Eni Reduces Profit Forecast Amid Falling Oil Prices

Eni SpA has adjusted its profit guidance for the year downward due to a negative shift in the outlook for oil prices, even as the company reported better-than-expected earnings for the third quarter.

Third-Quarter Performance

Despite the decrease in profit expectations, Eni's third-quarter earnings surpassed analysts' forecasts with an adjusted net income of €1.27 billion. This performance reflects a solid quarter compared to the overall trends in the energy sector where many companies are facing challenges.

Weaker Oil Prices

Eni's revised forecast now estimates its full-year adjusted earnings before interest and taxes (EBIT) at €14 billion ($15.2 billion), down from an earlier estimate of around €15 billion. The outlook for oil prices has been influenced by a decline in crude prices and tighter margins in refining and chemical products throughout Europe.

Investor Returns Remain Stable

While energy firms, including Eni, are preparing for lower profits, there are currently no indications that they will reduce returns to shareholders. In fact, Eni has announced plans to increase its share buyback program for 2024 to €2 billion, marking a 25% rise compared to prior guidance.

Strategic Moves and Asset Management

Recently, Eni entered into a partnership with KKR & Co. to sell a minority stake in its biorefining unit, Enilive. This strategy aims to generate funds to support its clean energy initiatives, alongside plans for asset disposals and spin-offs. Eni's asset sale plan, worth €8 billion by 2027, is reportedly progressing more quickly than anticipated, with a significant portion coming from exploration and production activities.

Future Investments

The company’s CEO, Claudio Descalzi, noted ongoing efforts in their divestment program and indicated they are nearing completion of evaluating options to commercialize recent important discoveries. Furthermore, Eni plans to invest approximately €2 billion to revamp its aging chemical facilities in Italy, emphasizing a transition to lower-carbon alternatives.

Eni, Oil, Earnings