Records provisions for more than 1,800 million for impairment of the carrying amount of its refining assets
Repsol achieved a net profit of EUR 2,539 million in the first half of the year, after doubling its profit of EUR 1,235 million in the same period last year, driven by the increase in hydrocarbon prices and refining margins.
The first half of this year has been characterized by a volatile international context, conditioned by the tensions caused by the war in Ukraine following the invasion of Russia, which led to a rise in commodity prices on world markets. These results come on the same day that the parliamentary factions of the governing coalition are presenting the bill for the new energy and financial tax in Congress.
For example, the price of Brent crude increased by 66% over the period compared to 2021, reaching an average of $107.9 per barrel in the first half, while Henry Hub gas averaged $6.1 per MBtu. % more than between January and June 2021. The refining margin indicator averaged $15.5 per barrel for the semester.
Repsol’s adjusted net income to June, which specifically measures business performance, was 3,177 million euros, with a contribution from international business of approximately 56%, the main exponent of which was the Exploration and Production Area, which develops all its activities outside Spain.
In a statement, the energy company pointed out that this net profit figure, along with the EUR 2,499 million in profits achieved in 2021, partially offsets the 2019 and 2020 exercises, which “added significant losses worth more than EUR 7,100 million, due to adjustments of assets to be net zero emissions and the global health pandemic.
Almost half of the net result -1,206 million euros corresponds to the accounting valuation of the inventories that the company stores as a strategic reserve for Spain.
Repsol stressed that these stocks, which rose in the last quarter, strengthen its ability to guarantee supplies even in volatile situations such as those seen worldwide since the start of the health pandemic and the war in Ukraine.
This significant increase in this item, which has almost tripled compared to the first six months of the previous year, is explained by the gradual increase in the prices of hydrocarbons and their derivatives, mainly due to the tensions caused by the invasion of Ukraine .
Similarly, the instability of the business environment in Europe has increased regulatory pressure on the continent with measures being combated by the sector – such as the ban on the sale in the European Union of combustion engine cars from the year 2035 – and the resulting impact on the long-term profitability and competitiveness of the group’s refineries has led the company to set up provisions for impairment on the carrying amount of its refining assets, which at 1,844 million euros make up the largest part of the specific results of the semester .
The net debt of the company chaired by Antonio Brufau amounted to 5,031 million euros at the end of June, a decrease of 869 million euros at the end of the previous quarter. The liquidity for its part amounted to 9,380 million euros, enough to cover 3.9 times the short-term debt.
The group’s CEO, Josu Jon Imaz, emphasized that the group’s effort “to continue to generate employment and investment for Spain, transform ourselves and be net zero emissions is proving to be remarkable”.
“We take this commitment responsibly, just as we contribute to society, helping our customers in a difficult time while guaranteeing supplies. All this despite the fact that the international context is uncertain and that we have just begun to overcome a pandemic that entails significant losses,” he added.
Similarly, Repsol, which will allocate more than 40% of the total investments foreseen in its strategic plan for the period 2021-2025 (19,300 million euros) to the Iberian Peninsula, indicated that it contributed 5,324 million euros in fiscal terms in the first half of 2022.
Exploration and Production recorded a result of 1,678 million euros per business area, more than half of the company’s total.
Likewise, the international context had a very significant impact on the industrial area, which achieved a result of 1,393 million euros. Repsol is committed to the transformation of this company, which had a negative net result of 612 million euros in its refining activity in 2020 and 2021.
In particular, the refining margin indicator fell over the past year and part of the first quarter of this year, impacted by reduced fuel demand, a situation that was reversed in the second quarter, when supply was insufficient to meet demand for fuel. diesel, gasoline and aviation kerosene, which pushed up prices around the world.
This volatility of the environment is evident in the correction of the refining margin indicator in recent weeks, where it is at single-digit levels, compared to $15.5 a barrel on average in the semester, or $23.3 a barrel in the quarter. second quarter.
Repsol pointed out that the refining endemic situation in the European Union has also contributed to this price increase, reducing capacity by more than 10% in the last decade after the closure of 24 facilities, mainly due to one of low profitability and regulatory uncertainty. On the contrary, the consumption of petrol, diesel and kerosene has increased by 1.3% over the same period.
The Commercial and Renewables sector was impacted by the significant rebates on the sale of fuel at its service stations, which translated into savings of more than EUR 150 million for its customers at the end of June, a figure that impacted the results of the service stations in the Netherlands. Spain, which did not make a profit in the second quarter.
Similarly, Repsol pointed out that it has tried to mitigate the impact of the price context of the retail electricity and gas market on its 1.5 million customers in this sector, which has contributed to the loss of the area.
In the renewable energy and low-carbon manufacturing activity, results continued to improve thanks to the gradual increase in generation capacity. During the period, the group agreed to sell 25% of Repsol Renovables for 905 million euros, in a transaction that values the company’s renewable energy business at 4,383 million euros, including debt and minority interests.
On the other hand, Repsol has approved changes to its Executive Committee to address the company’s new phase of growth and transformation, in line with its 2021-2025 strategic plan, which includes the departure from the company of the current CEO of Client and Low Carbon Generation, María Victoria Zingoni, who has expressed her desire to start a new professional stage outside Spain.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
