Eni Profit Beats Estimates as Low Taxes Offset Oil PriceAlessandra Migliaccio and Chiara Vasarri
Eni SpA reported a profit increase that beat analyst estimates as a lower tax rate offset falling crude prices and the weaker performance of the biggest Italian oil company’s exploration and production business.
Adjusted net income for the third quarter rose 2.5 percent to 1.17 billion euros ($1.47 billion euros) from a year earlier, the Rome-based company said in a statement. That was above the 896 million-euro average estimate of 14 analysts surveyed by Bloomberg. Revenue fell 11 percent to 26.6 billion euros.
Quarterly results were boosted by a 748 million-euro tax gain due to a settlement of a dispute with Italian fiscal authorities. That helped offset a 21 percent quarterly decline in operating profit in its exploration and production division and a 4.7 percent drop in output to 1.58 million barrels of oil a day.
Continued exploration, development of new projects and the restructuring of the gas and refining businesses are the best ways to “ensure profitability and financial robustness for Eni in an environment of declining prices,” Chief Executive Officer Claudio Descalzi said in the statement.
Oil prices have been falling since July as production from U.S. shale fields boomed and the world economy slowed. Eni said the competitive environment “remains challenging” in the gas, refining and chemicals businesses and no improvement in demand is expected in these segments.
The company said it will continue with capacity restructuring, cost cuts and renegotiation of long-term gas supply contracts. Production is forecast in line with 2013, while gas sales and refining volumes are seen lower than last year. Retail sales are also seen lower than in 2013 in Italy and Europe.
Eni’s gas and power division narrowed its quarterly adjusted operating loss to 109 million euros from a previous loss of 344 million euros through the renegotiation of long-term gas supply contracts, while the refining and marketing business posted a quarterly adjusted operating profit of 39 million euros from a 55 million-euro loss a year earlier.