Repsol Reports Mixed Q3 Results for 2024

Repsol (OTC:REPYY) S.A. (REP.MC), the Spanish multinational energy company, has reported a mixed set of results for the third quarter of 2024. CEO Josu Jon Imaz highlighted a challenging quarter marked by weaker refining margins, volatile oil prices, and geopolitical instability. Despite these challenges, the company has seen an improvement in cash flow from operations, which reached €1.5 billion. However, adjusted income for the first nine months fell by 49% year-over-year to €558 million. Repsol's net debt rose to €5.5 billion, with net capital expenditures (CapEx) totaling €4.9 billion year-to-date.

Key Takeaways

• Adjusted income for Repsol in the first nine months of 2024 was €558 million, a 49% decrease from the previous year.
• Cash flow from operations improved to €1.5 billion, despite a challenging third quarter.
• Net debt increased to €5.5 billion, with net CapEx reaching €4.9 billion year-to-date.
• Repsol paid a cash dividend of €0.9 per share in July, a 30% increase from 2023, and bought back 16 million shares.
• The company's production forecast for 2024 is at the lower end of the 570,000 to 600,000 barrels per day range, with cash flow from operations revised down to €6 billion.

Company Outlook

• Repsol anticipates 2024 production to be at the lower end of the 570,000 to 600,000 barrels per day range.
• The company's 2024 cash flow from operations estimate is revised down to €6 billion.
• Repsol maintains a commitment to a net CapEx of €16 billion to €19 billion from 2024 to 2027.
• Dividends for 2025 are expected to increase by 3% to €1.128 billion, with a minimum total cash dividend of €0.975 per share.

Bearish Highlights

• The third quarter faced challenges such as weaker refining margins and volatile oil prices.
• Adjusted income in the Low Carbon generation division was negative due to lower power prices.
• Geopolitical instability and production interruptions in Libya impacted overall performance.

Bullish Highlights

• The company has tripled its customer base since 2018, becoming a leading provider in Spain.
• Repsol reported a 1.7x increase in EBITDA for the first nine months compared to the previous year.
• The Waylet app has significantly contributed to growth, reaching nearly 9 million users.

Misses

• Adjusted income for the Industrial segment and the Chemicals sector faced challenges, with the latter seeing only a marginal increase in margin indicators.
• The Low Carbon generation division reported a negative adjusted income of €7 million.

Q&A Highlights

• Management expressed confidence in maintaining refining margins around $6 per barrel.
• The impact of the Spanish VAT guarantee on refining margins is expected to be positive.
• The previously proposed permanent windfall tax in Spain has been withdrawn.
• Upstream production for the fourth quarter is expected to be around 570,000-575,000 barrels per day.

Repsol's third-quarter performance reflects the complex dynamics of the global energy market, with various external factors influencing the company's financial outcomes. Despite a significant drop in adjusted income, Repsol has managed to improve its cash flow and maintain a robust dividend policy. The company's strategic investments in Spain and its commitment to shareholder returns underscore its resilience in the face of market headwinds. However, the ongoing geopolitical and macroeconomic uncertainties suggest a cautious outlook for the upcoming year.