Eni profit misses, output holds up in mixed bag of results
ROME (Bloomberg) --Eni SpA reported second-quarter profit that missed analysts’ estimates, though production held steady and output-growth targets were confirmed.
Adjusted net income dropped 27% from a year earlier to 562 million euros ($626.5 million), falling well short of the 935.2 million-euro average estimate of analysts. Production slipped just 2%.
The profit figure reflects a lower operating performance and a “notably” higher tax rate year-on-year in the upstream business, said Jason Kenney, an analyst at Banco Santander.
While Eni is “an attractive way to play a constructive view on oil,” it needs some “clean quarters going forward, without one-offs causing weaker earnings or cash,” said RBC Europe analyst Biraj Borkhataria.
Higher taxation is a short-term headwind, according to Alessandro Pozzi of Mediobanca, who noted “the long-term investment case of Eni, supported by a more diverse upstream portfolio, with a reduced geopolitical risk and higher margin production.”
Eni fell 1.3% in Milan trading to 14.16 euros.
Santander’s Kenney said a negative share reaction could be an opportunity to buy, as upstream prospects in the second half and continued exploration success buoy Eni’s value.
Net cash from operations rose 49% from a year earlier to 4.52 billion euros. That in part reflects an additional dividend paid by Var Energi, the Norwegian oil company majority-owned by Eni.
Production slid to 1.83 MMboed from 1.86 MMboed a year earlier, following a shutdown at the giant Kashagan field in Kazakhstan and maintenance in Norway.
Eni confirmed its 2019 target for output growth of 2% to 2.5%.
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