SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of July 2023
Eni S.p.A.
(Exact name of Registrant as specified in its charter)
Piazzale Enrico Mattei 1 -- 00144 Rome, Italy
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2b under the Securities Exchange Act of 1934.)
Yes __ No X
(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): ____)
Table of contents
| · | Eni’s Board of Directors: Approval of the first tranche of the provision in place of 2023 dividend: € 0.24 per share | |
| · | Eni: results for the second quarter and half year 2023 |
· SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorised.
| Eni S.p.A. | ||
| /s/ Paola Mariani | ||
| Name: | Paola Mariani | |
| Title: | Head of Corporate | |
| Secretary’s Staff Office | ||
Date: July 28, 2023
Eni’s Board of Directors
Approval of the first tranche of the provision in place of 2023 dividend: € 0.24 per share
San Donato Milanese, 27 July 2023 – Eni’s Board of Directors, chaired by Giuseppe Zafarana, today resolved to distribute to Shareholders the first of the four tranches of the provision in place of the 2023 dividend from Eni S.p.A. available reserves1 for the fiscal year 2023 of € 0.24 (compared to a total annual provision, in place of the dividend, equal to € 0.94) per share outstanding at the ex-dividend date as of 18 September 20232, payable on 20 September 20233, as resolved by the Shareholders’ Meeting of 10 May 2023.
Holders of ADRs, outstanding at the record date of 19 September 2023, will receive € 0.48 per ADR, payable on 6 October 20234, with each ADR listed on the New York Stock Exchange representing two Eni shares.
Company Contacts:
Press Office: Tel. +39.0252031875 – +39.0659822030
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): + 80011223456
Switchboard: +39-0659821
ufficio.stampa@eni.com
segreteriasocietaria.azionisti@eni.com
investor.relations@eni.com
Web site: www.eni.com
1 Coupon No. 43
2 Depending on the recipient’s fiscal status the payment is subject to a withholding tax or are treated in part as taxable income.
3 Pursuant to article 83-terdecies of the Italian Legislative Decree no. 58 of February 24, 1998, the right to receive the payment is determined with reference to the entries on the books of the intermediary – as set out in art. 83-quater, paragraph 3 of the Italian Legislative Decree no. 58 of February 24, 1998 – at the end of the accounting day of the September 19, 2023 (record date).
4 On ADR payment date, Citibank, N.A. will pay net of the amount of the withholding tax under Italian law applicable to all Depository Trust Company Participants.
1
 | Registered Head Office, Piazzale Enrico Mattei, 1 00144 Roma Tel. +39 06598.21 www.eni.com |
San Donato Milanese
July 28, 2023
Eni: results for the second quarter and half year 2023
Key operating and financial results |
| Q1 | Q2 | IH | |||||||
| 2023 | 2023 | 2022 | % Ch. | 2023 | 2022 | % Ch. | |||
| 81.27 | Brent dated | $/bbl | 78.39 | 113.78 | (31) | 79.83 | 107.59 | (26) | |
| 1.073 | Average EUR/USD exchange rate | 1.089 | 1.065 | 2 | 1.081 | 1.093 | (1) | ||
| 606 | Spot Gas price at Italian PSV | €/kcm | 395 | 1,032 | (62) | 500 | 1,037 | (52) | |
| 11.2 | Standard Eni Refining Margin (SERM) | $/bbl | 6.6 | 17.2 | (62) | 8.9 | 8.2 | 9 | |
| 1,656 | Hydrocarbon production | kboe/d | 1,611 | 1,586 | 2 | 1,633 | 1,623 | 1 | |
| Adjusted operating profit (loss) (a) | € million | ||||||||
| 2,789 | E&P | 2,066 | 4,867 | (58) | 4,855 | 9,248 | (48) | ||
| 1,372 | Global Gas & LNG Portfolio (GGP) | 1,087 | (14) | .. | 2,459 | 917 | 168 | ||
| 154 | Sustainable Mobility, Refining and Chemicals | 87 | 1,104 | (92) | 241 | 1,013 | (76) | ||
| 186 | Plenitude & Power | 165 | 140 | 18 | 351 | 325 | 8 | ||
| 140 | Corporate, other activities and consolidation adjustments | (24) | (256) | 116 | (471) | ||||
| 4,641 | 3,381 | 5,841 | (42) | 8,022 | 11,032 | (27) | |||
| 340 | Investment results and interest expense | 292 | 382 | (24) | 632 | 423 | 49 | ||
| 4,981 | Adjusted profit (loss) before taxes | 3,673 | 6,223 | (41) | 8,654 | 11,455 | (24) | ||
| 2,907 | Adjusted net profit (loss) (a)(b) | 1,935 | 3,808 | (49) | 4,842 | 7,078 | (32) | ||
| 0.86 | per share - diluted (€) | 0.57 | 1.07 | 1.43 | 1.98 | ||||
| 2,388 | Net profit (loss) (a)(b) | 294 | 3,815 | (92) | 2,682 | 7,398 | (64) | ||
| 0.70 | per share - diluted (€) | 0.08 | 1.07 | 0.78 | 2.07 | ||||
| 5,291 | Cash flow from operations before changes in working capital at replacement cost (a) | 4,232 | 5,191 | (18) | 9,523 | 10,797 | (12) | ||
| 2,982 | Net cash from operations | 4,443 | 4,183 | 6 | 7,425 | 7,281 | 2 | ||
| 2,214 | Net capital expenditure (c) | 2,597 | 1,822 | 43 | 4,811 | 3,439 | 40 | ||
| 7,796 | Net borrowings before lease liabilities ex IFRS 16 | 8,215 | 7,872 | 4 | 8,215 | 7,872 | 4 | ||
| 55,553 | Shareholders' equity including non-controlling interest | 55,528 | 52,012 | 7 | 55,528 | 52,012 | 7 | ||
| 0.14 | Leverage before lease liabilities ex IFRS 16 | 0.15 | 0.15 | 0.15 | 0.15 | ||||
| (a) Non-GAAP measure. For further information see the paragraph "Non-GAAP measures". | |||||||||
| (b) Attributable to Eni's shareholders. | |||||||||
| (c) Net of expenditures relating to business combinations, purchase of minority interests and other non-organic items. | |||||||||
Eni's Board of Directors, chaired by Giuseppe Zafarana, yesterday approved the unaudited consolidated results for the second quarter and first half 2023. Eni CEO Claudio Descalzi said:
“Eni has delivered excellent operating and financial results in Q2 ’23 despite a less supportive environment. This resilience is significant after having successfully captured upside in the previous stronger scenario. Furthermore, alongside the results delivery Eni has also made considerable steps forward in advancing strategy across the business. Q2 adjusted EBIT of €3.4 bln (€4.2 bln including the contribution proforma of our JV/associates) was underpinned by a solid and growing Upstream and another excellent result in GGP. The market scenario impacted our Refining and Chemicals results but Sustainable Mobility and Plenitude & Power continue to deliver earnings and capacity growth in line with plan despite volatile conditions. Adjusted cash flow was notable at €4.2 bln and well in excess of the capex funding requirements of €2.6 bln. In the first half of 2023, also taking into account working capital needs, we delivered about €3 bln of organic free cash flow, almost matching the entire full year 2023 dividend cash out. Actions in the strategic transformation of the company are already positively impacting our results and 2023 has seen further significant advances. Alongside expanding our biorefining capacity with the Chalmette JV and the Novamont green chemicals purchase, in June we announced the proposed acquisition of Neptune Energy. Neptune’s gas focused portfolio, geographic and operational complementarity with Eni and its low operating emissions profile is an exceptional fit with our strategic objectives yielding significant operating and financial upside. Our strategic initiatives will each contribute towards the very positive performance progression targeted in our plan. Considering our first half results and continuing business performance that drives raised guidance, we have a solid position from which to pay our first quarterly installment of the raised €0.94 per share 2023 dividend in September and continue our €2.2 bln buyback which commenced in May.’’
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Financial highlights of the second quarter of 2023 |
| · | Q2 2023 adjusted profit before tax of €3.7 bln was down 41% and represents a highly robust outcome given the 30% fall in crude oil prices and with gas price and refining margin down over 60%. Particularly, pro-forma adjusted EBIT including the operating margin of equity accounted entities was €4.2 bln vs. €7 bln in Q2 2022. This performance reflects resilient E&P earnings featuring growing production, another very strong contribution from GGP, plus contributions from Sustainable Mobility and Plenitude. | |
| · | E&P earned €2.1 bln of adjusted EBIT in Q2 2023, impacted by weaker realized prices and with year-on-year comparisons impacted by the deconsolidation of Azule. Including the contribution of JV/associates, proforma adjusted EBIT was €2.8 bln, down 52%, also impacted by a higher exploration charge. IH 2023 result was €4.9 bln (versus €9.3 bln in IH 2022). Production in the quarter was up 2% year-over-year | |
| · | GGP earned €1.1 bln of adjusted EBIT in Q2 2023, compared to around breakeven in the same period of 2022, resulting in a very good IH EBIT outcome of €2.5 bln. The Q2 result was mostly driven by specific benefits relating to contractual triggers, renegotiations and settlements related to previous periods that are a feature of the business. Additionally, in a market environment still characterized by some degree of volatility and arbitrage opportunities, the continued asset optimization and trading have also contributed to the quarterly performance. | |
| · | Eni Sustainable Mobility, operational as of January 1, 2023, delivered €0.20 bln of adjusted EBIT, little changed compared with Q2 2022 (€0.34 bln in IH 2023, up by 38%). | |
| · | Refining was impacted by SERM decreasing to $6.6/bbl in Q2 2023 ($17.2/bbl in Q2 2022) and reported a negative €0.05 bln of adjusted EBIT compared to a profit of €0.76 bln of Q2 2022 (a positive €0.08 bln in IH 2023). The performance was impacted by scenario conditions not fully captured by the SERM including lower leverage to natural gas price energy costs, crude differentials and turnaround activity at important upgrading refinery units. | |
| · | Plenitude & Power delivered solid results with €0.17 bln of adjusted EBIT (up 18% year-on-year; €0.35 bln, up 8% in IH 2023) supported by good results of the retail business and the ramp-up in the renewable installed capacity and production volumes, and optimizations in gas-fired power generation activities. Plenitude generated €0.47 bln of proforma adjusted EBITDA in IH 2023, rateably ahead of the yearly guidance of more than €0.7 bln partly as a result of seasonality. | |
| · | Versalis was negatively impacted by an exceptionally low demand across all business segments and competitive pressures of product streams from import resulting in an adjusted operating loss of €0.07 bln in Q2 2023 (a loss of €0.18 bln in IH 2023). | |
| · | Q2 2023 adjusted net profit attributable to Eni shareholders was €1.94 bln impacted by the weaker scenario, but significantly offset by underlying business performance. The Group adjusted tax rate, which did not include Italian extraordinary contributions, was under 50% despite inclusion of the UK energy profit levy. IH 2023 adjusted net profit attributable to Eni shareholders was €4.84 bln. | |
| · | In Q2 2023, Group adjusted operating cash flow before working capital at replacement cost was €4.2 bln, exceeding outflows related to organic capex of €2.6 bln and dividend payments (€0.7 bln). In IH 2023, adjusted cash flow was €9.5 bln resulting in an organic free cash flow of €3 bln. | |
| · | Portfolio activities in IH were around €1.2 bln and related to the first installment of the St. Bernard Bio-refinery in Chalmette, gas upstream assets in Algeria and renewable assets. IH dividend payments amounted to €1.5 bln and share buy-back of €0.4 bln. | |
| · | Eni’s Board of Directors approved the distribution of the first of the four tranches (resulting in a total annual dividend of €0.94) of the dividend for the fiscal year 2023 of €0.24 per share outstanding at the ex-dividend date as of September 18, 2023, payable on September 20, 2023, as resolved by the Shareholders’ Meeting of May 10, 2023. | |
| · | Net borrowings ex-IFRS 16 as of June 30, 2023, were €8.2 bln, and Group leverage stood at 0.15, versus 0.13 as of December 31, 2022. |
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| · | Following the authorization granted by the Shareholders Meeting on May 10, 2023, concerning €2.2 bln up to a maximum of €3.5 bln for the year, the 2023 buy-back program commenced at the end of May and through July 21, 2023, 45 mln shares have been purchased for a cash outlay of €588 mln. |
Main business developments |
Acquisition of Neptune Energy Group Ltd “Neptune”
| · | Eni and its associate Vår Energi ASA have signed a sale and purchase agreement to acquire Neptune, a leading independent exploration and production company with global, low emission, gas-oriented operations, which also retains several projects for CO2 capture. Eni will acquire an asset portfolio which features strong complementarity at both operational and strategic level with its own, strengthening the presence in key geographic areas, like UK, Algeria, Indonesia and Australia. Vår will consolidate its position in Norway. The deal with an enterprise value of $4.9 bln, of which $2.6 bln acquired by Eni and $2.3 bln by Vår, is expected to increase Eni production plateau by over 100 Kboe/d including its share of Vår, by adding cost-competitive, low-emission volumes that will underpin the Group strategy of growing its share of natural gas production and speeding up the transition, while at the same time enhancing security of energy supplies to Europe. The transaction whose economic effects are retroactive to January 1, 2023, is expected to close at the beginning of 2024 subject to the finalization of antitrust procedures and other customary conditions and will be immediately accretive to Eni’s earnings and cash flow also leveraging expected synergies of at least $0.5 bln. |
Exploration & Production
| · | During Q2 2023, the new resources added through exploration reached the total for the first half of the year of about 360 mln boe, driven mainly by the discoveries made off Egypt, Congo and Mexico. | |
| · | In April, the FPSO Firenze sailed out from Dubai to the Baleine field in Côte d'Ivoire. The FPSO to be renamed Baleine upon its mooring has been refurbished and upgraded to increase its processing capacity up to 15,000 bbl/d of oil and around 25 mmcf/d of associated gas. | |
| · | In June, Eni signed with Perenco the agreement for the sale of its participating interest in several production licences in Congo. The transaction value is approximately $300 mln. The closing is subject to the authorization of relevant local and regulatory authorities. | |
| · | In July, Eni acquired Chevron’s development and production assets in offshore Indonesia. The operation will ensure the fast track development of ongoing projects in the area and the integration with Neptune Energy assets. This acquisition is also in line with Eni's energy transition strategy to increase the share of natural gas production to 60% by 2030. The closing of the transaction is subject to the customary governmental and regulatory approvals. |
Global Gas & LNG Portfolio
| · | In April, Eni and SPP, the Slovakia’s largest energy supplier, signed a Memorandum of Understanding (MoU) for a commercial cooperation in the gas and LNG sector, aimed at evaluating initiatives in the areas of trading and management of regasification and transportation capacities to secure and strengthen supplies of natural gas to the Slovak Republic. | |
| · | In April, Eni inaugurated the Congo LNG project, the country's first natural gas liquefaction project and one of Eni's core supply diversification initiatives. The project is expected to start-up before the end of the year and to reach an overall LNG production capacity of 3 mln tons per year (approximately 4.5 bln cubic meters/year) from 2025. | |
| · | In May, Eni offloaded the first LNG cargo from Egypt’s Damietta liquefaction plant into Snam’s new regasification terminal in Piombino, off Tuscany. This was followed the delivery of the first commercial cargo, from Algeria’s Betihoua plant, in July. |
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Sustainable Mobility, Refining and Chemicals
| · | In June, Eni Sustainable Mobility Spa and PBF Energy Inc. (PBF) finalized the 50-50 joint venture partnership in St. Bernard Renewables LLC (SBR), an operating biorefinery co-located with PBF’s Chalmette Refinery in Louisiana (US). The biorefinery started operations in June and is currently targeted to have processing capacity of about 1.1 mln tonnes/year of raw materials, with full pretreatment capabilities. It will produce mainly HVO Diesel using the Ecofining™ process developed by Eni in cooperation with Honeywell UOP. | |
| · | In April, Versalis, currently owning a 36% interest in Novamont, finalized an agreement to purchase the remaining 64% participating interest owned by the other shareholder Mater-Bi. The closing of the transaction is subject to the customary conditions precedent. | |
| · | In May, Kenya Airways made its first flight, powered by Eni Sustainable Mobility's SAF (Sustainable Aviation Fuel). The conventional JetA1 fuel was blended with Eni Biojet produced by Livorno refinery by distilling the bio-components produced in the Gela biorefinery. |
Plenitude & Power
| · | In May, the European Commission and Cassa Depositi e Prestiti awarded more than €100 mln to Be Charge for the construction, by 2025, of a network of over 2,000 “ultra-fast” charging points, with a minimum power of 150 kW along the main European transport corridors involving eight European countries. | |
| · | In June, Plenitude through its subsidiary Be Charge signed an agreement with Ikea to provide the installation of 250 latest generation charging station, within the parking areas of stores and Ikea centers throughout the country. | |
| · | In June, the new Plenitude’s first utility-scale size battery plant of Assemini (Cagliari) realized in Italy started operations. The plant, with an installed capacity of 15 MW and an energy storage capacity of 9 MWh, has been realized with battery modules based on Lithium Iron Phosphate (LFP) technology. | |
| · | In June, Eni and KazMunayGas (KMG) announced a joint project for a 250 MW Hybrid Renewables-Gas Power Plant in Zhanaozen, in the Mangystau Region. The project, the first of its kind in the country, comprises a solar power plant, a wind power plant and a gas power plant for the production and supply of low-carbon and stable electricity to KMG subsidiaries in the area. | |
| · | In June, Eni Plenitude SpA SB finalized the acquisition from Helios UK (Spain) Ltd of a portfolio comprising two photovoltaic plants with a total capacity of 96.4 MWp in Spain’s Albacete. | |
| · | In July, GreenIT, a JV owned by Plenitude and CDP Equity, signed an agreement with Hive Energy Limited and SunLeonard Energy Limited to support the development of four photovoltaic projects with a total capacity of up to 200 MW. The new sites will be developed in Apulia, Sicily, and Lazio leveraging agri-voltaic technology, installing raised structures to achieve synergy between agriculture and the production of renewable energy. |
Decarbonization and Sustainability
| · | In May, Eni signed a Memorandum of Intent (MoI) with the Government of Republic of Guiné Bissau to explore potential areas of collaboration in exploration, nature and technology-based climate solutions, agriculture, sustainability and health. Other areas of collaboration include the evaluation of exploration potential of the country's offshore area. | |
| · | In May, Eni signed a Memorandum of Understanding (MoU) with Sonangol to evaluate possible joint initiatives in the areas of energy transition, including agro-industrial supply chains for the production of low-carbon fuels, the valorization of biomass for agro-industrial applications and critical minerals. | |
| · | In June, Eni signed a Memorandum of Understanding with Libya to evaluate possible opportunities to reduce GHG emissions and develop sustainable energy in the country. Under the terms of the memorandum, Eni will work on reducing CO2 emissions through the reduction of routine gas flaring, fugitive emissions and venting, as well as possible projects for the reduction of hard-to-abate sector emissions. |
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Outlook 2023 |
The Company is issuing the following updated operational and financial guidance.
| · | E&P: Hydrocarbon production for 2023 is confirmed in the range of 1.63-1.67 mln boe/d in a price scenario of $80/bbl. In Q3 2023 production is forecast to be about 1.63 mln boe/d. | |
| · | E&P: Exploration target of 700 mln boe of discovered resources is confirmed. | |
| · | GGP: Adjusted EBIT guidance is raised to €2.7 bln - €3.0 bln for the year versus the previous guidance of €2.0 bln - €2.2 bln. | |
| · | Plenitude & Power: Plenitude proforma adjusted EBITDA guidance is raised to around €0.8 bln, higher than €0.7 bln previously. | |
| · | Sustainable Mobility, Refining and Chemicals: Sustainable Mobility proforma adjusted EBITDA is confirmed at more than €0.9 bln. Downstream proforma adjusted EBIT is now expected to be €0.8 bln, lower than €1.0 bln - €1.1 bln reflecting market conditions not captured by the benchmark SERM. | |
| · | Financials: We confirm Group adjusted EBIT guidance of €12 bln even at the lowered reference scenario1, an underlying raise in guidance of around €2 bln. At the lowered scenario assumptions we expect cash flow from operations before working capital to be between €15.5-€16 bln, similarly reflecting an improvement in underlying performance. | |
| · | Capex: Now expected to be under €9.0 bln, lower than previous guidance of €9.2 bln and original guidance of €9.5 bln and resulting from continuing optimization and efficiency measures. | |
| · | Balance Sheet: Leverage is expected to remain within the stated range of 10% - 20%. | |
| · | Shareholders Remuneration: Full year 2023 dividend of €0.94 per share was approved by the Shareholders Annual General Meeting (AGM) on May 10, 2023, with the first quarterly installment of €0.24 per share due to be paid on September 20, 20232. The planned €2.2 bln share buyback, commenced in May after authorization at the AGM of a total of up to €3.5 bln, and is expected to be completed within April 2024. |
The above-described outlook is a forward-looking statement based on information to date and management’s judgement and is subject to the potential risks and uncertainties of the scenario (see our disclaimer on page 18).
1 Updated 2023 Scenario is: Brent 80 $/bbl (from $85/bbl); SERM 8 $/bbl (unchanged); PSV 484 €/kmc (from 529 €/kmc); and average EUR/USD exchange rate of 1.08 (unchanged).
2 Ex-dividend date: September 18, 2023; record date: September 19, 2023.
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Business segments operating results |
Exploration & Production
Production and prices
| Q1 | Q2 | IH | ||||||
| 2023 | 2023 | 2022 | % Ch. | 2023 | 2022 | % Ch. | ||
| Production | ||||||||
| 780 | Liquids | kbbl/d | 757 | 740 | 2 | 769 | 760 | 1 |
| 4,608 | Natural gas | mmcf/d | 4,491 | 4,447 | 1 | 4,549 | 4,542 | |
| 1,656 | Hydrocarbons (a) | kboe/d | 1,611 | 1,586 | 2 | 1,633 | 1,623 | 1 |
| Average realizations (a) | ||||||||
| 72.86 | Liquids | $/bbl | 69.72 | 104.93 | (34) | 71.25 | 99.63 | (28) |
| 8.06 | Natural gas | $/kcf | 7.05 | 7.60 | (7) | 7.56 | 8.33 | (9) |
| 57.24 | Hydrocarbons | $/boe | 53.31 | 74.32 | (28) | 55.25 | 72.68 | (24) |
(a) Prices relate to consolidated subsidiaries.
| · | In Q2 2023, hydrocarbon production averaged 1.61 mln boe/d (1.63 mln boe/d in IH 2023), up 2% compared to Q2 ’22 (up 1% vs. IH ’22). Production was supported by the ramp-up in Mozambique and Mexico, higher activity in Algeria, which also benefited from the business acquisition, in Kazakhstan due to unplanned events occurred in the same period of 2022, as well as in Indonesia and Iraq. These increases were offset by planned maintenance activities, particularly in Libya, and lower production due to mature fields decline. In the sequential comparison, seasonal factors weighted more, resulting in a decline of 3%. |
| · | Liquid production was 757 kbbl/d in Q2 ’23 (769 kbbl/d in IH ’23), up 2% compared to Q2 ’22 (up 1% vs. IH ’22). Production growth in Mexico, Kazakhstan and Iraq was offset by planned shutdowns and mature fields decline. |
| · | Natural gas production was 4,491 mmcf/d in Q2 ’23 (4,549 in IH ’23), up 1% compared to Q2 ’22 (unchanged compared to IH ’22). Production increases were reported in Algeria, Mozambique in relation to the ramp-up of the Coral Floating LNG project and Indonesia, offset by planned shutdowns and mature fields decline. |
Results
| Q1 | Q2 | IH | ||||||
| 2023 | (€ million) | 2023 | 2022 | % Ch. | 2023 | 2022 | % Ch. | |
| 2,702 | Operating profit (loss) | 1,812 | 4,779 | (62) | 4,514 | 9,123 | (51) | |
| 87 | Exclusion of special items | 254 | 88 | 341 | 125 | |||
| 2,789 | Adjusted operating profit (loss) | 2,066 | 4,867 | (58) | 4,855 | 9,248 | (48) | |
| (18) | of which: - CCUS and agro-biofeedstock | (12) | (8) | (30) | (16) | |||
| (44) | Net finance (expense) income | (85) | (12) | (129) | (115) | |||
| 314 | Net income (expense) from investments | 351 | 505 | 665 | 884 | |||
| 180 | of which: - Vår Energi | 100 | 220 | 280 | 455 | |||
| 115 | - Azule | 178 | 293 | |||||
| 3,059 | Adjusted profit (loss) before taxes | 2,332 | 5,360 | (56) | 5,391 | 10,017 | (46) | |
| (1,537) | Income taxes | (1,326) | (2,132) | 38 | (2,863) | (3,869) | 26 | |
| 50.2 | tax rate (%) | 56.9 | 39.8 | 53.1 | 38.6 | |||
| 1,522 | Adjusted net profit (loss) | 1,006 | 3,228 | (69) | 2,528 | 6,148 | (59) | |
| Results also include: | ||||||||
| 73 | Exploration expenses: | 155 | 92 | 68 | 228 | 160 | 43 | |
| 57 | - prospecting, geological and geophysical expenses | 62 | 59 | 119 | 105 | |||
| 16 | - write-off of unsuccessful wells | 93 | 33 | 109 | 55 | |||
| 1,819 | Capital expenditure | 2,159 | 1,480 | 46 | 3,978 | 2,551 | 56 | |
| - 6 - |
| · | In Q2 ’23, Exploration & Production reported an adjusted operating profit of €2,066 mln, a decrease of 58% compared to Q2 ’22 due to: (i) lower crude oil prices in USD (the marker Brent was down by 31% in the quarter) and lower benchmark gas prices in all geographies, which negatively affected realized prices of equity production, particularly in Europe. Appreciation of the USD/EUR exchange rate (up by 2%) partly alleviated the impact of lower prices, which were also mitigated by positive volumes/mix effects and cost discipline actions; (ii) the missing contribution of the former Angolan subsidiaries that were contributed to the Azule joint-venture in Q3 ’22, whose results are now recognized below the EBIT line. In IH ’23, adjusted operating profit was €4,855 mln, down 48% compared to the IH ‘22, due to the same drivers as for the Q2. |
| Adjusted operating profit of the segment includes the results of CCUS and agro-biofeedstock: a loss of €12 mln in Q2 ’23 (a loss of €30 mln in IH ’23). | |
| Including the contribution of JV/associates, in Q2 ‘23 pro-forma EBIT was €2.8 bln, down 52% year on year, also impacted by a higher exploration charge. |
| · | In Q2 ’23, the segment reported an adjusted net profit of €1,006 mln, a decrease of about 70% compared to Q2 ’22 due to weaker operating performance and lower performance of investments, particularly Vår Energi (€280 mln in IH ’23, a decrease of €175 mln compared to the same period of 2022). The Q2 ’23 tax rate increased by 17 percentage points when compared to the comparative period due to: (i) the impact of lower oil and gas prices; (ii) the impact of the UK energy profit levy which is recognized as a recurring item; and (iii) the impact of certain non-deductible tax expenses (i.e. exploration write-offs). |
| For the disclosure on business segment special charges, see “Special items” in the Group results section. | |
| - 7 - |
Global Gas & LNG Portfolio
Sales
| Q1 | Q2 | IH | ||||||
| 2023 | 2023 | 2022 | % Ch. | 2023 | 2022 | % Ch. | ||
| 606 | Spot Gas price at Italian PSV | €/kcm | 395 | 1,032 | (62) | 500 | 1,037 | (52) |
| 572 | TTF | 371 | 1,011 | (63) | 471 | 1,014 | (54) | |
| 34 | Spread PSV vs. TTF | 24 | 20 | 18 | 29 | 23 | 26 | |
| Natural gas sales | bcm | |||||||
| 7.10 | Italy | 5.73 | 6.83 | (16) | 12.83 | 16.28 | (21) | |
| 7.22 | Rest of Europe | 4.80 | 5.98 | (20) | 12.02 | 13.91 | (14) | |
| 0.62 | of which: Importers in Italy | 0.62 | 0.64 | (3) | 1.24 | 1.10 | 13 | |
| 6.60 | European markets | 4.18 | 5.34 | (22) | 10.78 | 12.81 | (16) | |
| 0.52 | Rest of World | 0.62 | 0.57 | 9 | 1.14 | 1.45 | (21) | |
| 14.84 | Worldwide gas sales (*) | 11.15 | 13.38 | (17) | 25.99 | 31.64 | (18) | |
| 2.7 | of which: LNG sales | 2.5 | 2.4 | 4 | 5.2 | 5.2 | ||
(*) Data include intercompany sales.
| · | In Q2 ’23, natural gas sales were 11.15 bcm, down 17% compared to the same period in 2022, mainly due to the lower gas volumes marketed in Italy (down 16%). In the European markets gas volumes decreased by 22% as result of lower sales in the Iberian Peninsula, Turkey and Germany. In IH ‘23, natural gas sales amounted to 25.99 bcm, down 18% vs the same period of 2022, due to lower gas volumes marketed in Italy (down 21% vs. the comparative period) in all segments and in the European markets (down 16% compared to IH ‘22). |
Results
| Q1 | Q2 | IH | ||||||
| 2023 | (€ million) | 2023 | 2022 | % Ch. | 2023 | 2022 | % Ch. | |
| 275 | Operating profit (loss) | 539 | (1,083) | .. | 814 | (2,060) | .. | |
| 1,097 | Exclusion of special items | 548 | 1,069 | 1,645 | 2,977 | |||
| 1,372 | Adjusted operating profit (loss) | 1,087 | (14) | .. | 2,459 | 917 | .. | |
| 2 | Net finance (expense) income | (3) | (15) | (1) | (20) | |||
| 10 | Net income (expense) from investments | 20 | 1 | 30 | 2 | |||
| 10 | of which: SeaCorridor | 20 | 30 | |||||
| 1,384 | Adjusted profit (loss) before taxes | 1,104 | (28) | .. | 2,488 | 899 | .. | |
| (385) | Income taxes | (296) | (30) | .. | (681) | (301) | .. | |
| 999 | Adjusted net profit (loss) | 808 | (58) | .. | 1,807 | 598 | .. | |
| Capital expenditure | 6 | 6 | 6 | 9 | (33) | |||
| · | In Q2 ’23, the Global Gas & LNG Portfolio segment achieved an adjusted operating profit of €1,087 mln, well above the same period in 2022. The Q2 result was mostly driven by specific benefits relating to contractual triggers, renegotiations and settlements related to previous periods that are a feature of the business. Additionally, in a market environment still characterized by some degree of volatility and arbitrage opportunities, the continued asset optimization and trading have also contributed to the quarterly performance. |
| · | In IH ‘23, adjusted operating profit was €2,459 mln, an improvement of €1,542 mln from the same period of 2022. |
For the disclosure on business segment special charges, see “Special items” in the Group results section.
| - 8 - |
Sustainable Mobility, Refining and Chemicals
Production and sales
| Q1 | Q2 | IH | ||||||
| 2023 | 2023 | 2022 | % Ch. | 2023 | 2022 | % Ch. | ||
| 11.2 | Standard Eni Refining Margin (SERM) | $/bbl | 6.6 | 17.2 | (62) | 8.9 | 8.2 | 9 |
| 4.24 | Throughputs in Italy on own account | mmtonnes | 4.09 | 4.63 | (12) | 8.33 | 8.13 | 2 |
| 2.47 | Throughputs in the rest of World on own account | 2.61 | 2.78 | (6) | 5.07 | 5.35 | (5) | |
| 6.71 | Total throughputs on own account | 6.70 | 7.41 | (10) | 13.40 | 13.48 | (1) | |
| 77 | Average refineries utilization rate | % | 75 | 90 | 76 | 80 | ||
| 136 | Bio throughputs | ktonnes | 140 | 144 | (3) | 276 | 235 | 17 |
| 54 | Average bio refineries utilization rate | % | 55 | 56 | 54 | 46 | ||
| Marketing | ||||||||
| 1.75 | Retail sales in Europe | mmtonnes | 1.88 | 1.87 | 1 | 3.64 | 3.55 | 3 |
| 1.25 | Retail sales in Italy | 1.32 | 1.35 | (2) | 2.58 | 2.55 | 1 | |
| 0.50 | Retail sales in the rest of Europe | 0.56 | 0.52 | 8 | 1.06 | 1.00 | 6 | |
| 21.5 | Retail market share in Italy | % | 20.9 | 21.5 | 21.2 | 21.7 | ||
| 1.83 | Wholesale sales in Europe | mmtonnes | 2.13 | 2.24 | (5) | 3.97 | 4.11 | (3) |
| 1.42 | Wholesale sales in Italy | 1.65 | 1.60 | 3 | 3.08 | 2.92 | 5 | |
| 0.41 | Wholesale sales in the rest of Europe | 0.48 | 0.64 | (25) | 0.89 | 1.19 | (25) | |
| Chemicals | ||||||||
| 0.76 | Sales of chemical products | mmtonnes | 0.82 | 1.07 | (24) | 1.58 | 2.20 | (28) |
| 52 | Average plant utilization rate | % | 55 | 69 | 54 | 69 | ||
| · | In Q2 ’23, the Standard Eni Refining Margin reported an average of 6.6 $/barrel vs. 17.2 $/barrel reported in comparative period (8.9 $/barrel in the first half of 2023, representing a slight increase vs. 8.2 $/barrel reported in IH ‘22). Refining margins decreased materially driven by lower demand for all kinds of refined products particularly gasoil reflecting weak industrial activity and ample supplies. The SERM calculation was also supported by lower natural gas prices, which nonetheless did not translate to better realized margins for Eni. |
| · | In Q2 ’23, throughputs on own accounts at Eni’s refineries in Italy were 4.09 mmtonnes, down 12% compared to Q2 ’22 as a result of lower volumes processed, mainly at the Livorno refinery, impacted by planned turnaround activity. In IH ’23, throughputs increased by 2%. Throughputs outside Italy decreased by 6% compared to Q2 ’22, following lower volumes processed in Germany (in IH ‘23 throughputs decreased by 5% vs. comparative period). |
| · | In Q2 ’23, bio throughputs were 140 ktonnes, representing a 3% decrease compared to the same period of 2022: higher volumes processed at the Gela biorefinery, following the shutdown occurred in 2022, were more than offset by lower throughputs at the Venice biorefinery due to planned turnaround. In IH ‘23, bio throughputs increased by 17% compared to the same period of 2022, thanks to higher volumes processed at the Gela biorefinery. |
| · | In Q2 ’23, retail sales in Italy were 1.32 mmtonnes, decreasing year-on-year (down 2%) due to lower volumes of gasoil, reflecting lower consumptions, partly offset by higher volumes of gasoline. In IH ‘23, retail sales amounted to 2.58 mmtonnes, a slight increase vs. IH ‘22. |
| · | In Q2 ’23, wholesale sales in Italy were 1.65 mmtonnes, increasing (up 3%) compared to the same period of 2022, mainly due to higher sales of jet fuel. Positive performance was also recorded in IH ‘23 at 3.08 mmtonnes: up 5% vs. IH ‘22. |
| · | Sales of chemical products were 0.82 mmtonnes in Q2 ’23, down 24% compared to the same period of 2022, impacted by lower demand and competitive pressure. In IH ‘23, sales amounted to 1.58 mmtonnes, down 28% vs. IH ‘22. |
| · | In Q2 ’23 cracking margin decreased compared to the same period in 2022. Also margins on polyethylene and styrenics decreased compared to Q2 ’22, due to weak commodity prices. |
| - 9 - |
Results
| Q1 | Q2 | IH | |||||
| 2023 | (€ million) | 2023 | 2022 | % Ch. | 2023 | 2022 | % Ch. |
| (270) | Operating profit (loss) | (305) | 1,617 | .. | (575) | 2,279 | .. |
| 337 | Exclusion of inventory holding (gains) losses | 190 | (625) | 527 | (1,388) | ||
| 87 | Exclusion of special items | 202 | 112 | 289 | 122 | ||
| 154 | Adjusted operating profit (loss) | 87 | 1,104 | (92) | 241 | 1,013 | (76) |
| 138 | - Sustainable Mobility | 202 | 222 | (9) | 340 | 246 | 38 |
| 125 | - Refining | (45) | 757 | .. | 80 | 757 | (89) |
| (109) | - Chemicals | (70) | 125 | .. | (179) | 10 | .. |
| (4) | Net finance (expense) income | (14) | (19) | (18) | (29) | ||
| 152 | Net income (expense) from investments | 70 | 166 | 222 | 218 | ||
| 151 | of which: ADNOC R> | 73 | 151 | 224 | 196 | ||
| 302 | Adjusted profit (loss) before taxes | 143 | 1,251 | (89) | 445 | 1,202 | (63) |
| (74) | Income taxes | (51) | (319) | 84 | (125) | (324) | 61 |
| 228 | Adjusted net profit (loss) | 92 | 932 | (90) | 320 | 878 | (64) |
| 138 | Capital expenditure | 216 | 139 | 55 | 354 | 231 | 53 |
| · | In Q2 ’23, Sustainable Mobility delivered an adjusted operating profit of €202 mln, little changed from the proforma adjusted operating profit of the Q2 ’22 following the restatement of the 2022 comparative period to take into account the spin out of the new business effective January 1, 2023. In IH ’23, it was up by 38%. |
| · | The Refining business posted an adjusted operating loss of €45 mln compared to a profit of €757 mln in Q2 ’22 (in IH ’23 reported an adjusted operating profit of €80 mln, compared to a profit of €757 mln in IH ’22). The worsening was driven by substantially lower benchmark refining margins, with Eni’s SERM down at 6.6 $/bbl (vs 17.2 $/barrel reported in comparative period), lower crack spread of products not captured by the SERM, narrowing heavy-light crude differentials and planned turnaround activity. |
| · | The Chemicals business, managed by Versalis, reported an adjusted operating loss of €70 mln in Q2 ’23, down €195 mln compared to Q2 ’22. Results were negatively affected by lower demand across all business segments and market uncertainties, holding back purchasing decisions by resellers, as well as continued competitive pressure of product streams exported by other geographies. In IH ’23, the adjusted operating result was a loss of €179 mln (profit of €10 mln in IH ’22) reflecting exceptionally adverse market conditions. |
For the disclosure on business segment special charges, see “Special items” in the Group results section.
| - 10 - |
Plenitude & Power
Production and sales
| Q1 | Q2 | IH | ||||||
| 2023 | 2023 | 2022 | % Ch. | 2023 | 2022 | % Ch. | ||
| Plenitude | ||||||||
| 10.1 | Retail and business customers at period end | mln pod | 10.1 | 10.0 | 1 | 10.1 | 10.0 | 1 |
| 2.91 | Retail and business gas sales | bcm | 0.88 | 0.95 | (8) | 3.79 | 4.37 | (13) |
| 4.62 | Retail and business power sales to end customers | TWh | 4.19 | 4.49 | (7) | 8.81 | 9.58 | (8) |
| 2.324 | Installed capacity from renewables at period end | GW | 2.465 | 1.524 | 62 | 2.465 | 1.524 | 62 |
| 56 | of which: - photovoltaic (including installed storage capacity) | % | 58 | 58 | 58 | 58 | ||
| 44 | - wind | 42 | 42 | 42 | 42 | |||
| 990 | Energy production from renewable sources | GWh | 980 | 662 | 48 | 1,970 | 1,220 | 62 |
| 14.7 | EV charging points at period end | thousand | 16.6 | 8.5 | 96 | 16.6 | 8.5 | 96 |
| Power | ||||||||
| 5.16 | Power sales in the open market | TWh | 4.90 | 5.61 | (13) | 10.06 | 11.34 | (11) |
| 5.27 | Thermoelectric production | 5.07 | 4.99 | 2 | 10.34 | 11.06 | (7) | |
| · | Retail and business gas sales amounted to 0.88 bcm in Q2 ’23, down by 8% compared to the same period in 2022, mainly due to lower consumptions. In IH ‘23, gas sales amounted to 3.79 bcm, decreasing by 13% vs. the comparative period, due to the same driver as for the quarter. | |
| · | Retail and business power sales to end customers were 4.19 TWh in the Q2 ’23, a 7% decrease compared to Q2 ’22 mainly due to lower consumptions. | |
| · | As of June 30, 2023, the installed capacity from renewables was 2.5 GW, up by approximately 1 GW compared to June 30, 2022, mainly thanks to the acquisitions in Italy (PLT Group), in Spain (Boreas and Helios), in the USA (Kellam) and to the organic development in the USA (Brazoria), Spain (Cerillares) and Kazakhstan (first tranche of Shaulder), as well as the realization of Assemini, first storage energy site in Italy. | |
| · | Energy production from renewable sources (980 GWh in Q2 ’23) up by 318 GWh year on year, mainly thanks to the contribution from acquired assets in operation and the start-up of organic projects. | |
| · | EV charging points as of June 30, 2023, amounted to 16.6 thousand, doubling compared to the same period of 2022, in line with the enhancing plan of our network. | |
| · | Power sales in the open market were 4.90 TWh in Q2 ’23, down 13% year-on-year mainly due to lower volumes marketed particularly in the open market and to the power exchange (10.06 TWh in IH ‘23, representing a reduction of 11% compared to the same period in 2022, due to the same drivers as of the quarter). |
Results
| Q1 | Q2 | IH | |||||
| 2023 | (€ million) | 2023 | 2022 | % Ch. | 2023 | 2022 | % Ch. |
| (308) | Operating profit (loss) | (3) | 1,019 | .. | (311) | 2,613 | .. |
| 494 | Exclusion of special items | 168 | (879) | 662 | (2,288) | ||
| 186 | Adjusted operating profit (loss) | 165 | 140 | 18 | 351 | 325 | 8 |
| 132 | - Plenitude | 133 | 112 | 19 | 265 | 251 | 6 |
| 54 | - Power | 32 | 28 | 14 | 86 | 74 | 16 |
| Net finance (expense) income | (4) | (4) | (4) | (7) | |||
| (5) | Net income (expense) from investments | (6) | (11) | (2) | |||
| 181 | Adjusted profit (loss) before taxes | 155 | 136 | 14 | 336 | 316 | 6 |
| (54) | Income taxes | (53) | (41) | (29) | (107) | (102) | (5) |
| 127 | Adjusted net profit (loss) | 102 | 95 | 7 | 229 | 214 | 7 |
| 149 | Capital expenditure | 158 | 181 | (13) | 307 | 322 | (5) |
| · | In Q2 ’23 Plenitude reported an adjusted operating profit of €133 mln, a 19% increase compared to Q2 ’22. The positive performance was achieved thanks to good results on retail business and to a ramp-up in renewable installed capacity and production volumes, confirming the value of the integrated business model. In IH ‘23, adjusted operating profit was €265 mln, representing an increase of 6% from the same period in 2022 due to the same drivers as for the second quarter. |
| -11- |
| · | The Power generation business from gas-fired plants reported an adjusted operating profit of €32 mln in Q2 ’23, up €4 mln or 14% compared to the same period in 2022, thanks to optimizations and lower fuel expenses. In IH ‘23, adjusted operating result was €86 mln, up €12 mln compared to IH ‘22. |
For the disclosure on business segment special charges, see “Special items” in the Group results section.
| -12- |
| Group results |
| Q1 | Q2 | IH | |||||
| 2023 | (€ million) | 2023 | 2022 | % Ch. | 2023 | 2022 | % Ch. |
| 27,185 | Sales from operations | 19,591 | 31,556 | (38) | 46,776 | 63,685 | (27) |
| 2,513 | Operating profit (loss) | 1,762 | 5,970 | (70) | 4,275 | 11,322 | (62) |
| 357 | Exclusion of inventory holding (gains) losses | 252 | (638) | 609 | (1,351) | ||
| 1,771 | Exclusion of special items (a) | 1,367 | 509 | 3,138 | 1,061 | ||
| 4,641 | Adjusted operating profit (loss) | 3,381 | 5,841 | (42) | 8,022 | 11,032 | (27) |
| Breakdown by segment: | |||||||
| 2,789 | Exploration & Production | 2,066 | 4,867 | (58) | 4,855 | 9,248 | (48) |
| 1,372 | GGP | 1,087 | (14) | .. | 2,459 | 917 | .. |
| 154 | Sustainable Mobility, Refining and Chemicals | 87 | 1,104 | (92) | 241 | 1,013 | (76) |
| 186 | Plenitude & Power | 165 | 140 | 18 | 351 | 325 | 8 |
| (134) | Corporate and other activities | (96) | (120) | 20 | (230) | (294) | 22 |
| 274 | Impact of unrealized intragroup profit elimination and other consolidation adjustments | 72 | (136) | 346 | (177) | ||
| 4,641 | Adjusted operating profit (loss) | 3,381 | 5,841 | (42) | 8,022 | 11,032 | (27) |
| (123) | Net finance (expense) income | (144) | (280) | 49 | (267) | (619) | 57 |
| 463 | Net income (expense) from investments | 436 | 662 | (34) | 899 | 1,042 | (14) |
| 4,981 | Adjusted profit before taxes | 3,673 | 6,223 | (41) | 8,654 | 11,455 | (24) |
| (2,055) | Income taxes | (1,718) | (2,411) | 29 | (3,773) | (4,367) | 14 |
| 2,926 | Adjusted net profit (loss) | 1,955 | 3,812 | (49) | 4,881 | 7,088 | (31) |
| 19 | of which attributable to: - non-controlling interest | 20 | 4 | .. | 39 | 10 | .. |
| 2,907 | - Eni’s shareholders | 1,935 | 3,808 | (49) | 4,842 | 7,078 | (32) |
| 2,388 | Net profit (loss) attributable to Eni's shareholders | 294 | 3,815 | (92) | 2,682 | 7,398 | (64) |
| 255 | Exclusion of inventory holding (gains) losses | 181 | (455) | 436 | (962) | ||
| 264 | Exclusion of special items (a) | 1,460 | 448 | 1,724 | 642 | ||
| 2,907 | Adjusted net profit (loss) attributable to Eni's shareholders | 1,935 | 3,808 | (49) | 4,842 | 7,078 | (32) |
(a) For further information see table “Breakdown of special items”.
| · | In Q2 ’23, the Group reported an adjusted operating profit of €3,381 mln, down 42% compared to Q2 ’22, mainly as a result of lower E&P segment results (down 58% to €2,066 mln), impacted by the reclassification of Angolan subsidiaries to equity accounted entities as the Azule joint-venture became operational in Q3 ‘22, and lower realized prices of equity production due to declining benchmark crude oil and natural gas prices. The Sustainable Mobility and Refining businesses (down 84% to €157 mln) were affected by lower refining margins. Results were supported by a strong GGP performance with €1,087 mln of adjusted operating profit (compared to a break-even result in the same period of 2022) mainly driven by specific benefits relating to contractual triggers, renegotiations and settlements related to previous periods and by the trend in the results of the Plenitude & Power businesses (up 18%). In IH ‘23, the Group reported an adjusted operating profit of €8,022 mln, down 27% compared to IH ’22, due to lower E&P segment and Sustainable Mobility and Refining business partly offset by strong performance in the GGP segment and positive results of the Plenitude & Power segment. | |
| · | In Q2 ’23 adjusted net profit attributable to Eni shareholders was €1,935 mln, €1,873 mln lower than the Q2 ’22, or 49%, due to lower operating profit and lower results at JV and associates. In IH ’23 the Group reported an adjusted net result of €4,842 mln, down 32% compared to IH 2022. | |
| · | Group’s tax rate: the adjusted tax rate increased by 8 percentage points to 47% vs Q2 ‘22, as a result of the impact of the UK energy profit levy, adverse scenario effects and the impact of E&P non-deductible expenses, partly offset by a higher proportion of the taxable profit earned by Italian subsidiaries. In the IH ‘23, the tax rate was 44%, up by 6 percentage points. |
| -13- |
Net borrowings and cash flow from operations
| Q1 | Q2 | IH | |||||
| 2023 | (€ million) | 2023 | 2022 | Change | 2023 | 2022 | Change |
| 2,407 | Net profit (loss) | 314 | 3,819 | (3,505) | 2,721 | 7,408 | (4,687) |
| Adjustments to reconcile net profit (loss) to net cash provided by operating activities: | |||||||
| 1,171 | - depreciation, depletion and amortization and other non monetary items | 1,990 | 1,211 | 779 | 3,161 | 2,765 | 396 |
| (408) | - net gains on disposal of assets | (10) | (110) | 100 | (418) | (444) | 26 |
| 1,302 | - dividends, interests and taxes | 1,769 | 2,731 | (962) | 3,071 | 5,185 | (2,114) |
| (293) | Changes in working capital related to operations | 1,587 | (1,235) | 2,822 | 1,294 | (3,840) | 5,134 |
| 560 | Dividends received by equity investments | 780 | 247 | 533 | 1,340 | 305 | 1,035 |
| (1,540) | Taxes paid | (1,849) | (2,271) | 422 | (3,389) | (3,664) | 275 |
| (217) | Interests (paid) received | (138) | (209) | 71 | (355) | (434) | 79 |
| 2,982 | Net cash provided by operating activities | 4,443 | 4,183 | 260 | 7,425 | 7,281 | 144 |
| (2,119) | Capital expenditure | (2,557) | (1,829) | (728) | (4,676) | (3,193) | (1,483) |
| (645) | Investments and acquisitions | (1,165) | (73) | (1,092) | (1,810) | (1,267) | (543) |
| 445 | Disposal of consolidated subsidiaries, businesses, tangible and intangible assets and investments | 44 | 330 | (286) | 489 | 904 | (415) |
| (212) | Other cash flow related to investing activities | 511 | 417 | 94 | 299 | 256 | 43 |
| 451 | Free cash flow | 1,276 | 3,028 | (1,752) | 1,727 | 3,981 | (2,254) |
| 752 | Net cash inflow (outflow) related to financial activities | (86) | (1,045) | 959 | 666 | 1,670 | (1,004) |
| (139) | Changes in short and long-term financial debt | 1,567 | (2,596) | 4,163 | 1,428 | (706) | 2,134 |
| (247) | Repayment of lease liabilities | (228) | (266) | 38 | (475) | (556) | 81 |
| (781) | Dividends paid and changes in non-controlling interests and reserves | (1,227) | (1,681) | 454 | (2,008) | (1,713) | (295) |
| (39) | Interest payment of perpetual hybrid bond | (48) | (48) | (87) | (87) | ||
| (32) | Effect of changes in consolidation and exchange differences of cash and cash equivalent | 17 | 70 | (53) | (15) | 79 | (94) |
| (35) | NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT | 1,271 | (2,538) | 3,809 | 1,236 | 2,668 | (1,432) |
| 5,291 | Adjusted net cash before changes in working capital at replacement cost | 4,232 | 5,191 | (959) | 9,523 | 10,797 | (1,274) |
| Q1 | Q2 | IH | |||||
| 2023 | (€ million) | 2023 | 2022 | Change | 2023 | 2022 | Change |
| 451 | Free cash flow | 1,276 | 3,028 | (1,752) | 1,727 | 3,981 | (2,254) |
| (247) | Repayment of lease liabilities | (228) | (266) | 38 | (475) | (556) | 81 |
| Net borrowings of acquired companies | (9) | 9 | (88) | 88 | |||
| (147) | Net borrowings of divested companies | (147) | (147) | ||||
| (7) | Exchange differences on net borrowings and other changes (a) | (192) | (273) | 81 | (199) | (422) | 223 |
| (781) | Dividends paid and changes in non-controlling interest and reserves | (1,227) | (1,681) | 454 | (2,008) | (1,713) | (295) |
| (39) | Interest payment of perpetual hybrid bond | (48) | (48) | (87) | (87) | ||
| (770) | CHANGE IN NET BORROWINGS BEFORE LEASE LIABILITIES | (419) | 751 | (1,170) | (1,189) | 1,115 | (2,304) |
| 247 | Repayment of lease liabilities | 228 | 266 | (38) | 475 | 556 | (81) |
| (134) | Inception of new leases and other changes | (116) | 199 | (315) | (250) | (124) | (126) |
| (657) | CHANGE IN NET BORROWINGS AFTER LEASE LIABILITIES | (307) | 1,216 | (1,523) | (964) | 1,547 | (2,511) |
(a) Includes expenditures to purchase plant and equipment from suppliers whose payment terms matched classification as financing payables (€104 million and €9 million in the second quarter 2023 and the second quarter 2022, respectively, €189 million and €18 million in the first half 2023 and the first half 2022, respectively, and €85 million in the first quarter 2023).
Net cash provided by operating activities in IH ’23 reached €7,425 mln and included €1,340 mln of dividends distributed from investments, mainly Azule Energy and Vår Energi and was impacted by lower amount of trade receivables due in subsequent reporting periods divested to financing institutions, down by approximately €1 bln compared to the amount divested at the end of 2022.
Cash flow from operating activities before changes in working capital at replacement cost was €9,523 mln in IH ’23 and was net of the following items: inventory holding gains or losses relating to oil and products, the reversing timing difference between gas inventories accounted at weighted average cost and management’s own measure of performance leveraging inventories to optimize margin, and the fair value of commodity derivatives lacking the formal criteria to be designated as hedges or prorated on an accrual basis. It also excluded €0.4 bln cash-out relating to an Italian extraordinary tax contribution enacted by the Italian Budget Law for 2023, calculated on the pre-tax income 2022 and accrued in the financial statements 2022 (for further developments, see the section “special items” below).
| -14- |
A reconciliation of cash flow from operations before changes in working capital at replacement cost to net cash provided by operating activities is provided below:
| Q1 | Q2 | IH | |||||
| 2023 | (€ million) | 2023 | 2022 | Change | 2023 | 2022 | Change |
| 2,982 | Net cash provided by operating activities | 4,443 | 4,183 | 260 | 7,425 | 7,281 | 144 |
| 293 | Changes in working capital related to operations | (1,587) | 1,235 | (2,822) | (1,294) | 3,840 | (5,134) |
| 1,247 | Exclusion of commodity derivatives | 137 | (115) | 252 | 1,384 | 490 | 894 |
| 357 | Exclusion of inventory holding (gains) losses | 252 | (638) | 890 | 609 | (1,351) | 1,960 |
| 4,879 | Net cash before changes in working capital at replacement cost | 3,245 | 4,665 | (1,420) | 8,124 | 10,260 | (2,136) |
| 412 | Provisions for extraordinary credit losses and other items | 987 | 526 | 461 | 1,399 | 537 | 862 |
| 5,291 | Adjusted net cash before changes in working capital at replacement cost | 4,232 | 5,191 | (959) | 9,523 | 10,797 | (1,274) |
Organic capex was €4.8 bln (up 40% year on year) due to the ramp-up of natural gas and LNG projects to boost energy security, as well as the Baleine project in Côte d’Ivoire, and comprised capital contributions to investees that are executing capital projects of interest to Eni.
Cash outflows for acquisitions net of divestments were about €1.2 bln and mainly related to the acquisition of bp’s activities in Algeria, the first price installment of the St. Bernard bio-refinery, Plenitude’s renewable assets and the final price installment of the acquisition of PLT group made late in 2022, partly offset by the divestment of a 49.9% stake in the equity interests of Eni’s subsidiaries managing the TTPC/Transmed pipelines following the deal with Snam and other non-strategic assets.
Net financial borrowings before IFRS 16 increased by around €1.2 bln due to the adjusted operating cash flow (€9.5 bln), capex requirements of €4.8 bln, working capital needs (€1.7 bln), dividend payments to Eni’s shareholders and share repurchases of €1.9 bln, the cash outflow related to acquisitions and divestments (€1.2 bln), other investing activities and other changes (€0.5 bln) as well as the payment of lease liabilities and hybrid bond interest (€0.6 bln).
| -15- |
Summarized Group Balance Sheet
| (€ million) | Jun. 30, 2023 | Dec. 31, 2022 | Change |
| Fixed assets | |||
| Property, plant and equipment | 57,289 | 56,332 | 957 |
| Right of use | 4,233 | 4,446 | (213) |
| Intangible assets | 5,499 | 5,525 | (26) |
| Inventories - Compulsory stock | 1,397 | 1,786 | (389) |
| Equity-accounted investments and other investments | 14,287 | 13,294 | 993 |
| Receivables and securities held for operating purposes | 2,062 | 1,978 | 84 |
| Net payables related to capital expenditure | (2,580) | (2,320) | (260) |
| 82,187 | 81,041 | 1,146 | |
| Net working capital | |||
| Inventories | 6,074 | 7,709 | (1,635) |
| Trade receivables | 10,644 | 16,556 | (5,912) |
| Trade payables | (11,122) | (19,527) | 8,405 |
| Net tax assets (liabilities) | (3,866) | (2,991) | (875) |
| Provisions | (15,198) | (15,267) | 69 |
| Other current assets and liabilities | 355 | 316 | 39 |
| (13,113) | (13,204) | 91 | |
| Provisions for employee benefits | (783) | (786) | 3 |
| Assets held for sale including related liabilities | 178 | 156 | 22 |
| CAPITAL EMPLOYED, NET | 68,469 | 67,207 | 1,262 |
| Eni's shareholders equity | 55,107 | 54,759 | 348 |
| Non-controlling interest | 421 | 471 | (50) |
| Shareholders' equity | 55,528 | 55,230 | 298 |
| Net borrowings before lease liabilities ex IFRS 16 | 8,215 | 7,026 | 1,189 |
| Lease liabilities | 4,726 | 4,951 | (225) |
| - of which Eni working interest | 4,247 | 4,457 | (210) |
| - of which Joint operators' working interest | 479 | 494 | (15) |
| Net borrowings after lease liabilities ex IFRS 16 | 12,941 | 11,977 | 964 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 68,469 | 67,207 | 1,262 |
| Leverage before lease liabilities ex IFRS 16 | 0.15 | 0.13 | 0.02 |
| Leverage after lease liabilities ex IFRS 16 | 0.23 | 0.22 | 0.01 |
| Gearing | 0.19 | 0.18 | 0.01 |
As of June 30, 2023, fixed assets (€82.2 bln) increased by €1.1 bln from December 31, 2022, due to capital expenditure and acquisitions and the increased book value of equity-accounted investments reflecting the net effect of Eni’s share of investees results and of the derecognition of Eni’s natural gas transport assets, which were contributed to the newly established “SeaCorridor” entity, jointly controlled by Eni and Snam (50.1% and 49.9%, respectively), the acquisition of a 50% stake in the St. Bernard Bio-refinery, offset by dividends distributed by investees. Negative exchange rate translation differences reduced the book values of dollar-denominated assets (the period-end exchange rate of EUR vs. USD was 1.085, up 1.7% compared to 1.067 as of December 31, 2022) as well as DD&A, impairment charges and write-offs recorded in the period.
Net working capital (-€13.11 bln) almost unchanged from December 31, 2022. Increased balance between trade receivables and trade payables (approximately up by €2.5 bln), partly offset by the lower value of oil and product inventories due to the weighted-average cost method of accounting in an environment of declining prices (down by €1.6 bln) and increased net tax liabilities (up by €0.9 bln).
| -16- |
Shareholders’ equity (€55.5 bln) was almost unchanged compared to December 31, 2022, due to the net profit for the period (€2.7 bln), the positive change in the cash flow hedge reserve of €0.5 bln, partly offset by negative foreign currency translation differences (about €1 bln) reflecting the appreciation of the Euro vs the USD as well as dividend paid to shareholders (€1.5 bln) and share repurchase (€0.4 bln).
Net borrowings3 before lease liabilities as of June 30, 2023, amounted to €8.2 bln, up by approximately €1.2 bln from December 31, 2022. Leverage4 – the ratio of the borrowings to total equity calculated before the impact of IFRS 16 – was 0.15 on June 30, 2023 (compared to 0.13 as of December 31, 2022).
Special items
The breakdown of special items recorded in operating profit by segment (net charges of €3,138 mln and €1,367 mln in IH and Q2 ’23, respectively) is as follows:
| · | E&P: net charges of €341 mln in IH ’23 (net charges of €254 mln in Q2) mainly related to impairment losses of €209 mln (€208 mln in Q2) recorded at certain Italian properties driven by lower natural gas prices and alignment to fair value of held-for-sale assets, credits impairment losses (€61 mln and €43 mln in IH and Q2 ’23, respectively) and environmental charges (€36 mln and €19 mln in IH and Q2 ’23, respectively). | |
| · | GGP: net charges of €1,645 mln in IH ’23 (net charges of €548 mln in Q2) mainly including the accounting effect of certain fair-valued commodity derivatives lacking the formal criteria to be classified as hedges or to be elected under the own use exemption; and the difference between the value of gas inventories accounted for under the weighted-average cost method provided by IFRS and management’s own measure of inventories, which moves forward at the time of inventory drawdown, the margins captured on volumes in inventories above normal levels leveraging the seasonal spread in gas prices net of the effects of the associated commodity derivatives (charges of €946 mln and €553 mln in IH and Q2 ’23, respectively). The reclassification to adjusted operating profit of the negative balance of €8 mln in IH ’23 (positive balance of €10 mln in Q2) related to derivatives used to manage margin exposure to foreign currency exchange rate movements and exchange translation differences of commercial payables and receivables. | |
| · | Sustainable Mobility, Refining and Chemicals: net charges of €289 mln in IH ’23 (net charges of €202 mln in Q2) mainly related to the write-down of capital expenditures made for compliance and stay-in-business at certain CGU with expected negative cash flows (€171 mln and €117 mln in IH and Q2 ’23, respectively), environmental provisions (€55 mln and €38 mln in IH and Q2 ’23), risk provisions (€16 mln in both reporting period) and the accounting effect of certain fair-valued commodity derivatives lacking the formal criteria to be classified as hedges (charge of €37 mln and €6 mln in IH and Q2 ’23). | |
| · | Plenitude & Power: net charges of €662 mln in IH ’23 (net charges €168 mln in Q2) mainly related to the fair values of commodity derivatives lacking the formal criteria to be classified as hedges under IFRS, and, to a lower extent, some derivatives part of a general annual hedging program prorated over the 2023 quarters. |
The other special items in IH ’23 related to a gain of €0.8 bln (including the fair value evaluation of stake retained in the company) in connection to the sale of a 49.9% stake in the equity interests of Eni’s subsidiaries managing the TTPC/Transmed pipelines and the relevant transportation rights of natural gas volumes imported from Algeria following the agreement with Snam SpA. Among other special items, the Italian extraordinary contribution ex law N° 197/2022 accrued in the 2022 accounts is re-incorporated according to decree N° 61/2023.
3 Details on net borrowings are furnished on page 28.
4 Non-GAAP financial measures and other alternative performance indicators disclosed throughout this press release are accompanied by explanatory notes and tables in line with guidance provided by ESMA guidelines on alternative performance measures (ESMA/2015/1415), published on October 5, 2015. For further information, see the section “Non-GAAP measures” of this press release. See pages 19 and subsequent.
-17-
Other information, basis of presentation and disclaimer
This press release on Eni’s results for the second quarter and the first half of 2023 has been prepared on a voluntary basis according to article 82-ter, Regulations on issuers (CONSOB Regulation No. 11971 of May 14, 1999, and subsequent amendments and inclusions). The disclosure of results and business trends on a quarterly basis is consistent with Eni’s policy to provide the market and investors with regular information about the Company’s financial and industrial performances and business prospects considering the reporting policy followed by oil&gas peers who are communicating results on quarterly basis.
Results and cash flow are presented for the first and second quarter of 2023, the first half of 2023 and for the second quarter and first half of 2022. Information on the Company’s financial position relates to end of the periods as of June 30, 2023 and December 31, 2022.
Accounts set forth herein have been prepared in accordance with the evaluation and recognition criteria set by the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission according to the procedure set forth in Article 6 of the European Regulation (CE) No. 1606/2002 of the European Parliament and European Council of July 19, 2002.
These criteria are unchanged from the 2022 Annual Report on Form 20-F filed with the US SEC on April 5, 2023, which investors are urged to read.
The interim consolidated financial report as at June 30, 2023 prepared in accordance with Italian listing standards, subject to a limited review by the external auditors is due to be published in the first week of August.
Basis of presentation
Following the establishment of Eni Sustainable Mobility subsidiary effective January 1, 2023, that operates Eni’s biorefineries and the retail marketing of fuels and of smart mobility solutions, the management has resolved to break-down the adjusted EBIT of the former reporting segment Refining & Marketing “R&M” into two operating sub-segments:
| - | Sustainable Mobility “SM”; and | |
| - | Refining. |
The re-segmentation of the adjusted EBIT of R&M for the comparative periods of 2022 is disclosed below:
| 2022 | First quarter | Second quarter | Third quarter | Fourth quarter | ||||
| Adjusted operating profit (loss) | As published | As restated | As published | As restated | As published | As restated | As published | As restated |
| R&M and Chemicals | (91) | 1,104 | 537 | 379 | ||||
| - Refining & Marketing | 24 | 979 | 714 | 466 | ||||
| - Chemicals | (115) | 125 | (177) | (87) | ||||
| Sustainable Mobility, Refining and Chemicals | (91) | 1,104 | 537 | 379 | ||||
| - Sustainable Mobility | 24 | 222 | 315 | 111 | ||||
| - Refining | 0 | 757 | 399 | 355 | ||||
| - Chemicals | (115) | 125 | (177) | (87) | ||||
No change has been made to the Group statutory segment information as per IFRS 8 “Segment Reporting”, which will continue to feature the Sustainable Mobility, Refining and Chemicals segment (formerly R&M and Chemicals).
* * *
Non-GAAP financial measures and other alternative performance indicators disclosed throughout this press release are accompanied by explanatory notes and tables in line with guidance provided by ESMA guidelines on alternative performance measures (ESMA/2015/1415), published on October 5, 2015. For further information, see the section “Alternative performance measures (Non-GAAP measures)” of this press release.
The manager responsible for the preparation of the Company’s financial reports, Francesco Esposito, declares pursuant to rule 154-bis paragraph 2 of Legislative Decree No. 58/1998 that data and information disclosed in this press release correspond to the Company’s evidence and accounting books and records.
* * *
Disclaimer
This press release contains certain forward-looking statements particularly those regarding capital expenditure, development and management of oil and gas resources, dividends, share repurchases, allocation of future cash flow from operations, future operating performance, gearing, targets of production and sales growth, new markets and the progress and timing of projects. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors, including the impact of the pandemic disease, the timing of bringing new fields on stream; management’s ability in carrying out industrial plans and in succeeding in commercial transactions; future levels of industry product supply; demand and pricing; operational issues; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; development and use of new technology; changes in public expectations and other changes in business conditions; the actions of competitors and other factors discussed elsewhere in this document. Due to the seasonality in demand for natural gas and certain refined products and the changes in a number of external factors affecting Eni’s operations, such as prices and margins of hydrocarbons and refined products, Eni’s results from operations and changes in net borrowings for the quarter of the year cannot be extrapolated on an annual basis.
* * *
Company Contacts
Press Office: Tel. +39.0252031875 - +39.0659822030
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): +80011223456
Switchboard: +39-0659821
ufficio.stampa@eni.com
segreteriasocietaria.azionisti@eni.com
investor.relations@eni.com
website: www.eni.com
* * *
Eni
Società per Azioni, Rome, Piazzale Enrico Mattei, 1
Share capital: €4,005,358,876 fully paid.
Tax identification number 00484960588
Tel.: +39 0659821 - Fax: +39 0659822141
This press release for the second quarter and first half of 2023 results (not subject to audit) is also available on Eni’s website eni.com.
-18-
| Alternative performance indicators (Non-GAAP measures) |
Management evaluates underlying business performance on the basis of Non-GAAP financial measures, which are not provided by IFRS (“Alternative performance measures”), such as adjusted operating profit, adjusted net profit, which are arrived at by excluding from reported results certain gains and losses, defined special items, which include, among others, asset impairments, including impairments of deferred tax assets, gains on disposals, risk provisions, restructuring charges, the accounting effect of fair-valued derivatives used to hedge exposure to the commodity, exchange rate and interest rate risks, which lack the formal criteria to be accounted as hedges, and analogously evaluation effects of assets and liabilities utilized in a relation of natural hedge of the above mentioned market risks. Furthermore, in determining the business segments’ adjusted results, finance charges on finance debt and interest income are excluded (see below). In determining adjusted results, inventory holding gains or losses are excluded from base business performance, which is the difference between the cost of sales of the volumes sold in the period based on the cost of supplies of the same period and the cost of sales of the volumes sold calculated using the weighted average cost method of inventory accounting as required by IFRS, except in those business segments where inventories are utilized as a lever to optimize margins.
Finally, the same special charges/gains are excluded from the Eni’s share of results at JVs and other equity accounted entities, including any profit/loss on inventory holding.
Management is disclosing Non-GAAP measures of performance to facilitate a comparison of base business performance across periods, and to allow financial analysts to evaluate Eni’s trading performance on the basis of their forecasting models.
Non-GAAP financial measures should be read together with information determined by applying IFRS and do not stand in for them. Other companies may adopt different methodologies to determine Non-GAAP measures.
Follows the description of the main alternative performance measures adopted by Eni. The measures reported below refer to the performance of the reporting periods disclosed in this press release:
Adjusted operating and net profit
Adjusted operating profit and adjusted net profit are determined by excluding inventory holding gains or losses, special items and, in determining the business segments’ adjusted results, finance charges on finance debt and interest income. The adjusted operating profit of each business segment reports gains and losses on derivative financial instruments entered into to manage exposure to movements in foreign currency exchange rates, which impact industrial margins and translation of commercial payables and receivables. Accordingly, also currency translation effects recorded through profit and loss are reported within business segments’ adjusted operating profit. The taxation effect of the items excluded from adjusted operating or net profit is determined based on the specific rate of taxes applicable to each of them.
Finance charges or income related to net borrowings excluded from the adjusted net profit of business segments are comprised of interest charges on finance debt and interest income earned on cash and cash equivalents not related to operations. Therefore, the adjusted net profit of business segments includes finance charges or income deriving from certain segment operated assets, i.e., interest income on certain receivable financing and securities related to operations and finance charge pertaining to the accretion of certain provisions recorded on a discounted basis (as in the case of the asset retirement obligations in the Exploration & Production segment).
Inventory holding gain or loss
This is the difference between the cost of sales of the volumes sold in the period based on the cost of supplies of the same period and the cost of sales of the volumes sold calculated using the weighted average cost method of inventory accounting as required by IFRS.
Special items
These include certain significant income or charges pertaining to either: (i) infrequent or unusual events and transactions, being identified as non-recurring items under such circumstances; (ii) certain events or transactions which are not considered to be representative of the ordinary course of business, as in the case of environmental provisions, restructuring charges, asset impairments or write ups and gains or losses on divestments even though they occurred in past periods or are likely to occur in future ones. Exchange rate differences and derivatives relating to industrial activities and commercial payables and receivables, particularly exchange rate derivatives to manage commodity pricing formulas which are quoted in a currency other than the functional currency are reclassified in operating profit with a corresponding adjustment to net finance charges, notwithstanding the handling of foreign currency exchange risks is made centrally by netting off naturally-occurring opposite positions and then dealing with any residual risk exposure in the derivative market. Finally, special items include the accounting effects of fair-valued commodity derivatives relating to commercial exposures, in addition to those which lack the criteria to be designed as hedges, also those which are not eligible for the own use exemption, including the ineffective portion of cash flow hedges, as well as the accounting effects of settled commodity and exchange rates derivatives whenever it is deemed that the underlying transaction is expected to occur in future reporting periods.
Correspondently, special charges/gains also include the evaluation effects relating to assets/liabilities utilized in a natural hedge relation to offset a market risk, as in the case of accrued currency differences at finance debt denominated in a currency other than the reporting currency, where the cash outflows for the reimbursement are matched by highly probable cash inflows in the same currency. The deferral of both the unrealized portion of fair-valued commodity and other derivatives and evaluation effects are reversed to future reporting periods when the underlying transaction occurs.
As provided for in Decision No. 15519 of July 27, 2006 of the Italian market regulator (CONSOB), non-recurring material income or charges are to be clearly reported in the management’s discussion and financial tables.
Leverage
Leverage is a Non-GAAP measure of the Company’s financial condition, calculated as the ratio between net borrowings and shareholders’ equity, including non-controlling interest. Leverage is the reference ratio to assess the solidity and efficiency of the Group balance sheet in terms of incidence of funding sources including third-party funding and equity as well as to carry out benchmark analysis with industry standards.
Gearing
Gearing is calculated as the ratio between net borrowings and capital employed net and measures how much of capital employed net is financed recurring to third-party funding.
Cash flow from operations before changes in working capital at replacement cost
This is defined as net cash provided from operating activities before changes in working capital at replacement cost. It also excludes certain non-recurring charges such as extraordinary credit allowances and, considering the high market volatility, changes in the fair value of commodity derivatives lacking the formal criteria to be designed as hedges, including derivatives which were not eligible for the own use exemption, the ineffective portion of cash flow hedges, as well as the effects of certain settled commodity derivatives whenever it is deemed that the underlying transaction is expected to occur in future reporting periods.
-19-
Free cash flow
Free cash flow represents the link existing between changes in cash and cash equivalents (deriving from the statutory cash flows statement) and in net borrowings (deriving from the summarized cash flow statement) that occurred from the beginning of the period to the end of period. Free cash flow is the cash in excess of capital expenditure needs. Starting from free cash flow it is possible to determine either: (i) changes in cash and cash equivalents for the period by adding/deducting cash flows relating to financing debts/receivables (issuance/repayment of debt and receivables related to financing activities), shareholders’ equity (dividends paid, net repurchase of own shares, capital issuance) and the effect of changes in consolidation and of exchange rate differences; (ii) changes in net borrowings for the period by adding/deducting cash flows relating to shareholders’ equity and the effect of changes in consolidation and of exchange rate differences.
Net borrowings
Net borrowings is calculated as total finance debt less cash, cash equivalents, financial assets measured at fair value through profit or loss and financing receivables held for non-operating purposes. Financial activities are qualified as “not related to operations” when these are not strictly related to the business operations.
Reconciliation tables of Non-GAAP results to the most comparable measures of financial performance determined in accordance with GAAPs
| (€ million) | ||||||||
| Second Quarter 2023 | Exploration & Production | Global Gas & LNG Portfolio | Sustainable Mobility, Refining and Chemicals | Plenitude & Power | Corporate and other activities | Impact of unrealized intragroup profit elimination | GROUP | |
| Reported operating profit (loss) | 1,812 | 539 | (305) | (3) | (291) | 10 | 1,762 | |
| Exclusion of inventory holding (gains) losses | 190 | 62 | 252 | |||||
| Exclusion of special items: | ||||||||
| environmental charges | 19 | 62 | 174 | 255 | ||||
| impairment losses (impairment reversals), net | 208 | 117 | 5 | 330 | ||||
| net gains on disposal of assets | (6) | (3) | (9) | |||||
| risk provisions | (7) | 15 | 8 | 16 | ||||
| provision for redundancy incentives | 2 | 1 | 3 | 1 | 5 | 12 | ||
| commodity derivatives | (35) | 6 | 166 | 137 | ||||
| exchange rate differences and derivatives | 12 | 10 | 7 | 29 | ||||
| other | 26 | 572 | (5) | 1 | 3 | 597 | ||
| Special items of operating profit (loss) | 254 | 548 | 202 | 168 | 195 | 1,367 | ||
| Adjusted operating profit (loss) | 2,066 | 1,087 | 87 | 165 | (96) | 72 | 3,381 | |
| Net finance (expense) income (a) | (85) | (3) | (14) | (4) | (38) | (144) | ||
| Net income (expense) from investments (a) | 351 | 20 | 70 | (6) | 1 | 436 | ||
| Adjusted profit (loss) before taxes | 2,332 | 1,104 | 143 | 155 | (133) | 72 | 3,673 | |
| Income taxes (a) | (1,326) | (296) | (51) | (53) | 28 | (20) | (1,718) | |
| Tax rate (%) | 46.8 | |||||||
| Adjusted net profit (loss) | 1,006 | 808 | 92 | 102 | (105) | 52 | 1,955 | |
| of which: | ||||||||
| - Adjusted net profit (loss) of non-controlling interest | 20 | |||||||
| - Adjusted net profit (loss) attributable to Eni's shareholders | 1,935 | |||||||
| Reported net profit (loss) attributable to Eni's shareholders | 294 | |||||||
| Exclusion of inventory holding (gains) losses | 181 | |||||||
| Exclusion of special items | 1,460 | |||||||
| Adjusted net profit (loss) attributable to Eni's shareholders | 1,935 | |||||||
| (a) Excluding special items. | ||||||||
-20-
| (€ million) | ||||||||
Second Quarter 2022 | Exploration & Production | Global Gas & LNG Portfolio | Sustainable Mobility, Refining and Chemicals | Plenitude & Power | Corporate and other activities | Impact of unrealized intragroup profit elimination | GROUP | |
| Reported operating profit (loss) | 4,779 | (1,083) | 1,617 | 1,019 | (239) | (123) | 5,970 | |
| Exclusion of inventory holding (gains) losses | (625) | (13) | (638) | |||||
| Exclusion of special items: | ||||||||
| environmental charges | 2 | 110 | 98 | 210 | ||||
| impairment losses (impairment reversals), net | 35 | 58 | 3 | 17 | 113 | |||
| net gains on disposal of assets | (7) | (7) | ||||||
| risk provisions | 7 | 5 | 12 | |||||
| provision for redundancy incentives | 3 | 69 | (2) | 70 | ||||
| commodity derivatives | 831 | 3 | (949) | (115) | ||||
| exchange rate differences and derivatives | (9) | 113 | (34) | (2) | 68 | |||
| other | 53 | 122 | (18) | 1 | 158 | |||
| Special items of operating profit (loss) | 88 | 1,069 | 112 | (879) | 119 | 509 | ||
| Adjusted operating profit (loss) | 4,867 | (14) | 1,104 | 140 | (120) | (136) | 5,841 | |
| Net finance (expense) income (a) | (12) | (15) | (19) | (4) | (230) | (280) | ||
| Net income (expense) from investments (a) | 505 | 1 | 166 | (10) | 662 | |||
| Adjusted profit (loss) before taxes | 5,360 | (28) | 1,251 | 136 | (360) | (136) | 6,223 | |
| Income taxes (a) | (2,132) | (30) | (319) | (41) | 77 | 34 | (2,411) | |
| Tax rate (%) | 38.7 | |||||||
| Adjusted net profit (loss) | 3,228 | (58) | 932 | 95 | (283) | (102) | 3,812 | |
| of which: | ||||||||
| - Adjusted net profit (loss) of non-controlling interest | 4 | |||||||
| - Adjusted net profit (loss) attributable to Eni's shareholders | 3,808 | |||||||
| Reported net profit (loss) attributable to Eni's shareholders | 3,815 | |||||||
| Exclusion of inventory holding (gains) losses | (455) | |||||||
| Exclusion of special items | 448 | |||||||
| Adjusted net profit (loss) attributable to Eni's shareholders | 3,808 |
(a) Excluding special items.
-21-
| (€ million) | ||||||||
First Half 2023 | Exploration & Production | Global Gas & LNG Portfolio | Sustainable Mobility, Refining and Chemicals | Plenitude & Power | Corporate and other activities | Impact of unrealized intragroup profit elimination | GROUP | |
| Reported operating profit (loss) | 4,514 | 814 | (575) | (311) | (431) | 264 | 4,275 | |
| Exclusion of inventory holding (gains) losses | 527 | 82 | 609 | |||||
| Exclusion of special items: | ||||||||
| environmental charges | 36 | 79 | 174 | 289 | ||||
| impairment losses (impairment reversals), net | 209 | 171 | 9 | 389 | ||||
| net gains on disposal of assets | 3 | (3) | ||||||
| risk provisions | (7) | 15 | 8 | 16 | ||||
| provision for redundancy incentives | 8 | 1 | 7 | 1 | 13 | 30 | ||
| commodity derivatives | 687 | 37 | 660 | 1,384 | ||||
| exchange rate differences and derivatives | 15 | (8) | 23 | 30 | ||||
| other | 77 | 965 | (40) | 1 | (3) | 1,000 | ||
| Special items of operating profit (loss) | 341 | 1,645 | 289 | 662 | 201 | 3,138 | ||
| Adjusted operating profit (loss) | 4,855 | 2,459 | 241 | 351 | (230) | 346 | 8,022 | |
| Net finance (expense) income (a) | (129) | (1) | (18) | (4) | (115) | (267) | ||
| Net income (expense) from investments (a) | 665 | 30 | 222 | (11) | (7) | 899 | ||
| Adjusted profit (loss) before taxes | 5,391 | 2,488 | 445 | 336 | (352) | 346 | 8,654 | |
| Income taxes (a) | (2,863) | (681) | (125) | (107) | 99 | (96) | (3,773) | |
| Tax rate (%) | 43.6 | |||||||
| Adjusted net profit (loss) | 2,528 | 1,807 | 320 | 229 | (253) | 250 | 4,881 | |
| of which: | ||||||||
| - Adjusted net profit (loss) of non-controlling interest | 39 | |||||||
| - Adjusted net profit (loss) attributable to Eni's shareholders | 4,842 | |||||||
| Reported net profit (loss) attributable to Eni's shareholders | 2,682 | |||||||
| Exclusion of inventory holding (gains) losses | 436 | |||||||
| Exclusion of special items | 1,724 | |||||||
| Adjusted net profit (loss) attributable to Eni's shareholders | 4,842 |
(a) Excluding special items.
-22-
| (€ million) | ||||||||
| First Half 2022 | Exploration & Production | Global Gas & LNG Portfolio | Sustainable Mobility, Refining and Chemicals | Plenitude & Power | Corporate and other activities | Impact of unrealized intragroup profit elimination | GROUP | |
| Reported operating profit (loss) | 9,123 | (2,060) | 2,279 | 2,613 | (419) | (214) | 11,322 | |
| Exclusion of inventory holding (gains) losses | (1,388) | 37 | (1,351) | |||||
| Exclusion of special items: | ||||||||
| environmental charges | 2 | 124 | 98 | 224 | ||||
| impairment losses (impairment reversals), net | 43 | 3 | 103 | 3 | 23 | 175 | ||
| net gains on disposal of assets | (2) | (7) | (9) | |||||
| risk provisions | 7 | 5 | 12 | |||||
| provision for redundancy incentives | 17 | 3 | 10 | 69 | 7 | 106 | ||
| commodity derivatives | 2,874 | (27) | (2,357) | 490 | ||||
| exchange rate differences and derivatives | (14) | 148 | (41) | (3) | 90 | |||
| other | 72 | (51) | (40) | (8) | (27) | |||
| Special items of operating profit (loss) | 125 | 2,977 | 122 | (2,288) | 125 | 1,061 | ||
| Adjusted operating profit (loss) | 9,248 | 917 | 1,013 | 325 | (294) | (177) | 11,032 | |
| Net finance (expense) income (a) | (115) | (20) | (29) | (7) | (448) | (619) | ||
| Net income (expense) from investments (a) | 884 | 2 | 218 | (2) | (60) | 1,042 | ||
| Adjusted profit (loss) before taxes | 10,017 | 899 | 1,202 | 316 | (802) | (177) | 11,455 | |
| Income taxes (a) | (3,869) | (301) | (324) | (102) | 178 | 51 | (4,367) | |
| Tax rate (%) | 38.1 | |||||||
| Adjusted net profit (loss) | 6,148 | 598 | 878 | 214 | (624) | (126) | 7,088 | |
| of which: | ||||||||
| - Adjusted net profit (loss) of non-controlling interest | 10 | |||||||
| - Adjusted net profit (loss) attributable to Eni's shareholders | 7,078 | |||||||
| Reported net profit (loss) attributable to Eni's shareholders | 7,398 | |||||||
| Exclusion of inventory holding (gains) losses | (962) | |||||||
| Exclusion of special items | 642 | |||||||
| Adjusted net profit (loss) attributable to Eni's shareholders | 7,078 |
(a) Excluding special items.
-23-
| (€ million) | ||||||||
First Quarter 2023 | Exploration & Production | Global Gas & LNG Portfolio | Sustainable Mobility, Refining and Chemicals | Plenitude & Power | Corporate and other activities | Impact of unrealized intragroup profit elimination | GROUP | |
| Reported operating profit (loss) | 2,702 | 275 | (270) | (308) | (140) | 254 | 2,513 | |
| Exclusion of inventory holding (gains) losses | 337 | 20 | 357 | |||||
| Exclusion of special items: | ||||||||
| environmental charges | 17 | 17 | 34 | |||||
| impairment losses (impairment reversals), net | 1 | 54 | 4 | 59 | ||||
| net gains on disposal of assets | 9 | 9 | ||||||
| risk provisions | ||||||||
| provision for redundancy incentives | 6 | 4 | 8 | 18 | ||||
| commodity derivatives | 722 | 31 | 494 | 1,247 | ||||
| exchange rate differences and derivatives | 3 | (18) | 16 | 1 | ||||
| other | 51 | 393 | (35) | (6) | 403 | |||
| Special items of operating profit (loss) | 87 | 1,097 | 87 | 494 | 6 | 1,771 | ||
| Adjusted operating profit (loss) | 2,789 | 1,372 | 154 | 186 | (134) | 274 | 4,641 | |
| Net finance (expense) income (a) | (44) | 2 | (4) | (77) | (123) | |||
| Net income (expense) from investments (a) | 314 | 10 | 152 | (5) | (8) | 463 | ||
| Adjusted profit (loss) before taxes | 3,059 | 1,384 | 302 | 181 | (219) | 274 | 4,981 | |
| Income taxes (a) | (1,537) | (385) | (74) | (54) | 71 | (76) | (2,055) | |
| Tax rate (%) | 41.3 | |||||||
| Adjusted net profit (loss) | 1,522 | 999 | 228 | 127 | (148) | 198 | 2,926 | |
| of which: | ||||||||
| - Adjusted net profit (loss) of non-controlling interest | 19 | |||||||
| - Adjusted net profit (loss) attributable to Eni's shareholders | 2,907 | |||||||
| Reported net profit (loss) attributable to Eni's shareholders | 2,388 | |||||||
| Exclusion of inventory holding (gains) losses | 255 | |||||||
| Exclusion of special items | 264 | |||||||
| Adjusted net profit (loss) attributable to Eni's shareholders | 2,907 |
(a) Excluding special items.
-24-
Breakdown of special items
| Q1 | Q2 | IH | |||
| 2023 | (€ million) | 2023 | 2022 | 2023 | 2022 |
| 34 | Environmental charges | 255 | 210 | 289 | 224 |
| 59 | Impairment losses (impairment reversals), net | 330 | 113 | 389 | 175 |
| 9 | Net gains on disposal of assets | (9) | (7) | (9) | |
| Risk provisions | 16 | 12 | 16 | 12 | |
| 18 | Provisions for redundancy incentives | 12 | 70 | 30 | 106 |
| 1,247 | Commodity derivatives | 137 | (115) | 1,384 | 490 |
| 1 | Exchange rate differences and derivatives | 29 | 68 | 30 | 90 |
| 403 | Other | 597 | 158 | 1,000 | (27) |
| 1,771 | Special items of operating profit (loss) | 1,367 | 509 | 3,138 | 1,061 |
| 1 | Net finance (income) expense | (25) | (75) | (24) | (91) |
| of which: | |||||
| (1) | - exchange rate differences and derivatives reclassified to operating profit (loss) | (29) | (68) | (30) | (90) |
| (729) | Net income (expense) from investments | 22 | 8 | (707) | (467) |
| of which: | |||||
| (824) | - gain on the SeaCorridor deal | (824) | |||
| (779) | Income taxes | 96 | 6 | (683) | 139 |
| 264 | Total special items of net profit (loss) | 1,460 | 448 | 1,724 | 642 |
-25-
Profit and loss reconciliation GAAP vs Non-GAAP
| Second Quarter | 2023 | IH | ||||||||
| Reported results | Profit on stock | Special items | Finance expense reclassified | Adjusted results | (€ million) | Reported results | Profit on stock | Special items | Finance expense reclassified | Adjusted results |
| 1,762 | 252 | 1,338 | 29 | 3,381 | Operating profit | 4,275 | 609 | 3,108 | 30 | 8,022 |
| (119) | 4 | (29) | (144) | Finance income (expense) | (243) | 6 | (30) | (267) | ||
| 414 | 22 | 436 | Income (expense) from investments | 1,606 | (707) | 899 | ||||
| 51 | 49 | 100 | . Vår Energi | 171 | 109 | 280 | ||||
| 178 | 178 | . Azule | 293 | 293 | ||||||
| 105 | (32) | 73 | . Adnoc R&T | 226 | (2) | 224 | ||||
| (1,743) | (71) | 96 | (1,718) | Income taxes | (2,917) | (173) | (683) | (3,773) | ||
| 314 | 181 | 1,460 | 1,955 | Net profit | 2,721 | 436 | 1,724 | 4,881 | ||
| 20 | 20 | - Non-controlling interest | 39 | 39 | ||||||
| 294 | 1,935 | Net profit attributable to Eni's shareholders | 2,682 | 4,842 | ||||||
| Second Quarter | 2022 | IH | ||||||||
| Reported results | Profit on stock | Special items | Finance expense reclassified | Adjusted results | (€ million) | Reported results | Profit on stock | Special items | Finance expense reclassified | Adjusted results |
| 5,970 | (638) | 441 | 68 | 5,841 | Operating profit | 11,322 | (1,351) | 971 | 90 | 11,032 |
| (205) | (7) | (68) | (280) | Finance income (expense) | (528) | (1) | (90) | (619) | ||
| 654 | 8 | 662 | Income (expense) from investments | 1,509 | (467) | 1,042 | ||||
| 46 | 174 | 220 | . Vår Energi | 294 | 161 | 455 | ||||
| 229 | (78) | 151 | . Adnoc R&T | 339 | (143) | 196 | ||||
| (2,600) | 183 | 6 | (2,411) | Income taxes | (4,895) | 389 | 139 | (4,367) | ||
| 3,819 | (455) | 448 | 3,812 | Net profit | 7,408 | (962) | 642 | 7,088 | ||
| 4 | 4 | - Non-controlling interest | 10 | 10 | ||||||
| 3,815 | 3,808 | Net profit attributable to Eni's shareholders | 7,398 | 7,078 | ||||||
| Q1 2023 | |||||
| (€ million) | Reported results | Profit on stock | Special items | Finance expense reclassified | Adjusted results |
| Operating profit | 2,513 | 357 | 1,770 | 1 | 4,641 |
| Finance income (expense) | (124) | 2 | (1) | (123) | |
| Income (expense) from investments | 1,192 | (729) | 463 | ||
| . Vår Energi | 120 | 60 | 180 | ||
| . Azule | 115 | 115 | |||
| . Adnoc R&T | 121 | 30 | 151 | ||
| Income taxes | (1,174) | (102) | (779) | (2,055) | |
| Net profit | 2,407 | 255 | 264 | 2,926 | |
| - Non-controlling interest | 19 | 19 | |||
| Net profit attributable to Eni's shareholders | 2,388 | 2,907 | |||
-26-
| Analysis of Profit and Loss account items |
Sales from operations
| Q1 | Q2 | IH | |||||
| 2023 | (€ million) | 2023 | 2022 | % Ch. | 2023 | 2022 | % Ch. |
| 6,001 | Exploration & Production | 5,558 | 8,424 | (34) | 11,559 | 16,196 | (29) |
| 7,944 | Global Gas & LNG Portfolio | 3,744 | 9,427 | (60) | 11,688 | 22,837 | (49) |
| 13,457 | Sustainable Mobility, Refining and Chemicals | 11,163 | 16,633 | (33) | 24,620 | 29,685 | (17) |
| 5,044 | Plenitude & Power | 2,680 | 3,748 | (28) | 7,724 | 9,967 | (23) |
| 440 | Corporate and other activities | 495 | 466 | 6 | 935 | 860 | 9 |
| (5,701) | Consolidation adjustments | (4,049) | (7,142) | (9,750) | (15,860) | ||
| 27,185 | 19,591 | 31,556 | (38) | 46,776 | 63,685 | (27) | |
Operating expenses
| Q1 | Q2 | IH | |||||
| 2023 | (€ million) | 2023 | 2022 | % Ch. | 2023 | 2022 | % Ch. |
| 21,976 | Purchases, services and other | 15,131 | 23,403 | (35) | 37,107 | 46,882 | (21) |
| 108 | Impairment losses (impairment reversals) of trade and other receivables, net | (48) | (12) | .. | 60 | 165 | (64) |
| 794 | Payroll and related costs | 746 | 755 | (1) | 1,540 | 1,548 | (1) |
| 18 | of which: provision for redundancy incentives and other | 12 | 70 | 30 | 106 | ||
| 22,878 | 15,829 | 24,146 | (34) | 38,707 | 48,595 | (20) | |
DD&A, impairments, reversals and write-off
| Q1 | Q2 | IH | |||||
| 2023 | (€ million) | 2023 | 2022 | % Ch. | 2023 | 2022 | % Ch. |
| 1,552 | Exploration & Production | 1,545 | 1,254 | 23 | 3,097 | 2,811 | 10 |
| 50 | Global Gas & LNG Portfolio | 63 | 49 | 29 | 113 | 104 | 9 |
| 114 | Sustainable Mobility, Refining and Chemicals | 125 | 129 | (3) | 239 | 250 | (4) |
| 111 | Plenitude & Power | 117 | 87 | 34 | 228 | 173 | 32 |
| 33 | Corporate and other activities | 32 | 34 | (6) | 65 | 68 | (4) |
| (8) | Impact of unrealized intragroup profit elimination | (9) | (8) | (17) | (16) | ||
| 1,852 | Total depreciation, depletion and amortization | 1,873 | 1,545 | 21 | 3,725 | 3,390 | 10 |
| 59 | Impairment losses (impairment reversals) of tangible and intangible and right of use assets, net | 330 | 113 | 389 | 175 | ||
| 1,911 | Depreciation, depletion, amortization, impairments and reversals | 2,203 | 1,658 | 33 | 4,114 | 3,565 | 15 |
| 32 | Write-off of tangible and intangible assets | 103 | 22 | 135 | 47 | ||
| 1,943 | 2,306 | 1,680 | 37 | 4,249 | 3,612 | 18 | |
Income (expense) from investments
| (€ million) | ||||||
| First Half 2023 | Exploration & Production | Global Gas & LNG Portfolio | Sustainable Mobility, Refining and Chemicals | Plenitude & Power | Corporate and other activities | Group |
| Share of profit (loss) from equity-accounted investments | 477 | 30 | 199 | (11) | (4) | 691 |
| Dividends | 71 | 21 | 92 | |||
| Net gains (losses) on disposals | 1 | 415 | 2 | 418 | ||
| Other income (expense), net | (1) | 409 | (3) | 405 | ||
| 548 | 854 | 222 | (11) | (7) | 1,606 |
-27-
| Leverage and net borrowings |
Leverage is a measure used by management to assess the Company’s level of indebtedness. It is calculated as a ratio of net borrowings to shareholders’ equity, including non-controlling interest. Management periodically reviews leverage in order to assess the soundness and efficiency of the Group balance sheet in terms of optimal mix between net borrowings and net equity, and to carry out benchmark analysis with industry standards.
| (€ million) | Jun. 30, 2023 | Dec. 31, 2022 | Change |
| Total debt | 28,737 | 26,917 | 1,820 |
| - Short-term debt | 6,694 | 7,543 | (849) |
| - Long-term debt | 22,043 | 19,374 | 2,669 |
| Cash and cash equivalents | (11,417) | (10,155) | (1,262) |
| Financial assets measured at fair value through profit or loss | (8,283) | (8,251) | (32) |
| Financing receivables held for non-operating purposes | (822) | (1,485) | 663 |
| Net borrowings before lease liabilities ex IFRS 16 | 8,215 | 7,026 | 1,189 |
| Lease Liabilities | 4,726 | 4,951 | (225) |
| - of which Eni working interest | 4,247 | 4,457 | (210) |
| - of which Joint operators' working interest | 479 | 494 | (15) |
| Net borrowings after lease liabilities ex IFRS 16 | 12,941 | 11,977 | 964 |
| Shareholders' equity including non-controlling interest | 55,528 | 55,230 | 298 |
| Leverage before lease liability ex IFRS 16 | 0.15 | 0.13 | 0.02 |
| Leverage after lease liability ex IFRS 16 | 0.23 | 0.22 | 0.01 |
-28-
| Consolidated financial statements |
BALANCE SHEET
| (€ million) | ||
| Jun. 30, 2023 | Dec. 31, 2022 | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 11,417 | 10,155 |
| Financial assets measured at fair value through profit or loss | 8,283 | 8,251 |
| Other financial assets | 849 | 1,504 |
| Trade and other receivables | 14,845 | 20,840 |
| Inventories | 6,074 | 7,709 |
| Income tax assets | 644 | 317 |
| Other assets | 6,185 | 12,821 |
| 48,297 | 61,597 | |
| Non-current assets | ||
| Property, plant and equipment | 57,289 | 56,332 |
| Right of use assets | 4,233 | 4,446 |
| Intangible assets | 5,499 | 5,525 |
| Inventory - compulsory stock | 1,397 | 1,786 |
| Equity-accounted investments | 13,022 | 12,092 |
| Other investments | 1,265 | 1,202 |
| Other financial assets | 2,043 | 1,967 |
| Deferred tax assets | 4,509 | 4,569 |
| Income tax assets | 110 | 114 |
| Other assets | 2,365 | 2,236 |
| 91,732 | 90,269 | |
| Assets held for sale | 391 | 264 |
| TOTAL ASSETS | 140,420 | 152,130 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities | ||
| Short-term debt | 2,610 | 4,446 |
| Current portion of long-term debt | 4,084 | 3,097 |
| Current portion of long-term lease liabilities | 853 | 884 |
| Trade and other payables | 17,466 | 25,709 |
| Income taxes payable | 1,775 | 2,108 |
| Other liabilities | 6,806 | 12,473 |
| 33,594 | 48,717 | |
| Non-current liabilities | ||
| Long-term debt | 22,043 | 19,374 |
| Long-term lease liabilities | 3,873 | 4,067 |
| Provisions for contingencies | 15,198 | 15,267 |
| Provisions for employee benefits | 783 | 786 |
| Deferred tax liabilities | 5,565 | 5,094 |
| Income taxes payable | 213 | 253 |
| Other liabilities | 3,410 | 3,234 |
| 51,085 | 48,075 | |
| Liabilities directly associated with assets held for sale | 213 | 108 |
| TOTAL LIABILITIES | 84,892 | 96,900 |
| Share capital | 4,005 | 4,005 |
| Retained earnings | 35,429 | 23,455 |
| Cumulative currency translation differences | 6,570 | 7,564 |
| Other reserves and equity instruments | 7,395 | 8,785 |
| Treasury shares | (974) | (2,937) |
| Net profit (loss) | 2,682 | 13,887 |
| Total Eni shareholders' equity | 55,107 | 54,759 |
| Non-controlling interest | 421 | 471 |
| TOTAL SHAREHOLDERS' EQUITY | 55,528 | 55,230 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 140,420 | 152,130 |
-29-
GROUP PROFIT AND LOSS ACCOUNT
| Q1 | Q2 | IH | |||
| 2023 | (€ million) | 2023 | 2022 | 2023 | 2022 |
| 27,185 | Sales from operations | 19,591 | 31,556 | 46,776 | 63,685 |
| 193 | Other income and revenues | 221 | 253 | 414 | 618 |
| 27,378 | Total revenues | 19,812 | 31,809 | 47,190 | 64,303 |
| (21,976) | Purchases, services and other | (15,131) | (23,403) | (37,107) | (46,882) |
| (108) | Impairment reversals (impairment losses) of trade and other receivables, net | 48 | 12 | (60) | (165) |
| (794) | Payroll and related costs | (746) | (755) | (1,540) | (1,548) |
| (44) | Other operating (expense) income | 85 | (13) | 41 | (774) |
| (1,852) | Depreciation, Depletion and Amortization | (1,873) | (1,545) | (3,725) | (3,390) |
| (59) | Impairment reversals (impairment losses) of tangible, intangible and right of use assets, net | (330) | (113) | (389) | (175) |
| (32) | Write-off of tangible and intangible assets | (103) | (22) | (135) | (47) |
| 2,513 | OPERATING PROFIT (LOSS) | 1,762 | 5,970 | 4,275 | 11,322 |
| 2,007 | Finance income | 1,189 | 2,205 | 3,196 | 3,456 |
| (2,181) | Finance expense | (1,371) | (2,288) | (3,552) | (3,805) |
| 66 | Net finance income (expense) from financial assets measured at fair value through profit or loss | 59 | (49) | 125 | (91) |
| (16) | Derivative financial instruments | 4 | (73) | (12) | (88) |
| (124) | FINANCE INCOME (EXPENSE) | (119) | (205) | (243) | (528) |
| 358 | Share of profit (loss) of equity-accounted investments | 333 | 450 | 691 | 850 |
| 834 | Other gain (loss) from investments | 81 | 204 | 915 | 659 |
| 1,192 | INCOME (EXPENSE) FROM INVESTMENTS | 414 | 654 | 1,606 | 1,509 |
| 3,581 | PROFIT (LOSS) BEFORE INCOME TAXES | 2,057 | 6,419 | 5,638 | 12,303 |
| (1,174) | Income taxes | (1,743) | (2,600) | (2,917) | (4,895) |
| 2,407 | Net profit (loss) | 314 | 3,819 | 2,721 | 7,408 |
| attributable to: | |||||
| 2,388 | - Eni's shareholders | 294 | 3,815 | 2,682 | 7,398 |
| 19 | - Non-controlling interest | 20 | 4 | 39 | 10 |
| Earnings per share (€ per share) | |||||
| 0.71 | - basic | 0.08 | 1.08 | 0.79 | 2.08 |
| 0.70 | - diluted | 0.08 | 1.07 | 0.78 | 2.07 |
| Weighted average number of shares outstanding (million) | |||||
| 3,345.4 | - basic | 3,338.0 | 3,536.9 | 3,341.7 | 3,538.3 |
| 3,351.7 | - diluted | 3,344.3 | 3,544.5 | 3,348.0 | 3,544.1 |
-30-
COMPREHENSIVE INCOME (LOSS)
| Q2 | IH | |||
| (€ million) | 2023 | 2022 | 2023 | 2022 |
| Net profit (loss) | 314 | 3,819 | 2,721 | 7,408 |
| Items that are not reclassified to profit or loss in later periods | 15 | 106 | 15 | 98 |
| Remeasurements of defined benefit plans | 71 | 71 | ||
| Share of other comprehensive income on equity accounted entities | 7 | 1 | ||
| Change in the fair value of interests with effects on other comprehensive income | 15 | 43 | 15 | 41 |
| Taxation | (15) | (15) | ||
| Items that may be reclassified to profit in later periods | 134 | 2,240 | (431) | 1,611 |
| Currency translation differences | 17 | 2,651 | (994) | 3,522 |
| Change in the fair value of cash flow hedging derivatives | 135 | (641) | 706 | (2,735) |
| Share of other comprehensive income on equity-accounted entities | 23 | 45 | 64 | 36 |
| Taxation | (41) | 185 | (207) | 788 |
| Total other items of comprehensive income (loss) | 149 | 2,346 | (416) | 1,709 |
| Total comprehensive income (loss) | 463 | 6,165 | 2,305 | 9,117 |
| attributable to: | ||||
| - Eni's shareholders | 443 | 6,160 | 2,266 | 9,106 |
| - Non-controlling interest | 20 | 5 | 39 | 11 |
CHANGES IN SHAREHOLDERS’ EQUITY
| (€ million) | |||
| Shareholders' equity at January 1, 2022 | 44,519 | ||
| Total comprehensive income (loss) | 9,117 | ||
| Dividends paid to Eni's shareholders | (1,522) | ||
| Dividends distributed by consolidated subsidiaries | (13) | ||
| Coupon of perpetual subordinated bonds | (87) | ||
| Net purchase of treasury shares | (212) | ||
| Other changes | 210 | ||
| Total changes | 7,493 | ||
| Shareholders' equity at June 30, 2022 | 52,012 | ||
| attributable to: | |||
| - Eni's shareholders | 51,917 | ||
| - Non-controlling interest | 95 | ||
| Shareholders' equity at January 1, 2023 | 55,230 | ||
| Total comprehensive income (loss) | 2,305 | ||
| Dividends paid to Eni's shareholders | (1,472) | ||
| Dividends distributed by consolidated subsidiaries | (31) | ||
| Coupon of perpetual subordinated bonds | (87) | ||
| Net purchase of treasury shares | (437) | ||
| Taxes on hybrid bond coupon | 25 | ||
| Other changes | (5) | ||
| Total changes | 298 | ||
| Shareholders' equity at June 30, 2023 | 55,528 | ||
| attributable to: | |||
| - Eni's shareholders | 55,107 | ||
| - Non-controlling interest | 421 |
-31-
GROUP CASH FLOW STATEMENT
| Q1 | Q2 | IH | ||||
| 2023 | (€ million) | 2023 | 2022 | 2023 | 2022 | |
| 2,407 | Net profit (loss) | 314 | 3,819 | 2,721 | 7,408 | |
| Adjustments to reconcile net profit (loss) to net cash provided by operating activities: | ||||||
| 1,852 | Depreciation, depletion and amortization | 1,873 | 1,545 | 3,725 | 3,390 | |
| 59 | Impairment losses (impairment reversals) of tangible, intangible and right of use, net | 330 | 113 | 389 | 175 | |
| 32 | Write-off of tangible and intangible assets | 103 | 22 | 135 | 47 | |
| (358) | Share of (profit) loss of equity-accounted investments | (333) | (450) | (691) | (850) | |
| (408) | Gains on disposal of assets, net | (10) | (110) | (418) | (444) | |
| (9) | Dividend income | (83) | (107) | (92) | (151) | |
| (104) | Interest income | (132) | (41) | (236) | (49) | |
| 241 | Interest expense | 241 | 279 | 482 | 490 | |
| 1,174 | Income taxes | 1,743 | 2,600 | 2,917 | 4,895 | |
| (439) | Other changes | 19 | (58) | (420) | (52) | |
| (293) | Cash flow from changes in working capital | 1,587 | (1,235) | 1,294 | (3,840) | |
| 1,597 | - inventories | 466 | (2,092) | 2,063 | (3,073) | |
| 3,612 | - trade receivables | 2,431 | 4,554 | 6,043 | (147) | |
| (6,301) | - trade payables | (2,143) | (3,383) | (8,444) | (645) | |
| (148) | - provisions for contingencies | 8 | 117 | (140) | 108 | |
| 947 | - other assets and liabilities | 825 | (431) | 1,772 | (83) | |
| 25 | Net change in the provisions for employee benefits | (2) | 39 | 23 | 55 | |
| 560 | Dividends received | 780 | 247 | 1,340 | 305 | |
| 64 | Interest received | 89 | 7 | 153 | 13 | |
| (281) | Interest paid | (227) | (216) | (508) | (447) | |
| (1,540) | Income taxes paid, net of tax receivables received | (1,849) | (2,271) | (3,389) | (3,664) | |
| 2,982 | Net cash provided by operating activities | 4,443 | 4,183 | 7,425 | 7,281 | |
| (3,015) | Cash flow from investing activities | (3,263) | (1,539) | (6,278) | (4,309) | |
| (2,064) | - tangible assets | (2,487) | (1,771) | (4,551) | (3,072) | |
| (55) | - intangible assets | (70) | (58) | (125) | (121) | |
| (524) | - consolidated subsidiaries and businesses net of cash and cash equivalent acquired | (104) | (3) | (628) | (170) | |
| (121) | - investments | (1,061) | (70) | (1,182) | (1,097) | |
| (71) | - securities and financing receivables held for operating purposes | (77) | (42) | (148) | (146) | |
| (180) | - change in payables in relation to investing activities | 536 | 405 | 356 | 297 | |
| 484 | Cash flow from disposals | 96 | 384 | 580 | 1,009 | |
| 30 | - tangible assets | 12 | 4 | 42 | 7 | |
| - intangible assets | 32 | 12 | 32 | 12 | ||
| 380 | - consolidated subsidiaries and businesses net of cash and cash equivalent disposed of | 4 | 380 | 4 | ||
| 35 | - investments | 310 | 35 | 881 | ||
| 6 | - securities and financing receivables held for operating purposes | 18 | 29 | 24 | 80 | |
| 33 | - change in receivables in relation to disposals | 34 | 25 | 67 | 25 | |
| 752 | Net change in receivables and securities not held for operating purposes | (86) | (1,045) | 666 | 1,670 | |
| (1,779) | Net cash used in investing activities | (3,253) | (2,200) | (5,032) | (1,630) | |
| -32- |
GROUP CASH FLOW STATEMENT (continued)
| Q1 | Q2 | IH | ||||
| 2023 | (€ million) | 2023 | 2022 | 2023 | 2022 | |
| 2,002 | Increase in long-term debt | 2,048 | 1 | 4,050 | 129 | |
| (152) | Payment of long-term debt | (357) | (2,817) | (509) | (3,694) | |
| (247) | Payment of lease liabilities | (228) | (266) | (475) | (556) | |
| (1,989) | Increase (decrease) in short-term financial debt | (124) | 220 | (2,113) | 2,859 | |
| (765) | Dividends paid to Eni's shareholders | (744) | (1,490) | (1,509) | (1,520) | |
| Dividends paid to non-controlling interests | (20) | (13) | (20) | (13) | ||
| (16) | Net capital issuance from non-controlling interest | 20 | (16) | 20 | ||
| Disposal (acquisition) of additional interests in consolidated subsidiaries | (57) | (3) | (57) | (5) | ||
| Net purchase of treasury shares | (406) | (195) | (406) | (195) | ||
| (39) | Interest payment of perpetual hybrid bond | (48) | (48) | (87) | (87) | |
| (1,206) | Net cash used in financing activities | 64 | (4,591) | (1,142) | (3,062) | |
| (32) | Effect of exchange rate changes on cash and cash equivalents and other changes | 17 | 70 | (15) | 79 | |
| (35) | Net increase (decrease) in cash and cash equivalents | 1,271 | (2,538) | 1,236 | 2,668 | |
| 10,181 | Cash and cash equivalents - beginning of the period | 10,146 | 13,471 | 10,181 | 8,265 | |
| 10,146 | Cash and cash equivalents - end of the period | 11,417 | 10,933 | 11,417 | 10,933 | |
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Capital expenditure
| Q1 | Q2 | IH | ||||||
| 2023 | (€ million) | 2023 | 2022 | % Ch. | 2023 | 2022 | % Ch. | |
| 1,819 | Exploration & Production | 2,159 | 1,480 | 46 | 3,978 | 2,551 | 56 | |
| of which: | - acquisition of proved and unproved properties | 77 | .. | 153 | .. | |||
| 211 | - exploration | 155 | 169 | (8) | 366 | 285 | 28 | |
| 1,562 | - oil & gas development | 1,949 | 1,183 | 65 | 3,511 | 2,044 | 72 | |
| 35 | - CCUS and agro-biofeedstock projects | 44 | 40 | 10 | 79 | 53 | 49 | |
| Global Gas & LNG Portfolio | 6 | 6 | 6 | 9 | (33) | |||
| 138 | Sustainable Mobility, Refining and Chemicals | 216 | 139 | 55 | 354 | 231 | 53 | |
| 112 | - Sustainable Mobility and Refining | 173 | 103 | 68 | 285 | 171 | 67 | |
| 26 | - Chemicals | 43 | 36 | 19 | 69 | 60 | 15 | |
| 149 | Plenitude & Power | 158 | 181 | (13) | 307 | 322 | (5) | |
| 130 | - Plenitude | 129 | 142 | (9) | 259 | 258 | ||
| 19 | - Power | 29 | 39 | (26) | 48 | 64 | (25) | |
| 14 | Corporate and other activities | 21 | 22 | (5) | 35 | 81 | (57) | |
| (1) | Impact of unrealized intragroup profit elimination | (3) | 1 | (4) | (1) | |||
| 2,119 | Capital expenditure (a) | 2,557 | 1,829 | 40 | 4,676 | 3,193 | 46 | |
(a) Expenditures to purchase plant and equipment from suppliers whose payment terms matched classification as financing payables, have been recognized among other changes of the cash flow statement (€104 million and €9 million in the second quarter 2023 and the second quarter 2022, respectively, €189 million and €18 million in the first half 2023 and the first half 2022, respectively and €85 million in the first quarter 2023).
In IH ’23, capital expenditure amounted to €4,676 mln increasing by 46% y-o-y, and mainly related to:
- oil and gas development activities (€3,511 mln) mainly in Côte d'Ivoire, Italy, Congo, Egypt, the United Arab Emirates, the United States and Iraq;
- traditional refining activity in Italy and outside Italy (€248 mln) mainly relating to the activities to maintain plants’ integrity and stay-in-business, as well as HSE initiatives; marketing activity (€37 mln) for regulation compliance and stay-in-business initiatives in the retail network in Italy and in the rest of Europe;
- Plenitude (€259 mln) mainly relating to development activities in the renewable business, acquisition of new customers as well as development of electric vehicles network infrastructure.
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Sustainability performance
| IH | |||
| 2023 | 2022 | ||
| TRIR (Total Recordable Injury Rate) | (total recordable injuries/worked hours) x 1,000,000 | 0.38 | 0.38 |
| Direct GHG emissions (Scope 1) | (mmtonnes CO2 eq.) | 19.6 | 19.9 |
| Direct methane emissions (Scope 1) | (ktonnes CH4) | 26.0 | 28.0 |
| Volumes of hydrocarbon sent to routine flaring | (billion Sm3) | 0.5 | 0.5 |
| Total volume of oil spills (>1 barrel) | (kbbl) | 10.4 | 2.7 |
| Re-injected production water | (%) | 61 | 58 |
| KPIs are calculated on 100% consolidated operated assets. | |||
| · | TRIR (Total Recordable Injury Rate) of the workforce amounted to 0.38, stable compared to the IH ��22. | |
| · | Direct GHG emissions (Scope 1): a slightly decrease compared to the IH ’22, in particular thanks to the new configuration in Porto Marghera plant, the maintenance activities in the chemical business and change in the consolidation area. | |
| · | Direct methane emissions (Scope 1) slightly decreased from the IH ‘22. | |
| · | Volumes of hydrocarbon sent to routine flaring were stable compared to the IH ‘22 (0.5 bscm in the two reporting periods). | |
| · | Total volume of oil spills (>1 barrel) increased from the IH ‘22, due to spill of fuel oil (7.5 kbbl) completely recovered. | |
| · | Re-injected production water increased from the IH ’22 driven by higher share of re-injected water, mainly in Libya due to sabotage occurred in the same period of 2022. |
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Exploration & Production
PRODUCTION OF OIL AND NATURAL GAS BY REGION
| Q1 | Q2 | IH | ||||
| 2023 | 2023 | 2022 | 2023 | 2022 | ||
| 74 | Italy | (kboe/d) | 69 | 82 | 72 | 83 |
| 180 | Rest of Europe | 171 | 180 | 175 | 197 | |
| 294 | North Africa | 270 | 270 | 282 | 255 | |
| 330 | Egypt | 322 | 353 | 326 | 355 | |
| 292 | Sub-Saharan Africa | 284 | 283 | 288 | 283 | |
| 166 | Kazakhstan | 161 | 108 | 163 | 136 | |
| 174 | Rest of Asia | 184 | 174 | 179 | 178 | |
| 140 | Americas | 143 | 125 | 141 | 124 | |
| 6 | Australia and Oceania | 7 | 11 | 7 | 12 | |
| 1,656 | Production of oil and natural gas(a)(b) | 1,611 | 1,586 | 1,633 | 1,623 | |
| 324 | - of which Joint Ventures and associates | 319 | 207 | 321 | 224 | |
| 131 | Production sold (a) | (mmboe) | 135 | 135 | 265 | 271 |
PRODUCTION OF LIQUIDS BY REGION
| Q1 | Q2 | IH | ||||
| 2023 | 2023 | 2022 | 2023 | 2022 | ||
| 31 | Italy | (kbbl/d) | 29 | 36 | 30 | 37 |
| 102 | Rest of Europe | 100 | 99 | 101 | 113 | |
| 131 | North Africa | 118 | 126 | 125 | 119 | |
| 69 | Egypt | 71 | 80 | 70 | 79 | |
| 172 | Sub-Saharan Africa | 163 | 187 | 168 | 181 | |
| 118 | Kazakhstan | 113 | 75 | 115 | 94 | |
| 84 | Rest of Asia | 86 | 75 | 85 | 76 | |
| 73 | Americas | 77 | 62 | 75 | 61 | |
| Australia and Oceania | - | - | ||||
| 780 | Production of liquids | 757 | 740 | 769 | 760 | |
| 176 | - of which Joint Ventures and associates | 174 | 89 | 175 | 102 | |
PRODUCTION OF NATURAL GAS BY REGION
| Q1 | Q2 | IH | ||||
| 2023 | 2023 | 2022 | 2023 | 2022 | ||
| 225 | Italy | (mmcf/d) | 211 | 241 | 218 | 244 |
| 407 | Rest of Europe | 374 | 427 | 390 | 443 | |
| 856 | North Africa | 801 | 758 | 828 | 716 | |
| 1,378 | Egypt | 1,318 | 1,439 | 1,348 | 1,453 | |
| 630 | Sub-Saharan Africa | 633 | 508 | 632 | 536 | |
| 252 | Kazakhstan | 253 | 173 | 252 | 221 | |
| 471 | Rest of Asia | 518 | 518 | 495 | 532 | |
| 356 | Americas | 347 | 328 | 351 | 335 | |
| 33 | Australia and Oceania | 36 | 55 | 35 | 62 | |
| 4,608 | Production of natural gas | 4,491 | 4,447 | 4,549 | 4,542 | |
| 777 | - of which Joint Ventures and associates | 762 | 622 | 770 | 644 | |
(a) Includes Eni’s share of production of equity-accounted entities.
(b) Includes volumes of hydrocarbons consumed in operation (129 and 119 kboe/d in the second quarter of 2023 and 2022, respectively, 128 and 117 kboe/d in the first half of 2023 and 2022, respectively, and 126 kboe/d in the first quarter of 2023).
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