How are Eni’s accounts going?
All results reported by Eni in the fourth quarter of 2023
Eni announced its results for the fourth quarter of 2023 on Friday, which proved to be good overall despite some difficulties. In fact, in the morning, its shares lost 1 percent on the Milan stock exchange, in contrast to the 0.6 percent increase in the FTSE MIB index, which brings together the largest capitalization Italian companies.
ENI'S RESULTS IN THE FOURTH QUARTER OF 2023
In the fourth quarter of last year Eni reported an adjusted net profit of 1.64 billion euros, exceeding analysts' expectations (1.63 billion). Adjusted operating profit, however, was 2.8 billion, less than what observers estimated (2.9 billion).
Considering the whole of 2023, Eni recorded a net profit of 8.3 billion euros, 38 percent less than in 2022, when energy prices had grown significantly mainly due to the Russian invasion of Ukraine.
THE EXCELLENT RESULT OF THE GAS DIVISION
In the last quarter of last year, the record adjusted operating profit – around 680 million euros – reported by the division dedicated to gas and liquefied gas stood out. Analysts expected much less, namely 477 million.
According to Eni, which however did not provide further details, the result was also possible thanks to a favorable arbitration procedure. According to Reuters , Eni could be referring to the payment of 550 million by the German company Uniper, ordered by an arbitration court and linked to a liquefied gas supply contract that expired in 2022.
HOW HYDROCARBON PRODUCTION IS GOING
In the fourth quarter of 2023, hydrocarbon production grew by 6 percent year-on-year, reaching 1.7 million barrels of oil equivalent per day.
THE SLOWDOWN OF THE PETROCHEMICAL DIVISION
Although the gas division beat internal forecasts for all of 2023, its results were dented by weaker performance from its refining and chemicals division. In the fourth quarter of last year this unit reported an adjusted operating loss of 87 million euros, while analysts had expected a profit of 182.8 million.
Eni spoke of "negative trends" in the petrochemical sector (the decline in demand, for example) which led to a reduction in margins of around 40 percent compared to the previous year.
On biofuels, last year Enilive – the division dedicated to these fuels of organic origin and more generally to mobility – acquired a 50 percent stake in the Chalmette biorefinery in the United States and entered into a joint venture agreement with South Korean chemical company LG Chem to build a plant in South Korea. In Italy, however, Eni will build a third biorefinery, in Livorno, with a capacity of 500,000 tonnes per year: the project has yet to complete the authorization process, but the start-up of the site is already scheduled for 2026.
In 2023 Enilive recorded an adjusted operating profit of 730 million euros, 8 percent more on an annual basis.
HOW PLENITUDE WENT
Plenitude, the Eni group company dedicated to the distribution of electricity and gas, reported an adjusted operating profit of 111 million euros in the fourth quarter of 2023, lower than expected due to reduced energy sales margins. The unit is making an expansion into the renewables sector, reaching a capacity of 3 gigawatts.
In December, Plenitude signed an agreement with the Swiss investment company Energy Infrastructure Partners for the latter's entry into the share capital, through a capital increase of 700 million euros. The operation will be completed in early 2024.
DESCALZI'S WORDS
According to Claudio Descalzi, CEO of Eni, the 2023 financial results “were excellent, with a pro forma Ebit of approximately €18 billion and an adjusted net profit exceeding €8 billion. Operating cash generation of €16.5 billion on an adjusted basis before working capital absorption ensured a significant surplus in addition to the substantial cash return to shareholders of €4.8 billion, maintaining a debt ratio of 0.2 ”.
The group's dividend plans and scenario for 2024 will be presented on March 14th during the Capital Markets Day.
WILL THE MINISTRY OF FINANCE REDUCE ITS PRESENCE IN ENI?
Eni, meanwhile, is close to completing its 2.2 billion euro share buyback plan. In this regard, according to Bloomberg it is possible that the Ministry of Finance could decide to sell a stake of up to 4 percent, aiming to raise 2 billion euros, useful for reducing public debt and financing some electoral promises.
Currently the Ministry of Finance directly owns 4.6 percent of Eni's shares, to which is added an indirect share – through Cassa Depositi e Prestiti – of 27.7 percent: consequently, it has de facto control over the company.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/eni-risultati-quarto-trimestre-2023/ on Fri, 16 Feb 2024 14:21:10 +0000.