Energy, Automobile, EV, Renewable News | Eni release fourth quarter and full year 2021 results

Eni release fourth quarter and full year 2021 results

February 18, 2022

Operating and financial results Financial discipline and cost reduction initiatives implemented to withstand the enduring impact of COVID-19 enabled Eni to capture the full upside of 2021’s strong economic recovery, reporting €9.7 bln of adjusted EBIT (up €7.8 bln or 400% vs. 2020).

Adjusted net profit of €4.7 bln, the highest since 2012, driven by better operating performance, improved results of equity investments and remarkable recovery in the upstream scenario.
For the full year of 2021, robust cash generation of €12.7 bln funded net capex of €5.8 bln. Organic free cash flow was €7.6 bln.
Organic cash generation used to fund dividend payments and share buy-back program (total cash return of €2.8 bln), to pursue growth in the low carbon businesses (€2.1 bln), and to continue deleveraging the balance sheet (net debt reduced to €9 bln; leverage down to 0.20 vs. 0.31 compared to December 31, 2020).
E&P adjusted EBIT at €9.3 bln, up 500% vs. 2020, keeping capital investment discipline and thanks to a yearly production of 1.7 mln boe/d.
Plenitude adjusted EBITDA at €0.6 bln, a 25% increase YoY; retail customer portfolio at over 10 million delivery points.
Renewable installed capacity more than tripled to 1.2 GW and over 2 GW including assets under construction, almost entirely relating to Plenitude.
Delivered excellent exploration results by adding over 700 mln boe of new resource, with the main discovery being the Baleine reservoir, in Ivory Coast, set to be developed with a phased fast-track approach. Start-up in early production is expected by the end of 2023. The project will be the first development in Africa at net zero emissions (Scope 1 and 2).

Portfolio

Started the listing process for Plenitude, newly created entity comprising renewable generation, customers and e-mobility, with the strategic goal of decarbonizing Eni’s customer portfolio.
Floated about 12.7% interest (including the greenshoe option) in the Vår Energi venture on the Norwegian stock exchange, marking the largest IPO in the O&G industry in Europe in more than a decade.
Progressing terms for establishing a JV with BP in Angola, which will combine the two partners’ assets in the Country to maximize returns.

Eni CEO Claudio Descalzi said:

“During 2021, we delivered excellent results and accelerated the pace of our transformation strategy, which leverages the integration of technologies, new business models and valuable relationships with our stakeholders. The strict financial discipline and cost efficiencies we implemented to withstand the downturn have allowed us to best capture the strong economic recovery of 2021. On the one hand, our upstream segment has kept generating the financial resources needed to fund our decarbonization strategy while, on the other, the new energy transition businesses, like those combined under our new entity Plenitude, have performed strongly. In this way, we have reached a Group EBIT of €9.7 bln and adjusted net profit of €4.7 bln, our best performance since 2012, a time when Brent crude oil prices exceeded the $110-a-barrel mark. Robust cash generation, underpinned by a selective approach to making investment decisions, has freed €7.6 bln of organic free cash flow, which we used to: boost the growth of green businesses; fund dividends and a share buy-back at pre-pandemic levels; and deleverage the balance sheet – achieving an indebtedness ratio of 20% vs 31% a year ago. Our portfolio restructuring has moved on to unlock value from our businesses, optimize our cost of capital and maximize growth. The listing of Plenitude, which combines renewables, customers and e-mobility, will enable us to fulfil our goal of cutting Scope 3 emissions for our retail customers. The upstream portfolio has also proven to be a value driver in the energy transition, as demonstrated by the success of the Vår Energi listing on the Norwegian stock exchange, the largest IPO of an O&G company of the last decade, as well as the upcoming creation of a strategic joint venture in Angola with BP that will combine the two partners’ operations in the Country. Finally, we are developing a full range of solutions to reduce GHG emission for our plants and industrial clients through: the HyNet CCS project in the UK; agro-biofeedstock hubs to supply our refineries; and the successful magnetic fusion test performed by CFS of which we are the main shareholder. All in all, our performance in 2021 highlighted the efficacy of the strategy launched at the start of the pandemic, which enabled us to return to pre-crisis balance sheet strength in just a few months while simultaneously enhancing our transition plans.”

Q4 2021 financial highlights

Group adjusted EBIT: €3.8 bln in the fourth quarter of 2021, up 53% compared to the third quarter of 2021. The quarterly Group result was driven by the positive performance of all Eni’s businesses:
   – E&P: adjusted EBIT of €3.64 bln, up 49% vs. the third quarter of 2021 (up 354% vs. the same period of 2020) due to a strengthening pricing environment and a 3% increase in production to 1.74 mln boe/d.
   – GGP: strong performance reported in the fourth quarter of 2021 with an adjusted EBIT of €536 mln, up €486 mln from the third quarter of 2021, driven by portfolio optimizations and contractual renegotiations.
   – Plenitude & Power business: adjusted EBIT at €97 mln, increasing by 52% compared to the third quarter of 2021 due to seasonal factors in the retail sales.
   – R&M: negative adjusted EBIT of €36 mln compared to a profit of €161 mln in the third quarter 2021. Reported an improved performance of €23 mln compared to the fourth quarter of 2020 as a result of higher volumes sold by commercial businesses, driven by the recovery in consumptions.
   – Chemicals: negative adjusted EBIT of €69 mln, €94 mln lower compared to the third quarter of 2021 due to a normalization in products margins and a catch up in maintenance activity that was delayed to capture the upside of the strong market trends in the second quarter of 2021.
Adjusted net profit: €2.1 bln in the fourth quarter of 2021, 47% higher than third quarter of 2021 due to strengthening market trends and production growth. Compared to the corresponding 2020 reporting periods, which were impacted by the COVID-19 pandemic, the performance recorded a material recovery, with net adjusted results up €2.1 bln and €5.5 bln respectively vs the fourth quarter and full year 2020.
Cash flow from operations before changes in working capital at replacement cost: €4.6 bln in the fourth quarter of 2021, enough to fund net capex of €1.8 bln.
Portfolio: net investment of about €2.9 bln in the full year of 2021 (including net borrowings of acquired entities), fully deployed to accelerate growth in the renewables and low-carbon businesses.
Net borrowings ante IFRS 16: €9 bln, down €2.6 bln vs. December 31, 2020. Leverage lowered to 0.20 (vs. 0.31 as of December 31, 2020).
Buy-back: in December 2021 finalized the €400 mln buy-back program started in August 2021, purchasing 34.11 mln shares.
Confirmed the 2021 dividend proposal already disclosed to the market of €0.86 per share (of which, €0.43 paid as interim dividend in September 2021).

Outlook 2022

The Group financial outlook, its business prospects and the key industrial and profitability targets in the short, medium and long term will be disclosed during the Capital Markets Day scheduled on March 18, 2022. A press release illustrating the Group’s strategy will be issued on the same day and disseminated through the Company’s website (eni.com) and other public channels as required by applicable listing standards.

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