Repsol SA (REPYF) Q4 2024 Earnings Call Highlights: Strong Cash Flow and Dividend Growth Amidst ...

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Fri, Feb 21, 2025, 12:03 AM 4 min read

Adjusted Income: EUR3.3 billion for 2024.
Operating Cash Flow: EUR6.3 billion, ahead of guidance.
Total Shareholder Remuneration: EUR1.9 billion, 31% of operating cash flow.
Cash Dividend: Increased by 30% to EUR0.90 per share.
Net Debt: EUR5 billion, reduced by EUR0.5 billion from September.
Total Liquidity: EUR9.5 billion, over 3.5 times short-term debt.
Net CapEx: EUR5.7 billion, excluding EUR0.3 billion from Colombia disposal.
Upstream Division Adjusted Income: EUR1.5 billion, 16% lower year over year.
Full Year Production: 571,000 barrels per day.
Industrial Division Earnings: EUR1.5 billion, EUR1.3 billion lower year over year.
Customer Division Adjusted Income: EUR659 million, 7% increase over 2023.
Customer Division EBITDA: EUR1.2 billion, 13% improvement year over year.
Low Carbon Generation Adjusted Income: EUR23 million negative.
Renewable Capacity: 3.7 gigawatts by year-end 2024.
Projected 2025 Production: 530,000 to 550,000 barrels per day.
2025 Cash Flow from Operations: EUR6 billion to EUR6.5 billion.
2025 Net CapEx: EUR3.5 billion to EUR4 billion.
2025 Cash Dividend: EUR0.975 per share, 8.3% increase over 2024.

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Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Repsol SA (REPYF) achieved an adjusted income of EUR3.3 billion and delivered EUR6.3 billion of operating cash flow, surpassing their guidance.
The company increased its cash dividend by approximately 30% to EUR0.90 per share and redeemed 60 million shares, equivalent to 5% of its share capital.
Net debt was reduced to EUR5 billion, with a gearing ratio of 2.4% excluding leases, indicating strong financial management.
Repsol SA (REPYF) plans to invest in key growth projects, including Leon Castile in the Gulf and Pikka in Alaska, which are expected to contribute significantly to future production.
The company is committed to a net CapEx of EUR16 billion to EUR19 billion over four years, with a focus on low-carbon projects and upstream development.

Negative Points

Full-year adjusted income in the upstream division was EUR1.5 billion, 16% lower year over year, due to lower gas prices and volumes.
Production was impacted by divestments and force majeure events in Libya, with full-year production at the lower end of guidance.
The industrial division's earnings were EUR1.5 billion, EUR1.3 billion lower year over year, mainly due to normalization of refining margins.
The chemicals business continued to face challenges, with a negative EBITDA contribution despite a slight improvement in margins.
Repsol SA (REPYF) faces potential challenges in the US renewables market due to financial conditions and inflationary pressures.

Q & A Highlights

Q: Can you provide more details on the production guidance for 2025 and the factors influencing it? A: Josu Jon Imaz San Miguel, CEO, explained that Repsol aims to be at the higher end of the 530,000 to 550,000 barrels per day range. Factors include increased production in Libya and new wells, offset by divestments in Colombia and Trinidad and Tobago. The Leon Castile and Pikka projects will contribute to production, but Pikka's impact will be more significant in 2026.

Q: What are the plans for asset disposals in 2025, and what is the expected timing? A: Repsol plans to achieve EUR2 billion in disposals, with EUR300 million from Colombia and EUR1.5 billion from the low-carbon business, including asset rotations. The first half of the year will see significant progress, with transactions in Spain and the US expected to close soon.

Q: Is Repsol still considering an IPO for its upstream business, or are there other options? A: The company is preparing for a liquidity event by the end of Q1 2026, with options including an IPO, reverse takeover, or private liquidity event. The focus is on optimizing the upstream portfolio and increasing cash flow from operations.

Q: How is Repsol addressing the challenges in the low-carbon generation business, and what is the strategy moving forward? A: Repsol is prioritizing returns over capacity targets, with a focus on capital employed and efficiency. The company aims to have 9 gigawatts of assets in operation by 2027, down from the previous target of 9 to 10 gigawatts, and is exploring opportunities to leverage data centers for increased returns.

Q: What is the outlook for Repsol's refining margins and the factors influencing them? A: The refining margin indicator is expected to average $6 per barrel in 2025, supported by higher demand and balanced new refining capacity. The premium over the indicator is projected at $2 per barrel, with improvements driven by energy efficiency programs and better HBO and SAP expectations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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