• Pro Forma Adjusted EBITDA: EUR3.4 billion for Q3 2024.
• Cash Flow from Operations: EUR2.9 billion for Q3 2024; EUR10.7 billion for the nine months.
• CapEx: EUR2 billion for Q3 2024; EUR6.1 billion for the nine months, expected below EUR9 billion for the year.
• Net CapEx: EUR1.6 billion for Q3 2024, expected below EUR6 billion for the year.
• Upstream Production: Expected around 1.7 million barrels per day for the full year.
• Pro Forma EBIT: EUR3.4 billion for Q3 2024.
• Net Debt and Leverage: Both down in Q3 2024, comfortably below the planned 15%-25% leverage range.
• Share Buyback: EUR560 million in Q3 2024; planned increase to EUR2 billion for 2024.
• Dividend: First tranche of annual EUR1 dividend paid in September, up 6% from last year.
• GGP Pro Forma EBIT: Raised to EUR1.1 billion for the full year.
• Transition Businesses EBITDA: Expected to deliver EUR1 billion each for the full year.
• Cash Tax Rate: Expected to revert to a more normal level in the low 30s for Q4 2024.

• Warning! GuruFocus has detected 4 Warning Sign with E.

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 (NYSE:E) 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 (NYSE: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 (NYSE: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 (NYSE: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 (NYSE: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.