Earnings call transcript: Galp Energia Q2 2025 reports strong EBITDA growth

Galp Energia reported robust financial results for Q2 2025, showcasing a significant 25% increase in Group EBITDA to €840 million. Despite a volatile macroeconomic environment, the company demonstrated financial resilience with a net debt to EBITDA ratio of 0.5x. The stock, however, saw a slight decline of 0.06% to close at €15.87, reflecting broader market trends rather than company-specific issues. According to InvestingPro analysis, Galp currently trades below its Fair Value, suggesting potential upside opportunity. The company maintains strong financial health with an overall score of "GOOD" based on comprehensive metrics.

Key Takeaways

• Group EBITDA rose by 25% quarter-on-quarter to €840 million.
• Net debt stood at €1.4 billion, maintaining a low debt-to-EBITDA ratio of 0.5x.
• Stock price decreased by 0.06% in line with market trends.
• Renewables capacity increased with 115 MW added in Spain.

Company Performance

Galp Energia’s performance in Q2 2025 highlighted its ability to navigate economic challenges, driven by strong operational efficiency and strategic investments in renewables. The company’s diversified business model, spanning upstream, industrial, midstream, and renewables, contributed to its resilience amidst fluctuating Brent prices and currency depreciation.

Financial Highlights

• Revenue: Not disclosed in earnings call summary
• Group EBITDA: €840 million, up 25% quarter-on-quarter
• Net debt: €1.4 billion
• Net debt to EBITDA ratio: 0.5x

Outlook & Guidance

Galp Energia upgraded its 2025 production guidance to 105,000-110,000 barrels and increased its EBITDA guidance to over €2.7 billion from the previous €2.5 billion. The company also raised its industrial and midstream EBITDA guidance to over €800 million. Operating cash flow is expected to exceed €1.8 billion, reflecting confidence in its strategic direction and operational capabilities.

Executive Commentary

"Our portfolio remained highly cost-efficient, with a remarkably low operating breakeven at under $20 per barrel," stated an unnamed executive, emphasizing Galp’s competitive edge in cost management. Another executive noted, "We continue to see strong delivery ahead as Galp leadership teams remain very focused on strategic execution."

Risks and Challenges

• Volatile Brent Prices: Fluctuations in oil prices could impact revenue and profitability.
• Currency Depreciation: Continued dollar depreciation may affect financial results.
• Regulatory Changes: Potential changes in environmental regulations could influence operational costs.
• Market Competition: Increasing competition in the renewables sector may pressure margins.
• Geopolitical Risks: Uncertainty in global markets could disrupt supply chains and affect operations.

Galp Energia’s Q2 2025 results reflect a strong operational foundation and strategic focus on growth, particularly in renewables. The company’s forward-looking guidance and low-cost operations position it well for future challenges, despite minor stock fluctuations.

Full transcript - Galp Energia Nom (GALP) Q2 2025:

Executive/Investor Relations Representative, Galp: Welcome everyone, and thank you for joining us. Galp’s positive momentum continued during the second quarter of twenty twenty five, delivering strong financial performance. Once again, operating a resilient, solid asset base has proved reassuring in face of a volatile macro environment. Group EBITDA reached EUR $840,000,000 in the quarter, 25% up Q on Q, underpinned by strong operating performances across our business units. Production stood at 113,000 barrels, reflecting a low concentration of planned maintenance activities and limited unplanned events, which elevated the fleet availability.

Upstream, EBITDA reached EUR403 million, up Q on Q, despite Brent falling 10% and the dollar depreciating significantly. Our portfolio remained highly cost efficient, with a remarkably low operating breakeven at under $20 per barrel. Moving to Industrial and Midstream, again a robust contribution. While refining activities were slightly impacted by the power outage in Iberia in late April, we still captured the middle desolate strength in June. Midstream trading performance was strong across commodities, especially gas supply and trading as we started liftings from the Venture Global LNG project and delivered three cargoes during the quarter.

Commercial followed seasonality and came in very strong at €101,000,000 28% up year on year. In renewables, we continued optimizing revenue streams, enhancing realized prices through ancillary services. In June, we brought online 115 megawatts from two new solar parks in Spain, bringing our total installed capacity to 1.7 gigawatts. Altogether, strong performance translated into sound operating cash flow. We saw some unwind from the working capital build from Q1, although partially offset by the dollar depreciation.

Net debt stood at EUR 1,400,000,000.0 considering CapEx and after paying the final tranche on 2024 dividend and an accelerated buyback execution. With over 60% of our activity held in dollars, the change in net debt also reflects the expected currency translation adjustment. Overall, GALP maintained a strong financial position, with a net debt to EBITDA at 0.5x. Looking ahead, we are upgrading our 2025 outlook. While keeping the Brent assumption unchanged at $70 we are revising our ForEx expectations with the dollar depreciation against the euro weighing particularly on our Upstream business.

On production, considering the sound year to date performance, with about half the planned maintenance program completed, we’re revising upwards our full year production guidance to a range of 105,000 to 110,000 barrels. On refining, we expect full system availability during the third quarter, with margins now close to double digit, whilst maintaining plans for a large maintenance in Q4. And on midstream, we are now incorporating the LNG volumes from the Venture Global contract, which were not in our initial guidance. Industrial and Midstream EBITDA is now expected to exceed €800,000,000 in 2025 compared to the original €500,000,000 Overall, following these operational improvements, we upgrade our EBITDA guidance to above €2,700,000,000 up from above 2,500,000,000.0 cascading into improved operating cash flow of over €1,800,000,000 We continue to see strong delivery ahead ahead as Galp leadership teams remain very focused on strategic execution. Which brings me to Namibia.

Securing a strong partnership remains a priority and the next natural step for the asset. Our objectives remain very clear: to partner with an experienced operator, ensure a partnership based on solid grounds, and alignment on progressing with Mopane. With this in mind, during most of Q2, we shared data with a selected list of potential partners and have now collected nonbinding offers, all from highly credible players. Focus will now be on analyzing the offers at hand and defining a way forward. Progress so far leaves us confident on a partnership completion this year.

Thank you again for joining us.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.