Italian energy giant Eni (E, Financial) announced a 25% increase in its share buyback program, raising it to €2 billion ($2.2 billion) after its third-quarter earnings exceeded expectations. The company posted an adjusted net profit of €1.27 billion for Q3, surpassing analysts' forecasts of €1.08 billion, although it fell short of the €1.82 billion from the same period last year.
Previously, in July, Eni mentioned that an improved macroeconomic outlook could lead to an increase in its buyback plan from €1.6 billion to €2.1 billion. Despite anticipated declines in oil prices, Eni remains committed to enhancing investor returns, crediting progress in asset disposal and cost control efforts for debt management.
Analysts have warned that dropping oil prices might compel major energy companies to borrow funds or reduce buybacks to maintain shareholder dividends. Eni recently agreed to sell a 25% stake in its biofuel venture Enilive to U.S. fund KKR for €2.9 billion, reflecting its strategy to fund energy transition initiatives by spinning off growth-oriented businesses.
Citi analysts attributed Eni's better-than-expected Q3 performance to successful gas trading, improved downstream operations, and reduced upstream tax rates. The company's gas and LNG segment reported an adjusted operating profit of €250 million. Although the chemical business faced losses again, Eni has pledged a €2 billion investment over the next five years for comprehensive reform and decarbonization.
Eni adjusted its full-year outlook, forecasting the average Brent crude price to drop to $83 per barrel, compared to the earlier estimate of $86. Consequently, the company revised down its full-year cash flow and operating profit expectations. The Q3 operating cash flow was €2.9 billion, aligning with market predictions. The debt-to-equity ratio remained stable at 22% from the previous quarter, with future expectations to fall at the low end of 15%-20%.
Eni's four-year asset disposal program is advancing faster than anticipated, with nearly all of the planned €8 billion in net proceeds showing strong visibility. The company also hinted at possibly selling shares in a recently discovered oil field, though it provided no further details. Pre-market trading saw Eni shares rise by 0.39%, yet the stock has declined nearly 5% year-to-date.
