7/26/2021 | Results

Second quarter and first half results 2021

Galp presents today its 2Q21 and 1H21 results. To access the report and all documents related with the results, please click here.

Galp’s financial performance during this first half was robust. Our assets have been able to capture the continued recovery of the macro context, namely higher Brent prices and increased Iberian demand for oil products, crucial for Galp to deliver a solid set of results, generating a free cash flow of over €0.7 bn and strengthening its financial position. However, Covid restrictions are still impacting operational performance, refinery margins and commercial sales volumes. Nevertheless, we are already at our targeted leverage ratio, which allows us to have confidence on the outlook for our financial performance and on the capacity to keep delivering a highly competitive and differentiated investment proposition.
In our latest Capital Markets Day in June, Galp presented an updated strategy, with a clear capital allocation framework aiming to continue to deliver growth from one of the most efficient portfolios in the industry, whilst progressively transforming and decarbonising our activities. We have progressed on that direction during the first half of the year, advancing on key developments that will support our path. We have also refreshed our organisational structure and, with that, made some changes to our Executive Team, as we aim to adopt a leaner and more agile management model to embrace the exciting challenges ahead.
These are important times in Galp’s history and I am confident that we will thrive through the energy transition.

Andy Brown, Galp’s CEO

Second quarter 2021

Galp’s adjusted operating cash flow (OCF)1 reached €470 m, up €231 m YoY, reflecting the very challenging macro conditions during 2020, lsupported by a higher Upstream contribution as well as a better downstream performance. Cash flow from operations (CFFO) was €440 m.

FCF generation was strong at €228 m, with net capex during the period of €186 m.

Net debt at the end of the period was €1,711 m, with net debt to RCA Ebitda decreasing to 1.0x.

RCA Ebitda was €571 m, with the following highlights:

  • Upstream: RCA Ebitda was €467 m, a €263 m increase YoY, reflecting the higher oil price environment, which more than offset the lower production and the depreciation of the USD against the Euro.
  • Commercial: RCA Ebitda of €73 m, up 22% YoY, reflecting the higher demand of oil products from a partial relief of lockdown measures in Iberia.
  • Industrial & Energy Management: RCA Ebitda was €50 m, up €31 m YoY, with margins still pressured by the international environment. Energy Management Ebitda benefited from timing differences on trading gas derivative, which should be partially reverted during 2H21.
  • Renewables & New Businesses: No relevant RCA Ebitda as most of the operations are not consolidated. The pro-forma Ebitda2 of the Renewables operations reached €17 m in the period, driven by robust Iberian solar capture prices in Iberia.

RCA Ebit was up €362 m YoY to €305 m, supported by the stronger operational performance, whilst including €50 m of impairments in exploration assets in Upstream.

RCA net income was €140 m. IFRS net income was €71 m, with an inventory effect of €68 m and special items of -€137 m.

First semester 2021

Galp’s OCF1 was €914 m, 68% higher YoY, while RCA Ebitda was €1,071 m, 41% higher YoY, given the improved macro conditions.

Capex totalled €402 m, with Upstream accounting for 71% of total investments, whilst the downstream activities represented 11% and Renewables & New Businesses 16%. Net capex represented a gain of €8 m, considering the proceeds from divestments during the period, most notably the stake in GGND.

FCF amounted to €746 m, with the strong cash generation supported by operational performance and the GGND divestment.

Considering dividends paid to shareholders of €290 m and to non-controlling interests of €78 m, as well as other adjustments, net debt decreased €354 m, compared to the end of last year.

The adjusted operating cash flow indicator represents a proxy of Galp’s operational performance excluding inventory effects, working capital changes and special items. The reconciliation of this indicator with CFFO using IFRS is in chapter 6.3 Cash Flow of the report. 2 Pro-forma considers all Renewables projects as if they were consolidated according to Galp’s equity stakes.  

€m (IFRS, except otherwise stated)            
Quarter   First Half
2Q20 1Q21 2Q21 Var. YoY % Var. YoY   2020 2021 Var. YoY % Var. YoY
     291      499      571      281 97% RCA Ebitda      760  1,071      311 41%
      204       438       467       263 n.m. Upstream       490       906       416 85%
        59         69         73         13 22% Commercial       149       142 (7) (5%)
        19 (6)         50         31 n.m. Industrial & Energy Management       109         45 (64) (59%)
(4) (2) (6)          2 58% Renewables & New Businesses (5) (8)          4 79%
(57)      284      305      362 n.m. RCA Ebit      161      588      428 n.m.
(32)       314       290       322 n.m. Upstream       113       603       490 n.m.
        36         44         48         12 32% Commercial       104         92 (13) (12%)
(60) (67) (9) (51) (85%) Industrial & Energy Management (51) (76)         25 50%
(9) (3) (5) (4) (45%) Renewables & New Businesses (16) (8) (8) (52%)
(52)        26      140      192 n.m. RCA Net income (22)      166      188 n.m.
(154)      161        71      225 n.m. IFRS Net income (410)      232      642 n.m.
(18)         34 (137)       119 n.m. Special items (26) (103)         77 n.m.
(84)       101         68       152 n.m. Inventory effect (362)       169       531 n.m.
     239      445      470      231 96% Adjusted operating cash flow      544      914      370 68%
      123       390       346       223 n.m. Upstream       255       736       481 n.m.
        55         67         69         14 26% Commercial       145       136 (9) (6%)
        49 (9)         64         15 31% Industrial & Energy Management       134         55 (79) (59%)
(4) (2) (2) (2) (56%) Renewables & New Businesses (4) (4) (1) (12%)
     160      377      440      280 n.m. Cash flow from operations      404      817      413 n.m.
(149)      195 (186)        37 25% Net Capex (360)          8      368 n.m.
       16      518      228      212 n.m. Free cash flow      107      746      639 n.m.
(86) - (78) (8) (9%) Dividends paid to non-controlling interests (194) (78) (116) (60%)
(318) - (290) (28) (9%) Dividends paid to shareholders (318) (290) (28) (9%)
 1,932  1,552  1,711 (221) (11%) Net debt  1,932  1,711 (221) (11%)
1.1x 1.1x 1.0x 0.0x n.m. Net debt to RCA Ebitda1 1.1x 1.0x 0.0x n.m.
1 Ratio considers the LTM Ebitda RCA (€1,697 m on 30 June 2021), which includes the adjustment for the impact from the application of IFRS 16 (€184 m on 30 June 2021).        
Other highlights
Galp Capital Markets Day 2021

On June 2, Galp presented a refreshed strategy, aiming to thrive through the energy transition, continuing to deliver growth from one of the most efficient portfolios in the industry, whilst progressively transforming its activities in alignment with the energy transition. The strategy relies on a clear capital allocation framework, with a strict investment plan capable of delivering both cash flow growth and a competitive shareholder remuneration. Galp’ strategy also incorporates a commitment to the progressive decarbonisation of its operations and customers’ sales, as it is committed to be a net zero emissions Company by 2050, with clear intermediate targets by 2030.

The capital allocation framework relies on a solid financial position, with the Company targeting to keep a net debt to Ebitda ratio of c.1x. Net capex to average €0.8-1.0 bn p.a. during 2021-25, a c.20% reduction compared with Galp’s previous plan, with 2021 guidance maintained at €0.5-0.7 bn.

The net capex target includes portfolio management initiatives to support our investment plan, crystallise value and maintain a robust financial position. The shareholder’s remuneration framework considers a baseline dividend of €0.50/sh and an additional variable component which should be triggered by net debt to Ebitda ratio being below 1x. Total base and variable distributions may reach 1/3 of CFFO depending on maintaining the net debt to Ebitda ratio at c.1x. More information here.

Final investment decision for Bacalhau phase I in Brazil

On June 1, Galp, through its subsidiary Petrogal Brasil, together with its partners Equinor (operator), ExxonMobil, and Pré-sal Petróleo SA (PPSA) have decided to sanction the development of the Bacalhau field in the Brazilian pre-salt Santos area. The investment estimated is of approximately $8 bn. Bacalhau is a highly competitive project, with an NPV10 breakeven below $35/bbl and a low carbon intensity of c.9 kgCO2e/bbl. The project first oil is expected in the second half of 2024 and will add c.40 kbpd to Galp’s working interest production once at plateau, through a 220 kbpd capacity FPSO. Phase I recoverable volumes are estimated at over 1 bn bbl. More information here.


Subsequent events
Changes in Galp’s Board of Directors and Executive Committee

Following Galp´s strategic update presented at its Capital Markets Day by the recently appointed CEO Andy Brown, the Board of Directors approved on July 23 changes in its composition and in the Company´s Executive Committee (Exco) to enhance the potential of each of its activities, adopting a leaner and more agile management model. The new Exco structure is the following:

  • Andy Brown, CEO
  • Filipe Silva, CFO
  • Carlos Costa Pina, COO Corporate Office
  • Teresa Abecasis, COO Commercial
  • Thore E. Kristiansen, COO Production & Operations, which will include Upstream and Industrial businesses.

The Board of Directors is in the process of recruiting the new COO for the Renewables & New Businesses unit, which will be, in the interim, managed by CEO Andy Brown. Additionally, the development of Energy Management businesses will be led by Andy Brown.

The changes in the organisational structure will not impact Galp’s reporting segments during 2021, which should follow the structure announced in the Capital Markets Day 2021 presentation.

More information at Galp’s website (here).

Conference call details


To access the webcast, click here.

Dial-in numbers


+351 308 800 848


+44 (0) 207 192 8000 or +44 (0) 800 376 7922 (UK toll free)

Conference ID: 8367159


Galp | Investor Relations Team

+351 21 724 08 66
Website: www.galp.com
Email: investor.relations@galp.com