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Investing.com -- Galp Energia SGPS, S.A. (ELI:GALP) on Monday reported its fourth-quarter 2024 earnings, which fell short of expectations in some areas, particularly net income.
The energy company posted an adjusted EBITDA of €688 million, which was below the consensus estimate of €715 million.
However, adjusted net income came in much lower than anticipated, totaling just €71 million compared to a consensus of €171 million.
At the EBIT level, the miss was largely attributed to the upstream sector, which reported €267 million in EBIT, much below consensus expectations of €366 million.
This was primarily driven by higher-than-usual exploration costs and impairments totaling around €70 million, which had been flagged earlier by the company.
In contrast, the Industrial & Midstream segment performed better, with EBIT exceeding expectations due to a strong contribution from the midstream operations, which performed well above plan for the full year.
On the cash flow side, Galp generated €393 million in adjusted operating cash flow (OCF), falling short of RBC’s estimate of €440 million.
The weaker earnings were a key factor in this miss, though the Lisbon-based company did report a working capital release of €516 million, which was higher than RBC’s estimate of €300 million.
This release helped reduce net debt quarter-on-quarter. Capital expenditure for the quarter stood at €541 million, which was higher than expected, and there were minimal proceeds from divestments.
In its 2025-2026 outlook, Galp projects EBITDA of over €2.5 billion for 2025. It assumes oil prices of $70-75 per barrel, refining margins of $6-5 per barrel, and Iberian gas prices of around €30 per MWh.
In spite of this, the guidance seems somewhat softer than RBC's own estimate of €2.7 billion for 2025 at a $65 per barrel oil price.
The company noted that 2025 results are likely to be impacted by one-off maintenance events in both its upstream and industrial segments.
For the 2025-2026 period, Galp has guided to average net capex of under €800 million per year, which aligns with RBC’s forecast for the period.
The company does not anticipate any significant additional capital expenditure in Namibia beyond the current well.
As for distributions, Galp has committed to returning around one-third of its operating cash flow to shareholders, with a €250 million buyback program slated for 2025 (in line with RBC’s estimate of €300 million and VA consensus of €252 million).
Additionally, the company plans a 15% increase in its dividend per share (DPS) in 2025, above market expectations, and a further 4% increase in 2026.