Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Eni SpA (E, Financial) reported a pro forma adjusted EBITDA of EUR3.4 billion and cash flow from operations of EUR2.9 billion, demonstrating resilience despite a challenging market environment.
- The company successfully reduced net debt and leverage ahead of its original plan, indicating strong financial management.
- Eni SpA (E) confirmed a EUR2.9 billion investment by KKR for a 25% stake in Enilive, supporting growth and validating the value created.
- The company is advancing its transition strategy with significant progress in biorefineries in South Korea and Malaysia, and the start of its first bio jet plant.
- Eni SpA (E) increased its 2024 share buyback plan to EUR2 billion, reflecting better-than-expected progress in M&A and financial performance.
Negative Points
- The company's cash flow from operations and EBIT were down 14% year-on-year, reflecting the impact of a deteriorating market scenario.
- Eni SpA (E) faces challenges in its petrochemical segment, with Versalis continuing to incur losses and a restructuring plan that may not achieve breakeven EBITDA by 2025.
- The European chemicals industry is expected to remain weak, with no significant improvement anticipated in 2025, impacting Eni's operations.
- The company is dealing with a high tax rate of 51%, consistent with the current oil price and earnings mix.
- Eni SpA (E) anticipates a challenging environment for its refining operations, with low margins expected to persist in the European market.
Q & A Highlights
Q: Can you update us on the priority of selling an additional stake in Enilive after the 25% sale to KKR?
A: Francesco Gattei, Chief Transition & Financial Officer, explained that after selling 25% to KKR, Eni is now considering selling a smaller additional stake, likely at the lower end of the 5% to 10% range initially considered. This reflects a strategic decision to keep options open for future partnerships without overextending the sale of shares.
Q: What is the expected timeline for profitability in the petrochemical restructuring, and how has the union responded?
A: Adriano Alfani noted that due to a challenging market outlook, profitability improvements will mainly come from restructuring actions. The union understands the need for change due to the challenging environment. However, reaching breakeven EBITDA by 2025 is unlikely without market improvement.
Q: Can you provide insights into the expected cash inflow from disposals in 2025 and the activities planned in Indonesia?
A: Francesco Gattei mentioned that Eni expects around EUR2.5 billion from disposals next year. Guido Brusco added that in Indonesia, Eni plans to ramp up production with a combined output of over 400,000 barrels of oil equivalent per day, leveraging existing facilities and exploring further potential.
Q: How does Eni plan to manage its distribution policy given the current leverage and cash flow situation?
A: Francesco Gattei stated that the current distribution policy, which includes a EUR2 billion buyback, reflects Eni's improved leverage and disposal success. Future distributions will depend on ongoing strategic and financial evaluations, aiming for a sustainable and progressive approach.
Q: What are the strategic implications of Eni's new business structure, and what are the plans for the UK North Sea post-Etika combination?
A: Francesco Gattei explained that the new structure focuses on enhancing technical and trading capabilities, with a strategic focus on transforming the chemical sector. In the UK, Eni aims to leverage synergies and expand its presence in oil, gas, CCS, and renewables.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
