AIG earnings beat by $0.50, revenue topped estimates
Investing.com -- Repsol SA (BME:REP) (OTC:REPYY) on Thursday reported third-quarter results broadly in line with market expectations, posting €820 million in adjusted net income and stronger-than-expected cash flow, as robust performance in its commercial segment offset weaker upstream and industrial earnings.
The Madrid-based energy company maintained its full-year guidance and said it would continue its share buyback program.
RBC Europe said, “Repsol’s earnings came in ahead of consensus with €820m net income at the group level (consensus €805m),” adding that “the beat was primarily driven by a stronger commercial segment, with industrial and upstream coming in slightly below consensus expectations.”
Morgan Stanley described the performance as “in line with our estimates and company-compiled consensus,” noting that “there were a few moving parts across the different segments, with a slight miss in Upstream and Industrial, offset by better than expected earnings on Customer, Renewables and Corporate & Others.”
Cash generation improved during the quarter. Repsol’s cash flow from operations excluding working capital was €1.6 billion, broadly in line with Visible Alpha consensus of €1.65 billion and RBC’s estimate of €1.49 billion.
Morgan Stanley said, “Cash generation in the quarter was strong, with CFFO ex W/C at ~€1.7bn.”
The brokerage added that free cash flow excluding working capital and M&A reached about €0.5 billion, “stronger than consensus figures of ~€0.1bn,” helped by lower organic capital expenditure of approximately €1.2 billion.
By business division, Repsol’s industrial unit recorded €315 million in earnings, up 218% from the previous quarter and 70% year over year.
The customer segment, which includes retail and distribution, earned €241 million, a 22% increase from the second quarter.
Upstream profit declined 28% quarter over quarter to €317 million but rose 10% from a year earlier. The low carbon generation business reported €31 million in earnings, compared with €7 million in the prior period.
Repsol’s total production averaged 551 thousand barrels of oil equivalent per day, down 1% sequentially. Oil output stood at 192 thousand barrels per day, while gas production fell slightly to 359 thousand barrels of oil equivalent per day.
The company said refining margins averaged $9.7 per barrel in October, with spot margins near $14 per barrel.
RBC commented that this suggests “we are clearly in upgrade territory for 4Q if margins were to hold near here.”
Despite the favorable environment, Repsol “did not implement any changes to guidance at this point,” Morgan Stanley said, adding the company expects to present new projections for 2028 in March.
Repsol’s net debt rose to €3.8 billion from €2.4 billion in the prior quarter. Morgan Stanley attributed the sequential increase from €5.7 billion in the second quarter to €6.9 billion in the third quarter to the “impact from the UK E&P merger.”