Repsol’s Q1 Profit Plummets Despite Liquidity Stays Strong

Repsol, the largest Spanish oil company, reported a net profit of 969 million euros in the first quarter of the year, which was 12.9% lower than the same period in 2023. Despite this decrease in profits, liquidity remains strong at 10,332 million euros, covering nearly four times all short-term debt maturities.

The adjusted result, measuring operating performance, was 1,267 million euros, a 33% decrease from the previous year. This decline is attributed to various factors including the drop in fossil fuel prices and lower refining margins. Additionally, Repsol’s shares fell around 2% on the Ibex 35 index.

Repsol’s net debt increased to 3,901 million euros due to several reasons such as distribution of dividends and increased working capital. However, despite this increase in leverage, liquidity remains strong at 10,332 million euros.

The business segments within Repsol showed heterogeneity with exploration and production of crude oil and gas recording a profit of 442 million euros. The industrial area including refineries saw a significant drop in profits mainly due to refining margin reductions resulting in negative figures for low-carbon generation and corporations amidst challenges in the wholesale electricity market in Spain. The client segment involving fuel and electricity marketing achieved an adjusted profit of 156 million euros but was slightly lower than before.

Repsol recently distributed dividends to shareholders and began a share buyback program that enhanced indirect remuneration for investors supporting its financial strategy amidst changing market conditions while investing between 16 billion to 19 billion euros between 2022-2027 with renewables receiving half of this amount on the Iberian Peninsula.