Eni's Board of Directors, chaired by Lucia Calvosa, yesterday approved the unaudited consolidated results for the first quarter of 2022.
Eni CEO Claudio Descalzi said: 'This quarter has been one of major strategic developments for Eni. We rapidly reacted to the ongoing challenges of the energy market by leveraging our global upstream and partnerships with producing countries to find alternative and additional supply opportunities for Europe. We have signed important agreements in Algeria, Egypt and the Republic of Congo, while another one was reached in Angola, consolidating our joint operations in the countries and promoting increased gas exports to Italy and Europe in the interest of transitioning to a low carbon economy.
During the quarter, we successfully completed the listing of our Norwegian upstream company, Var Energi, in which we retain 64% stake, and launched with BP the combination of our respective significant portfolio in Angola. Plenitude, our retail company integrating renewable and gas & power, is progressing towards the listing that is planned for 2022 subject to markets conditions, and we have announced the set-up of a Sustainable Mobility entity, integrating biorefineries, our network of multi-energy and multi-service outlets and their clients. With Plenitude and Sustainable Mobility we aim to serve our customer base with distinctive decarbonized products and sustainable services. We also successfully completed the IPO of NEOA in London, a SPAC targeting low carbon and transition opportunities. Coming to Q1 '22 results, our performance exhibited strength and resilience against a backdrop of high market volatility and uncertainty linked to the ongoing war and international tensions. We delivered EUR5.2 billion of consolidated adjusted Ebit, EUR3.9 billion higher than in Q1 '21, driven by robust trends at E&P on the back of a strong pricing environment, and GGP driven by larger LNG international operations and the flexibility of our supply portfolio. We earned EUR3.3 billion of adjusted net profit. Crucially, in such a volatile environment, we remained financially disciplined and generated an organic FCF of EUR1.8 billion, despite the higher cyclical working capital requirements in the first part of the year further raised by increased input commodities prices.
In conclusion, a quarter of clear progress in executing our strategy of delivering security and sustainability of the energy system, while keeping sharp focus on a just energy transition and creating value for our stakeholders.'
Highlights
Group's results of operations in Q1 '22
In Q1 '22, the Group reported an adjusted EBIT of EUR5.19 billion, up by 300% from Q1 '21.
This performance was driven by the robust results of the E&P segment that reported a EUR3 billion increase in adjusted Ebit capturing the higher realized prices in equity production (up by 70% on average). Hydrocarbons production for the quarter was 1.65 million boe/d, consistent with the full year guidance.
The GGP segment reported an adjusted Ebit of EUR0.93 billion, compared to breakeven in Q1 '21 due to higher gas sales, better results of the international LNG business amid a strong pricing environment, and margin optimization leveraging the flexibility of the natural gas supply portfolio.
The R&M business achieved a positive result of EUR24 million, a significant improvement from the EUR159 million loss of Q1 '21. This trend was driven by plant optimizations allowing to reduce the use of gas and utilities expenses, as well as a strong rebound of refining margins in the second half of March '22 benefitting from a tight market for refined products, particularly of gasoil.
The chemical business managed by Versalis has weakened due to the rise in oil-based feedstock costs and higher plant utilities expenses. The business reported lower results of EUR154 million year-on-year.
The retail, renewable & electric mobility businesses managed by Plenitude are well positioned to achieve the full-year guidance of adjusted EBITDA (over EUR0.6 billion), notwithstanding the high volatility of the scenario, confirming the resilience of our integrated business model.
The Group adjusted net profit in Q1 '22 was about EUR3.27 billion, increasing by EUR3 billion from Q1 '21, supported by improved results from our equity accounted entities and a lower tax rate resulting from geographical mix effects and higher prices in E&P and positive business contribution from GGP and R&M in the overall results.
The Group adjusted cash flow before working capital at replacement cost came in at EUR5.61 billion supported by the strong base business performance (up by 186% compared to Q1 '21).
After funding organic capex of EUR1.62 billion, slightly higher versus last year, and working capital needs, the Group earned an organic FCF of EUR1.8 billion. Seasonal factors that typically shape working capital requirements in the first quarter, drove a cash absorption of about EUR1.96 billion that reflected the higher nominal value of trade receivables.
The cash flow of the quarter was boosted by the closing of the share offering in Var Energi with proceeds for Eni of about EUR0.4 billion.
Non-organic cash outflows of EUR1.25 billion relate to Plenitude acquisitions (EUR0.8 billion) and a capital contribution to the Saipem JV (EUR0.46 billion) as part of the financial restructuring of the investee.
Net borrowing as of March 31, 2022, before the IFRS 16 effect stood at EUR8.62 billion, and the leverage continued to improve at 0.18 versus 0.20 as of December 31, 2021.
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