Eni Raises Full-Year Guidance After Profit Beats Estimates

(Bloomberg) -- Eni SpA’s second-quarter profit was better than expected after a strong performance at its upstream business, prompting the company to revise up its guidance for the year. 

European energy companies have been grappling with competing forces — the negative impact of low natural gas prices and falling refining margins due to weak fuel demand, against the positive effect of higher crude prices amid OPEC+ supply cuts. For Eni, the upside outweighed the downside. 

The Italian energy giant’s adjusted net income was €1.52 billion ($1.7 billion) in second quarter, beating the average analyst estimate of €1.46 billion. Eni raised its full-year target for proforma adjusted earnings before interest and taxes by €1 billion to about €15 billion.

Shares of the company rose 3.1% to €14.46 as of 9:01 a.m. in Milan. 

The exploration and production unit reported an adjusted operating income of €3.53 billion, up by 26% from same period last year. Hydrocarbons productions rose 6% from previous quarter to 1.71 million barrels of oil equivalent a day. 

This growth was supported by the acquisition of Neptune Energy last year, the ramp-ups of projects in the Ivory Coast and Mozambique, and higher Libyan production, according to statement. Production for this year is seen at the upper end of the range of 1.69 million to 1.71 million barrels of oil equivalent a day, assuming a Brent crude price of $86 a barrel.

Cash flow from operations could exceed the previous €14 billion target. Proforma adjusted Ebit guidance for the gas unit was raised to about €1 billion from €800 million.

Debt Reduction

Eni has a four-year plans to sell assets worth about €8 billion. In the second quarter it divested a non-core upstream asset in Alaska and reached an agreement to sell a stake in its biorefining unit Enilive. 

“With the progress now being made on divestments, we expect leverage to be significantly below 0.2 by year end, better than our original expectation,” Chief Executive Officer Claudio Descalzi said in the statement. “This will enable us to speed up the execution of our €1.6 billion share buyback program.”

As cash flow is expected to increase, the company said it will to evaluate an increase of €500 million in its buyback program of €1.6 billion. 

“Eni has signed a number of divestments which should be cashed in over the coming quarters,” RBC Europe Limited’s Biraj Borkhataria said in a note. “On our numbers, it is plausible to think that Eni’s gearing could approach 10-15% by the end of 2025.”

(Updated with earnings details and analyst comments throughout)

©2024 Bloomberg L.P.