Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Repsol SA (REPYF, Financial) reported a cash flow from operations of EUR1.5 billion in Q3 2024, a 16% improvement over the same period last year.
- The company completed a share buyback program, canceling 40 million shares, with an additional 20 million shares buyback launched in August.
- Repsol SA (REPYF) has maintained a strong balance sheet, with a strategic focus on efficiency and capital discipline.
- The company has made significant progress in its transformation strategy, aiming to reach 4 gigawatts of renewable capacity by year-end.
- Repsol SA (REPYF) has increased its ownership in Block 29 in Mexico, supporting its growth plans in the region.
Negative Points
- Repsol SA (REPYF) experienced a 49% year-over-year decrease in adjusted income, reaching EUR558 million.
- The company's refining margin indicator averaged $4 per barrel, 37% below the previous quarter and 71% below the same period last year.
- Production in Libya was interrupted for almost two months, negatively impacting performance.
- The company faced challenges in the chemicals sector, with a negative EBITDA contribution due to weak demand and lower product prices.
- Repsol SA (REPYF) revised its cash flow from operations estimate for 2024 down to EUR6 billion, below the lower end of previous guidance.
Q & A Highlights
Q: With the current share price performance impacted by lower refining margins, is there a plan to accelerate disposals or streamline the upstream portfolio? Also, could you provide guidance on CapEx for 2025?
A: We are committed to preparing the liquidity event for the E&P business by Q1 2026 and improving the quality of our portfolio. We have flexibility in CapEx, especially in the unconventional sector in the US, and expect net CapEx to be around EUR10 billion for 2024-2025. We aim to be at the lower end of the EUR16 billion to EUR19 billion range for the strategic period.
Q: Can you confirm the gross CapEx for 2024 and provide insights on the payout ratio for 2025?
A: The gross CapEx for 2024 is expected to be around EUR6.5 billion, including the acquisition of Connect. For 2025, the payout ratio will be within the 25% to 35% range of cash flow from operations, with a minimum cash dividend of EUR0.975 per share.
Q: How do you see the refining margins evolving with the Dangote refinery ramping up, and what are your thoughts on the pricing for renewable fuels?
A: We expect refining margins to recover due to seasonal demand and potential diesel spread increases. The Dangote refinery's impact is not expected to change the game significantly. For renewable fuels, we anticipate a recovery in HBO prices from 2025 due to new mandates and import limitations.
Q: Is the special tax in Spain included in your cash flow guidance, and what are your views on its future?
A: The special tax is included in our cash flow guidance. The proposal to make this tax permanent has been withdrawn, allowing us to focus on future opportunities and industrial investments in Spain.
Q: With the commitment to prepare the upstream vehicle for a potential listing, do you have a plan B if conditions are not favorable?
A: We are committed to preparing the vehicle by Q1 2026, focusing on improving the quality of barrels and cash flow. While we don't need the proceeds, we are working to make the business more attractive for a potential window of opportunity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
