Eni S.p.A. (E, Financial) (FRA:ENI, Financial)Â posted a turnaround in the net profit attributable to the company’s shareholders to 965 million euros ($1.048 billion), or 27 cents per share, from a loss of 383 million euros, or 11 cents per share, in the first quarter.
The energy company closed the quarter with a net profit, adjusted to one-time charges, of 744 million euros, or 21 cents per share, an impressive growth from the same item of one year ago when Eni reported an adjusted net profit of only 2 million euros, or 0 cents per share.
Eni beat the consensus estimate on adjusted net profit attributable to shareholders by nearly 22%, having analysts forecasted the Italian global oil and gas producer would have closed the first quarter of 2017 with an adjusted net profit of 610 million euros.
The adjusted operating profit for the first quarter was 2.111 billion euros, impressive growth on a year-over-year basis, and the company beat analysts’ expectations on the adjusted operating profit by 281 million euros.
The first quarter adjusted operating profit came from the Exploration & Production (E&P) segment –Â up 77.2% (or 1.415 billion euros) –Â from the Gas & Power (G&P) segment – 18.4% (or 338 million euros) –Â and from Refining & Marketing and Chemicals (R&M and Chemicals) – 10.3% (or 189 million euros).
Eni beat analysts’ expectations on first-quarter adjusted operating profit generated by the G&P and R&M segments, as you can see from the picture below:
Source of data: www.eni.com
For the first quarter, production was 1.795 million barrels of oil equivalent per day (boe/day), a 2.3% increase from the production of the comparable quarter of 2016, but the energy company missed consensus estimates on quarterly production by 15,000 boe/day. Analysts forecasted that Eni would have closed the first quarter with a production of 1.810 million boe/day.
For 2017, Eni confirms a production of 1.84 million barrels of oil equivalent per day (boe/day), which represents a 5% increase from the production’s level of 2016. The company says that the new projects Eni started in in Egypt and Kazakhstan in 2016 will help it to reach this production target.
“Eni has markedly improved its financial and operational performance in the first quarter of 2017,” said Claudio Descalzi, Eni’s CEO, adding that “the disposal of assets in Egypt and Mozambique, which are expected to close before the end of the year, will contribute to a further strengthening of the Group’s financial position while maintaining future growth prospects.”
The company closed the first quarter with $5.465 billion in cash on hand and securities while the long-term debt amounted to $20.225 billion as of March 31, 2016. The LT Debt to Equity (MRQ) ratio of the group is 38.10 versus an industry’s average ratio of 28.55, showing Eni is more indebted than its peers. However, the interest coverage (ttm) ratio is 2.53 versus an industry’s average ratio of 1.32, showing that the company can take the debt burden easier than its peers.
From operations the company generated an adjusted measure of cash flow of 2.597 billion euros, a 76% increase year over year, marking the first quarter as the “strongest cash generation in seven quarters,” Descalzi said.
During the quarter, Eni used 2.831 billion euros as capex.
Descalzi also said that the company expects that in 2017 the organic generation of cash, combined with proceeds from the sale of the assets in Egypt and Mozambique, will enable it to fully fund its capital expenditure needs and the payment of the dividend when oil will trade below the current prices.
The company pays a dividend of $1.69 to its shareholders through semiannual dividends of 84.5 cents, for a dividend yield of 5.23% according to the current share price of $32.41 on the New York Stock Exchange.
The energy stock is trading at 1.03 times its book value per share and at 0.93 times its sales.
The analysts average target price per share is $41.22.
Here you can find on overwiew about Eni.
Disclosure: I have no positions in Eni.
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