July 31 (Bloomberg) -- Eni SpA, Italy’s biggest oil company, said second-quarter profit rose 51 percent, boosted by the improved performance of its gas and power division and its services subsidiary Saipem SpA.
Adjusted net income for the quarter increased to 868 million euros ($1.16 billion), the Rome-based company said in a statement. That missed the 1 billion euro estimate of 18 analysts surveyed by Bloomberg. Revenue fell to 27.4 billion euros from 28.1 billion euros.
The gas and power division posted a 40 million euro profit in the quarter from a 227 million euro loss a year earlier, benefiting from the successful renegotiation of gas supply tariffs with OAO Gazprom. Saipem also recovered from past losses, posting a second-quarter profit of 75 million euros earlier this week.
“Eni reported a significant increase in cash flow,” thanks to the gas contracts renegotiations, Eni Chief Executive Officer Claudio Descalzi said in the statement.
Second-quarter operating cash flow of 3.59 billion euros, the highest since the second-quarter of 2012, will allow the company to propose an interim dividend of 0.56 euros per share, Descalzi said.
Overall production was little changed from the previous quarter at 1.58 million barrels of oil a day.
The refining and marketing division posted a net adjusted loss of 165 million euros in the quarter. A sharp decline in refining margins and a deterioration in the European refining sector caused by excess capacity has prompted Eni to accelerate the restructuring of its refineries, Descalzi said in the statement. The company has already begun negotiations with unions to close refineries shutting as much as half the company’s 774,000 barrel-a-day capacity.
Eni said it expects continuing weak conditions in the European industries of gas distribution, refining and fuels and chemical products marketing, and plans to continue with cost cuts and renegotiation of gas contracts.
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