30/10/2023 | Resultados

Galp 3Q23 results

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).

“This was a strong quarter for Galp, with good operational momentum led by the performance in our Brazilian assets. Our robust financial performance was reflected across all business units in a context of disciplined strategic execution. Final investment decisions were made for a 100 MW electrolyser, set to be one of Europe's largest, and an advanced biofuels unit. These investments lay the foundation  to our future as a provider of sustainable energy solutions.” 

Filipe Silva, CEO

Third quarter 2023

Galp delivered a robust set of results supported on a strong operating performance and disciplined capital allocation during 3Q23, allowing to further strengthen its financial position.

RCA Ebitda reached €1,057 m:

  • Upstream: RCA Ebitda was €594 m, down YoY, reflecting the de-recognition of the Angolan upstream assets’ disposal and a less favourable oil and gas prices environment.

    On a comparable basis, excluding Angolan assets, current portfolio working interest (WI) production was up 8% YoY, supported by the ramp-up of Coral Sul FLNG in Mozambique and stable production in Brazil.

  • Renewables & New Businesses: RCA Ebitda was €43 m, on a seasonally high generation quarter, with the increased generation from added operating capacity more than offsetting the lower market price environment YoY.

  • Industrial & Midstream: RCA Ebitda was €342 m, reflecting a strong performance of the industrial activities, with the system’s high utilisation capturing the international cracks environment. The contribution from the midstream businesses continued robust, benefiting from improved supply and trading activities across oil, gas and power.

  • Commercial: RCA Ebitda was €111 m, up YoY, following improved performance on the Iberian retail and convenience, and despite the pressured environment on some B2B segments.

Group RCA Ebit was €741 m, mostly following RCA Ebitda.

Taxation was up YoY, including €76 m of extraordinary taxes in Iberia, leading to an implicit 63% tax rate (the rate would be 52% if excluding these extraordinary effects). RCA net income was €210 m.

Galp’s adjusted operating cash flow (OCF) was robust at €716 m, reflecting the sound operating performance. Cash flow from operations (CFFO), including working capital and inventory effects, reached €686 m.

Net capex totalled €161 m, mostly directed towards Upstream projects under execution and development in the Brazilian pre-salt, as well as the preparation of the upcoming exploration activities in Namibia and including interim inflow of €132 m related with the Angolan upstream assets’ disposal.

FCF amounted to €497 m, with Net Debt reduced by €152 m during the period.

Nine months of 2023

Galp’s RCA Ebitda was €2,838 m, while OCF was €1,781 m, reflecting a robust operating performance across all business units during the period.

Net capex totalled €476 m, mostly directed towards Upstream’s developments, and considering €209 m of inflows from the Angolan upstream assets’ disposal.

FCF amounted to €1,351 m, with net debt down 22% compared to the end of last year, considering dividends to non-controlling interests of €89 m, dividends paid to shareholders of €422 m and €308 m invested through the share buybacks.

Financial Data

€m (RCA, except otherwise stated)          
Quarter   Nine Months
3Q22 2Q23 3Q23 % Var. YoY   2022 2023 % Var. YoY
              784               916            1,057 35% RCA Ebitda            2,897            2,838 (2%)
               612                522                594 (3%) Upstream             2,292             1,664 (27%)
                 38                  33                  43 12% Renewables & New Businesses                  34                110 n.m.
                 48                289                342 n.m. Industrial & Midstream                333                866 n.m.
               103                  68                111 7% Commercial                256                249 (3%)
(17)                    5 (32) 86% Others (17) (51) n.m.
              408               643               741 81% RCA Ebit            1,870            2,058 10%
               420                405                469 12% Upstream             1,627             1,311 (19%)
                 32                  23 (27) n.m. Renewables & New Businesses                  27                  19 (30%)
(86)                218                258 n.m. Industrial & Midstream                  82                674 n.m.
                 77                    4                  78 2% Commercial                179                126 (29%)
(34) (5) (37) 8% Others (44) (72) 66%
              187               258               210 12% RCA Net income               608               718 18%
               223                  16                  24 (89%) Special items                172                232 35%
(103) (23)                  69 n.m. Inventory effect                241 (45) n.m.
              307               251               303 (1%) IFRS Net income            1,020               906 (11%)
              484               702               716 48% Adjusted operating cash flow (OCF)            2,087            1,781 (15%)
               320                326                363 13% Upstream             1,493                762 (49%)
                 35                  55                  43 22% Renewables & New Businesses                  30                135 n.m.
                 57                248                252 n.m. Industrial & Midstream                343                735 n.m.
                 88                  43                  79 (10%) Commercial                234                164 (30%)
           1,024               733               686 (33%) Cash flow from operations (CFFO)            1,964            1,919 (2%)
(558) (207) (161) (71%) Net Capex (924) (476) (48%)
              427               503               497 16% Free cash flow (FCF)               944            1,351 43%
(34) (87) (2) (94%) Dividends paid to non-controlling interests (145) (89) (39%)
(213) (209) (213) 0% Dividends paid to Galp shareholders (420) (422) 1%
(77) (159) (72) (5%) Buyback (116) (308) n.m.
           2,096            1,363            1,211 (42%) Net debt            2,096            1,211 (42%)
0.6x 0.4x 0.3x (46%) Net debt to RCA Ebitda1 0.6x 0.3x (46%)
1 Ratio considers the LTM Ebitda RCA (€3,549 m), which includes the adjustment for the impact from the application of IFRS 16 (€240 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.75 c.75
Realised refining margin $/boe c.9 c.9
Iberian PVB natural gas price €/MWh c.40 c.40
Iberia solar capture price €/MWh c.180 c.80
Average exchange rate EUR:USD c.1.08 c.1.10
WI production kboepd >115 >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 >3.5
Upstream € bn   >2
Renewables & NB € m   >180
Industrial & Midstream € m   >550
Commercial € m   c.300
OCF € bn                 2.2 >2.3
Upstream € bn   >1.1
Renewables & NB € m   >160
Industrial & Midstream € m   >550
Commercial € m   c.230
Organic capex € bn                   - c.1.1
       

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