13/02/2023 | Resultados

Galp 4Q & FY22 results and Outlook

All the materials related with the results and the short-term outlook, including the video presentation from Galp’s executives, are available here.

“During 2022, Galp met most of its operating targets, with a strong performance across its asset base, and once again being distinguished by its ESG and sustainability practices.
Ebitda reached €3.8 bn and Operating Cash Flow was €2.8 bn. This allowed us to continue to progress with our growth and transformational investments, reinforce our financial position, while delivering a competitive return to our shareholders. 
Looking forward, we will keep our strategic and capital allocation guidelines. Our financial discipline remains focused on accretive project returns and on keeping average net capex at c.€1 bn per annum until 2025. We will continue to grow this company and at the same time drive its gradual transformation from grey to green. We will continue to grow upstream but expand much faster our renewables footprint, whilst also enabling its integration with our low carbon industrial and commercial projects. Galp is an Energy Transition champion, and the team is motivated by the exciting journey ahead.”

Filipe Silva, Galp's CEO

Fourth quarter 2022

Galp’s 4Q22 results reflect a robust operating performance, capturing the supportive macro environment, namely on Upstream and Industrial activities. Free cash flow generation was strong, at €737 m, also supported by a large working capital release, enabling net debt to be reduced during the period by €541 m.

RCA Ebitda reached €951 m, 48% higher YoY:

  • Upstream: RCA Ebitda was €791 m, up YoY, supported by the improved operational performance and benefitting from the favourable oil price environment. 
    Working Interest (WI) production was up 5% YoY, reflecting reduced maintenance interventions and the ramp-up of Berbigão / Sururu and Sépia in Brazil, as well as the start-up of Coral FLNG, in Mozambique.
  • Renewables & New Businesses: RCA Ebitda was €17 m, with all renewables’ projects in operation now consolidated into Galp’s accounts. 
    Renewables installed capacity reached 1.4 GW, following the commercial start-up at year-end of c.100 MW of solar projects in Iberia.
  • Industrial & Midstream: RCA Ebitda was €118 m, supported by the contribution from industrial activities, capturing the improved international refining environment, although partially offset by the natural gas trading activities performance, pressured by persisting natural gas sourcing restrictions and pricing differentials. 
  • Commercial: RCA Ebitda was €42 m, with oil products demand pressured by the high price environment, as well as higher development costs on transformational businesses and adjustments from previous quarters’ costs.

Group RCA Ebit was €475 m, a 14% increase YoY including a €108 m impairment related with retail distribution assets and a €60 m provision for the Matosinhos’ site transformation project.

RCA net income was €273 m, also benefiting from positive financial results, namely mark-to-market swings, mostly related with Brent and refining margin hedges. IFRS net income was €455 m, with an inventory effect of €-206 m and special items for €388 m, mostly from maturing gas hedges.

Galp’s adjusted operating cash flow (OCF) was €701 m following the improved RCA Ebitda, whilst cash flow from operations (CFFO) reached €1,107 m, including a €700 m working capital release driven by the decrease in commodities prices and the roll off of all gas derivatives margin account balances.

Net debt decreased €541 m during the quarter, after dividends paid to minorities of €100 m and €34 m related with the buyback programme concluded in the quarter.

Note: 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. Pro-forma considers all Renewables projects as if they were consolidated according to Galp’s equity stakes. 

Full Year 2022

Galp’s RCA Ebitda was €3,849 m, while OCF was €2,788 m.

Net capex totalled €1,266 m, mostly directed towards Upstream projects, namely for the execution of Bacalhau and Tupi & Iracema maintenance, and the expansion of the Renewables’ portfolio, including Titan Solar’s stake acquisition.

FCF amounted to €1,681 m, with the strong cash generation driven by the operating performance under a supportive macro environment, as well as by the expected working capital release from the roll off of all gas derivatives margin account balances.

Net debt decreased €802 m compared to the end of last year, also considering dividends paid to shareholders of €420 m and the €150 m share repurchase programme executed throughout the year, as well as dividends to non-controlling interests of €245 m.

At the end of the period, net debt amounted to €1,555 m and net debt to RCA Ebitda was at 0.4x.

Short Term Outlook

Galp is providing key operating and financial guidance for 2023, in accordance with its updated views and macro assumptions.

Assumptions for 2023     2023
Brent   $/bbl                  85
Realised refining margin   $/boe                    9
Iberian PVB natural gas price   €/MWh                  60
Iberia solar capture price   €/MWh                120
Average exchange rate   EUR:USD               1.15
Operational indicators (full year 2023)
WI production   kboepd >110
Production costs   $/boe c.3
Renewable capacity by YE   GW                 1.6
Industrial & Midstream      
Sines refining throughput   mboe c.75
Sines refining cash costs2   $/boe 3-4
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
Financial indicators      
RCA Ebitda   € bn                3.2
Upstream   € bn >2
Renewables & NB   € m >180
Industrial & Midstream   € m >550
Commercial   € m c.300
OCF   € bn                2.2
Upstream   € bn >1.1
Renewables & NB   € m >160
Industrial & Midstream   € m >550
Commercial   € m c.230
Net capex (avg. 2023-25)   € bn c.1
1 Already excluding Angola asset.
2 2023 Sines refining costs reflect concentration of cyclical maintenance during the period.


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