings guidance primarily reflects lower gas prices as the energy crisis in Europe caused by Russia’s invasion of Ukraine eases. The revised outlook is modeled on a gas price of €529 per thousand cubic meters, down from €970 previously. It’s estimate for Brent crude was unchanged at $85 a barrel.
The guidance is “nothing to be concerned about” said Banco Santander SA analyst Jason Kenney. Its is ahead of previous implied price-sensitivity guidance and so can be seen as “positive,” he said in a note.
–With assistance from Chiara Remondini.
(Updates with share price in fourth paragraph.)
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