Eni's Q2 Profit Declines But Beats Expectations: Shares Rise On Strong Production

Eni S.p.A. E shares are trading higher after the company reported Q2 FY24 pro forma adjusted EBIT of €4.1 billion, down 8% Y/Y, in the quarter.

Hydrocarbon production rose 6% Y/Y to €1,712 kboe/d, with installed capacity from renewables of 3.1 GW at the end of the period.

Production benefitted from a continued ramp-up of the company’s flagship projects in Côte d’Ivoire and Congo Floating LNG, a higher contribution from Libya, and the full integration of Neptune.

In Q2 2024, E&P proforma adjusted EBIT was €3.5 billion, up 26% Y/Y, fueled by higher production and efficiency gains.

GGP proforma adjusted EBIT stood at €0.33 billion, reflecting ongoing optimization of the gas and LNG portfolio.

Adjusted net profit stood at €1.5 billion, down 21% Y/Y, in the quarter but above an analyst consensus of €1.42 billion (as per Reuters).

Cash flow from operations before changes in working capital at replacement cost fell 8% Y/Y to €3.91 billion.

CEO Claudio Descalzi stated, "We are upgrading our Upstream portfolio, having recently announced the divestment of our non-core assets in Alaska, the ongoing completion of the sale of onshore Nigeria, and agreed a combination with Ithaca Energy for our UK assets.”

Apart from this, PETRONAS, Eni’s Enilive S.p.A, and Euglena Co. finalized the investment decision to build a biorefinery at PETRONAS’ Pengerang Integrated Complex (PIC) in Johor, Malaysia.

The biorefinery, slated for completion in late 2028, will produce Sustainable Aviation Fuel (SAF) and other biofuels.

Construction starts in Q4 2024, and the facility will process 650,000 tonnes of raw materials per year to produce SAF, HVO, and bio-naphtha.

Outlook: The company projects hydrocarbon production to reach the upper end of the 1.69 – 1.71 million boe/d range, given a forecast Brent price of $86/bbl.

The company now expects proforma adjusted EBIT of around €15 billion, with adjusted CFFO before working capital expected to exceed €14 billion for the year.

Eni anticipates the next quarterly dividend, following shareholder approval of a €1 per share dividend for FY 2024 (a 6% increase from 2023), will be €0.25 per share, payable on Sept. 25, 2024.

After shareholder approval of a new €3.5 billion buyback plan, management confirms a 2024 buyback of €1.6 billion, with a faster pace of repurchases than previously planned.

The company’s disposal plan is advancing ahead of schedule, with nearly all of the €8 billion net proceeds over the four-year period now clearly visible.

This week, Eni secures an exclusivity agreement with KKR to sell a 20%-25% stake in Enilive, valuing it at €11.5 billion-€12.5 billion.

Investors can gain exposure to Eni via The Advisors? Inner Circle Fund Cambiar Aggressive Value ETF CAMX.

Price Action: E shares are up 4.23% at $31.57 at last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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