By Pietro Lombardi
MADRID (Reuters) -The CEO of Spanish oil company Repsol on Thursday confirmed the group’s outlook for shareholder payouts despite a near halving in third-quarter profit linked to a slump in oil refining margins.
Like larger peers including France’s TotalEnergies and BP, Repsol has been hit by a significant decline in refining margins amid weaker global economic activity and new refineries coming online.
CEO Josu Jon Imaz told analysts in a call that that had not changed the company’s strategic priorities.
“The first one that is fully written in stone is the distribution for our shareholders,” he said.
Sticking to the guidance of between 25% and 35% of cash flow from operations going to shareholders next year, he said that if current assumptions prove correct the payout is likely to be in the 30-35% range.
Next year, the company will pay a cash dividend of at least 0.975 euros ($1.06) per share in two instalments, he said.
“On top of that, we are committed to the share buyback programme,” he said, adding that the size will depend on the cash flow from operations. No additional buyback will take place this year.
Since protecting the balance sheet to keep its credit rating is another priority, capex will provide the necessary flexibility, Imaz said, adding that net investments through 2027 will probably be at the lower end of the announced 16 billion to 19 billion euros range.
Shares in Repsol fell 1.6% in afternoon trading, after rising 1.5% in earlier in the day.
REFINING MARGINS AND LIBYAN OUTPUT
Repsol cut its 2024 guidance for cash flow from operations to 6 billion euros from 6.5 billion-7 billion euros previously.
The lower outlook takes into account the weaker refining margins in the third quarter, down more than 70% from the same period of last year, and the impact of shutdowns at Libya’s Sharara oil field due to “force majeure” circumstances between Aug. 3 and Oct. 3.
“Our performance was negatively impacted by the interruption of production in Libya for almost two months,” Imaz said.
Oil production in the quarter was down 7% year-on-year.
Third-quarter adjusted net profit fell around 50% to 558 million euros ($605.7 million), the company said on Thursday, down from 1.1 billion euros a year earlier and slightly below a company-provided average forecast of 567 million euros.
Net profit fell 88% to 166 million euros.
($1 = 0.9193 euros)
(Reporting by Pietro Lombardi, editing by Inti Landauro and Jan Harvey)
