Italian energy company Eni ENI.MI announced on Wednesday its decision to increase its planned 2024 share buyback by 45% to 1.6 billion euros ($1.71 billion) after surpassing first-quarter net income expectations.
The adjusted net profit experienced a 46% decline to 1.58 billion euros, slightly surpassing the analyst consensus of 1.56 billion, as per a company-provided forecast for the initial three months of the year.
In the corresponding period last year, adjusted net income surged to 2.91 billion euros, driven by significantly higher natural gas prices in Europe. However, the group’s leverage ratio expanded, nearing the upper limit of the range projected for the 2024-27 period.
Hydrocarbon production increased by 5% year-on-year, bolstering the performance of the group’s exploration and production segment. This growth was partly attributed to the completion of the acquisition of upstream company Neptune Energy, as stated by the Italian group.
Eni’s CEO, Claudio Descalzi, expressed confidence in the company’s ability to surpass full-year earnings and cash flow guidance, emphasizing efficient growth in the upstream sector, profitable development of businesses linked to the energy transition, and complete market scenario capture.
Following the company’s updated outlook, Eni now anticipates that full-year cash flow from operations will exceed 14 billion euros, compared to the previously indicated 13.5 billion euros in its mid-March capital markets update. Consequently, Eni raised the 2024 share buyback to 1.6 billion euros from the initial 1.1 billion euros.
Biraj Borkhataria, head of global energy transition research at RBC Europe, attributed the earnings beat to higher earnings from Plenitude, with Eni citing increased retail commodity margins and the ramp-up in its renewable portfolio, as well as upstream volumes and earnings surpassing expectations.
Eni’s retail and renewable business Plenitude reported a proforma adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of 346 million euros, marking a 48% rise from the first quarter of the previous year.
The group’s leverage rose to 0.23 at the end of March, up from 0.20 at the end of the preceding year, within the range of 15% to 25% indicated in the 2024-27 business plan.
Despite the positive news, shares in the Italian group initially rose but later fell by around 1% by 0730 GMT, underperforming a flat blue-chip index in Milan .FTMIB.
In related news, Ithaca Energy ITH.L recently announced its agreement to acquire nearly all of Eni’s UK-based oil and gas producing assets for approximately 754 million pounds in stock, forming one of the largest independent energy companies in the North Sea.