Eni SpA posted a first-quarter profit that beat estimates on strong gas trading, but cut its full-year earnings guidance due to lower fuel prices.
The Italian oil and gas giant said it expects 2023 adjusted operating profit to be 12 billion euros ($13.2 billion), down from previous guidance of 13 billion euros. Cash flow from operations was reduced by roughly the same amount to €16 billion.
Eni is one of the first major oil companies to report earnings in a season expected to deliver sizable cash flows, even as profits fall from record levels last year. So far, companies have been using the profit bonanza to reward investors and pay down debt and there is little sign of that changing, despite speculation about whether there will be a pivot to faster growth through big deals.
The company reaffirmed the previously announced increase in its dividend to 0.94 euros per share and plans to buy back 2.2 billion euros worth of shares, pending shareholder approval at a May 10 meeting. Its shares were little changed at 13.41 euros at 10:08 a.m. in Milan.
“Eni has obtained an excellent set of operational and financial results despite a scenario of weakness,” CEO Claudio Descalzi said in a statement on Friday. “We remain financially disciplined as necessary to meet the challenges of the energy market and deliver value to our shareholders.”
Adjusted net profit for the first quarter was 2.91 billion euros, according to the statement, beating analysts’ average estimate of 2.3 billion euros. Its gas business posted an adjusted operating profit of 1.37 billion euros, up 47% from 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 euros also beat estimates.
“Eni continues to benefit from strong commercial opportunities in the European gas market,” according to a Morgan Stanley note. “After several quarters of incidents, upstream oil and gas production was strong this quarter.”
The adjustment to Eni’s full-year earnings guidance mainly reflects lower gas prices as the energy crisis in Europe caused by Russia’s invasion of Ukraine eases. The revised outlook is based on a gas price of 529 euros per thousand cubic meters, down from 970 euros previously. Its estimate for Brent crude remained unchanged at $85 a barrel.
The guidance is “not something to worry about,” said Jason Kenney, an analyst at Banco Santander SA. It is ahead of the implied prior price sensitivity guidance and can therefore be viewed as “positive,” it said in a note.
— With the assistance of Chiara Remondini.
