Eni accelerates buyback after Q2 net profit beats expectations
Adds graphic, potential increase in share buyback in Q3, details on full-year targets
By Francesca Landini
MILAN, July 26 (Reuters) -After reporting a smaller than expected drop in second-quarter net profit, Italian energy group Eni ENI.MI promised to accelerate its share buyback and hinted at the possibility of nudging it up in the coming months.
A stronger than anticipated performance at the group's upstream and Gas & LNG divisions supported results, while actions to streamline its portfolio are expected to translate into lower debt at the end of this year, Eni said on Friday
Between April and June adjusted net profit came in at 1.52 billion euros ($1.65 billion), down 21% from a year ago, but above an analyst consensus of 1.42 billion.
During the past quarter the energy group pressed ahead with divestments, signing a deal to sell upstream assets in Alaska and announcing exclusive talks with investment firm KKR KKR.N to dispose of a minority stake in its biofuel unit Enilive.
Thanks to these moves, Eni said it now expected its leverage ratio, which measures total debt in relation to equity, to be significantly below 20% by year end, better than an original projection of between 20% and 25%.
"This will enable us to speed up the execution of our 1.6 billion euro share buyback program and confirm our delivery of both business growth and shareholder returns," Eni Chief Executive Claudio Descalzi said in a statement.
Originally the programme was expected to end in April 2025.
Eni said in the third quarter it would evaluate a further raise of the distribution up to a potential buyback value of additional 500 million euros.
Shares in the Italian group were up 3.5% on Milan bourse, outperforming a slightly positive blue-chip index .FTMIB at 0820 GMT.
Analysts had put the group's debt under the spotlight after credit rating agency S&P recently revised its outlook on Eni to negative from stable.
An 8-billion euro disposal plan to be completed by 2027 should reduce the leverage and also help the energy group unlock fresh funds to be invested in its budding low-carbon businesses.
The state-controlled group also said it was improving its 2024 pro-forma adjusted operating profit guidance to around 15 billion euros. In April it had guided for earnings before interest and tax (EBIT) of more than 14 billion euros this year.
Eni recorded a proforma adjusted EBIT at its exploration & production division of 3.5 billion euros in the second quarter, better than an analysts' estimate of 2.43 billion euros.
Oil and gas production rose by 6% year-on-year to 1.71 million barrel of oil equivalent (boe) driven by the ongoing ramp-up at the group's flagship projects in Ivory Coast and Congo floating LNG, higher contribution from Libya and by the full integration of recently acquired Neptune Energy.
The Gas and LNG business (GGP) posted an adjusted operating profit of 0.33 billion euros, above a 0.18 billion consensus.
The chemical business reported a loss of 0.22 billion euros in the period impacted by very challenging economic conditions.
In a separate statement, Eni said its Enilive unit, Malaysia's Petronas and Japanese company Euglena Co 2931.T reached a final investment decision to develop a biorefinery in Malaysia.
($1 = 0.9209 euros)
Eni's adjusted net profit https://reut.rs/4c2hns6
Reporting by Francesca Landini, additional reporting by Ron Bousso, editing by Giulia Segreti; Valentina Za and David Evans
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