Friday, December 3

The good moment of crude oil takes Repsol to € 643M in profits

Repsol will present its quarterly results this week and the figures will once again follow the line of the accounts prior to the pandemic.

The upward rally of oil in the accumulated of the year, which has accelerated in recent months, and the company’s renewable roadmap contribute to the recovery of the results, which already left signs of stabilization in the first half of the year.

A context that shareholders pay attention to, especially after Repsol paid a dividend of 0.3 euros in July. The company is even considering increasing remuneration thanks to the good moment of oil.

Income skyrockets

The consensus consulted by It estimates that revenues will skyrocket by about 4 billion compared to the second quarter figures to exceed 14.2 billion.

Repsol returned to profits in the first half of the year after the losses in 2020, in which the fall in crude oil due to the pandemic cost it a deterioration in its accounts of more than 3,000 million in the year.

The panel of analysts anticipates that the Repsol’s net profit will be 643 million euros this quarter, a figure that is at the levels of 2019: in the third tranche of that year, the company earned more than 520 million and more than 600 million in the previous two quarters.

“It will benefit from the improvement in the refining margin. These margins support the profitability prospects for the rest of this year ”, they explain in Bloomberg Intelligence to

Bloomberg analysts also expect an increase in ebitda of 20 percent compared to the previous quarter thanks to “better macroeconomic conditions.”

However, they warn of lower production.

“A surprisingly low level of 530,000 barrels per day in the third quarter suggests that the contribution to earnings may be limited. This indicates that the objective of producing 595,000 barrels in the rest of the year may be under pressure and the company may revise its guidance downward ”, they detail.

Renewable targets appeal to the market

At the beginning of October, Repsol celebrated its Low Carbon Day, a day in which he explained some of the modifications in his roadmap towards the renewable transition.

The company did not change its goals for 2025, which continues to reach a capacity of 6 gigawatts (GW), but did raise its goal for 2030 by about 8 GW to 20 GW by the end of the decade.

“It revealed an enhanced energy transition agenda. Higher ambition leads to higher capital spending, but an additional € 1 billion over five years puts the group’s spending in our forecast, ”JP Morgan analysts said in a report after Low Carbon Day.

“Importantly, this preserves the ability of the ‘premium’ decarbonization strategy and an increase in cash profitability,” they point out at JP Morgan.

Thus, analysts expect Repsol to increase its pipeline until 2025 until it reaches “2.5 times the capacity target, above the industry average.”

The bet on hydrogen

Finally, analysts value Repsol’s commitment to hydrogen, which the company sees as the fuel for the next decade.

At the beginning of the year, Repsol announced its plans, together with a consortium of multinationals, to build Europe’s largest renewable hydrogen electrolyzer, with a capacity of 100 MW. It is expected to be ready in three years.

The last episode was a couple of weeks ago, when Repsol and the Portuguese EDP announced an alliance to develop ‘green’ hydrogen projects in the Iberian Peninsula.

“Repsol sees itself with a series of advantages of being the ‘backbone’ of the renewable hydrogen roadmap in Europe”, they highlight at Barclays.

The “new financial objectives”, according to the British bank’s analysts, go through a capex -capital expenditure- of 2,550 million in the next decade, which would leave a cumulative EBITDA of 1,200 million between 2026 and 2030.

In this way, they anticipate that Repsol will soon benefit from the “green premium associated with European regulations”, which places the company as one of the future European references for hydrogen projects.