Morningstar

Eni Earnings: Profit Falls on Lower Oil and Gas Prices

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Securities In This Article
Eni SpA
(ENI)

Eni ENI reported adjusted net earnings of EUR 2.9 billion for the first quarter, a small decline from adjusted net earnings of EUR 3.2 billion a year ago. The weakening profit was a result of lower oil and gas prices, which fell 20% and 42%, respectively, from last year.

Operating cash flow, excluding working capital, decreased to EUR 5.3 billion from EUR 5.6 billion in 2022. Net debt excluding leases rose to EUR 8.0 billion, implying a gearing ratio of 14% versus 13% the year prior. Eni left its shareholder payout guidance unchanged for 2023: a dividend of EUR 0.94 per share and EUR 2.2 billion in share buybacks. It previously revised its shareholder payout target to 25%-30% of cash flow, which places it at the lower end of the peer range.

The exploration and production segment’s adjusted operating profit fell to EUR 2.8 billion from EUR 4.3 billion the year before, largely due to lower oil and gas prices. First-quarter production held constant at 1.66 million barrels of oil equivalent per day from the year before, largely thanks to ramp-ups in Mozambique and Mexico that were offset by mature field declines. Management reiterated its full-year production guidance of 1.63-1.67 mmboe/d with second-quarter production of 1.6 mmboe/d.

The global gas and liquefied natural gas portfolio’s adjusted operating profit rose to EUR 1.4 billion from EUR 931 million the year before, driven by optimization and successful trading, which captured value from price movements. Sales volumes offset some of these gains, falling to 14.8 billion cubic meters from 18.2 bcm the year prior. Management tightened its full-year operating income guidance to EUR 2.0 billion-EUR 2.2 billion from EUR 1.7 billion-EUR 2.2 billion, a positive sign for the segment.

The mobility, refining, and chemicals segment reported adjusted operating income of EUR 154 million compared with a loss of EUR 91 million the year prior, benefiting from stronger refining margins but harmed by weakening chemical demand.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Allen Good, CFA

Director
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Allen Good, CFA, is a director, Europe, for Morningstar*. Based in Amsterdam, he covers the oil and gas industries as well as manages a team of multi-industry analysts. He is also chair of the Morningstar Research Services Economic Moat Committee, a group of senior members of the equity research team responsible for reviewing all Economic Moat ratings issued by Morningstar. In this role, he is responsible for ensuring consistent application of Morningstar’s Economic Moat methodology across sectors and regions as well as updating and revising the methodology. His specialty is global integrated oils such as Exxon, Chevron and Shell and US independent refiners such as Valero and Marathon Petroleum. He also contributes to developing hydrocarbon price and petroleum product margin forecasts used in valuation models.

Before joining Morningstar in 2008, He performed merger and acquisition advisory work for a middle-market investment bank. Before that, he spent several years at Black & Decker in various operational roles, primarily focused on manufacturing and distribution.

Good holds a bachelor’s degree in business from the University of Tennessee and a master’s degree in business administration from Kenan-Flagler Business School at the University of North Carolina. He also holds the Chartered Financial Analyst® designation.

* Morningstar Holland BV (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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