7/31/2023 | Results

Results 2Q23

All the materials related with the results are available here. The analysts' Q&A session will be held at 14:00h (Portugal / U.K. time).

“Galp delivered a strong operating and financial performance during the second quarter, under a volatile energy market context. We remain committed to position Galp as a leading energy transition company, providing sustainable energy solutions to our customers. Our competitive low-carbon activities will continue to play a key role in the decarbonization of our traditional businesses.” 

Filipe Silva, CEO

Second quarter 2023

Galp’s 2Q23 results reflect a strong operating performance during the period, in a context of a less favourable oil, gas, power and refining environment. At the end of the period, Galp maintained a robust financial position, with net debt stable.

RCA Ebitda reached €916 m:

  • Upstream: RCA Ebitda was €522 m, down YoY, reflecting the de-recognition of the Angolan upstream assets and a less favourable oil and gas prices environment.

    On a comparable basis, excluding Angolan assets, current portfolio working interest (WI) production was up 9% YoY, supported by the ramp-up of Coral Sul in Mozambique and improved efficiencies in the Brazilian producing portfolio.

  • Renewables & New Businesses: RCA Ebitda was €33 m, on a seasonally high generation quarter, although reflecting a lower market price environment YoY.

  • Industrial & Midstream: RCA Ebitda was €289 m, supported on a strong performance of the midstream businesses, with improved oil, gas and power supply and trading activities. The contribution from industrial activities was robust, despite the lower international oil products’ cracks environment. 

  • Commercial: RCA Ebitda was €68 m, down YoY, impacted by a more pressured environment, namely in the B2B segment in Iberia and in the African marketing activities.

Group RCA Ebit was €643 m, a 30% decrease YoY, following RCA Ebitda.

Taxes amounted to €356 m, up YoY, including €49 m related to the temporary Brazilian levy on oil exports and €9 m from Iberian windfall taxes. RCA net income was €258 m and IFRS net income was €251 m, with an inventory effect of €-23 m and special items of €16 m.

Galp’s adjusted operating cash flow (OCF) was strong at €702 m, reflecting the sound operating performance. Cash flow from operations (CFFO), including working capital and inventory effects, reached €733 m. 

Net capex totalled €207 m, mostly directed towards Upstream projects under execution and development in the Brazilian pre-salt, namely Bacalhau and BM-S-11, as well as Coral Sul, in Mozambique.

First half 2023

Galp’s RCA Ebitda was €1,781 m, while OCF was €1,065 m.Galp’s RCA Ebitda was €1,781 m, while OCF was €1,065 m.

Net capex totalled €316 m, mostly directed towards Upstream’s developments and considering €77 m of initial proceeds from the Angolan upstream assets disposal.

FCF amounted to €854 m, with robust cash generation driven by operating performance, although reflecting a high concentration of tax payments made in the first quarter (phasing effect) related to upstream activities in Brazil.

Net debt is down 12% compared to the end of last year, already considering dividends paid to shareholders of €209 m and the €235 m share repurchase programme executed throughout the period, as well as dividends to non-controlling interests of €87 m.

Financial Data

€m (RCA, except otherwise stated)        
Quarter   Half Year
2Q22 1Q23 2Q23 % Var. YoY   2022 2023 % Var. YoY
     1,244         864         916 (26%) RCA Ebitda      2,114      1,781 (16%)
          878           548           522 (41%) Upstream        1,680        1,070 (36%)
(4)            35            33 n.m. Renewables & New Businesses (5)            67 n.m.
          283           235           289 2% Industrial & Midstream           285           524 84%
           97            71            68 (30%) Commercial           153           139 (9%)
(10) (24)              5 n.m. Others (0) (19) n.m.
        924         674         643 (30%) RCA Ebit      1,462      1,317 (10%)
          653           438           405 (38%) Upstream        1,208           842 (30%)
(4)            23            23 n.m. Renewables & New Businesses (5)            46 n.m.
          219           199           218 (1%) Industrial & Midstream           168           417 n.m.
           71            45              4 (95%) Commercial           102            48 (53%)
(15) (31) (5) (64%) Others (10) (36) n.m.
        265         250         258 (3%) RCA Net income         420         508 21%
          269           192            16 (94%) Special items (51)           208 n.m.
          192 (90) (23) n.m. Inventory effect           344 (113) n.m.
        727         352         251 (65%) IFRS Net income         713         603 (15%)
        964         363         702 (27%) Adjusted operating cash flow (OCF)      1,603      1,065 (34%)
          597            74           326 (45%) Upstream        1,173           400 (66%)
(4)            37            55 n.m. Renewables & New Businesses (5)            92 n.m.
          288           235           248 (14%) Industrial & Midstream           286           483 69%
           91            42            43 (53%) Commercial           146            85 (42%)
        747         500         733 (2%) Cash flow from operations (CFFO)         940      1,233 31%
(244) (109) (207) (15%) Net Capex (365) (316) (14%)
        488         352         503 3% Free cash flow (FCF)         517         854 65%
(1) - (87) n.m. Dividends paid to non-controlling interests (111) (87) (22%)
(207) - (209) 1% Dividends paid to Galp shareholders (207) (209) 1%
(40) (77) (159) n.m. Buyback (40) (235) n.m.
     2,185      1,341      1,363 (38%) Net debt      2,185      1,363 (38%)
0.7x 0.4x 0.4x (40%) Net debt to RCA Ebitda1 0.7x 0.4x (40%)
1 Ratio considers the LTM Ebitda RCA (€3,282 m), which includes the adjustment for the impact from the application of IFRS 16 (€233 m).  
               

Short term outlook

Galp expected 2023 Ebitda and OCF is unchanged, supported by improved business performance and despite the lower than initially assumed commodity price environment.

Net capex at €0.4-0.6 bn, reflecting the lower investments execution registered in the first half and already including the 2023 proceeds from the Angolan upstream divestments.

Assumptions for 2023FY   Previous Updated
Brent $/bbl c.85 c.75
Realised refining margin $/boe c.9 c.9
Iberian PVB natural gas price €/MWh c.60 c.40
Iberia solar capture price €/MWh c.120 c.80
Average exchange rate EUR:USD c.1.15 c.1.10
WI production kboepd >110 >115
       
Operational indicators (full year 2023)
Upstream1      
WI production   kboepd >110
Production costs   $/boe c.3
Renewables      
Renewable capacity by YE   GW                 1.6
Industrial & Midstream      
Sines refining throughput   mboe c.75
Sines refining cash costs2   $/boe 3-4
Commercial      
Oil products sales to direct clients   mton                 7.4
Convenience Ebitda growth YoY (from €70 m)   % 10%
EV charging points by YE   # >5 k
Decentralised energy installations by YE   # >25 k
1 Already excluding Angola asset.
2 2023 Sines refining costs reflect concentration of maintenance during the period.
     
       
       
Financial indicators for 2023FY      
RCA Ebitda € bn                 3.2 3.2
Upstream € bn   >2
Renewables & NB € m   >180
Industrial & Midstream € m   >550
Commercial € m   c.300
OCF € bn                 2.2 2.2
Upstream € bn   >1.1
Renewables & NB € m   >160
Industrial & Midstream € m   >550
Commercial € m   c.230
Net capex € bn -- 0.4 - 0.6
       

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