Repsol doubles its profit in the first half, to 2,539 million

Records provisions for more than 1,800 million for impairment of the book value of its refining assets

Repsol obtained a net profit of 2,539 million euros in the first half of the year, after doubling the profit of 1,235 million euros in the same period last year, driven by the rise in hydrocarbon prices and refining margins.

The first half of this year was marked by a volatile international context, conditioned by the tensions caused by the war in Ukraine after the invasion by Russia, which have led to an increase in the prices of raw materials in world markets.

Thus, Brent crude oil increased its price in the period by 66% compared to 2021, standing at an average of 107.9 dollars per barrel in the first half, while Henry Hub gas reached 6.1 dollars per MBtu of average, 118% more than between January and June 2021. For its part, the refining margin indicator stood at an average of 15.5 dollars per barrel in the semester.

Repsol's adjusted net income up to June, which specifically measures the performance of business, stood at 3,177 million euros, with a contribution from international business of approximately 56%, the main exponent of which was the Exploration and Production area, which develops all its activity outside of Spain.

In a statement, the energy company pointed out that this net profit figure, together with the 2,499 million euros of profits obtained in 2021, partially compensates for the 2019 and 2020 exercises, which "added significant losses for a value greater than 7,100 million euros, derived from asset adjustments to be net zero emissions and the global health pandemic".

Almost half of the net result -1,206 million euros- corresponded to the accounting valuation of the inventories that the company stores as a strategic reserve for Spain.

Repsol stressed that these inventories, which have increased in the last quarter, reinforce its capacity to guarantee supply, even in volatile situations such as those experienced throughout the world since the start of the health pandemic and the war in Ukraine.

This significant increase in this item, which almost tripled compared to the first six months of the previous year, is explained by the progressive rise in the prices of hydrocarbons and their derivatives, conditioned, mainly, by the tensions generated by the invasion of Ukraine .

Likewise, the instability of the business environment in Europe, added to the regulatory pressure on the continent with measures contested by the sector -such as the prohibition of the sale in the European Union of cars with a combustion engine from the year 2035-, and Its consequent impact on the long-term profitability and competitiveness of the group's refineries has led the company to record provisions for impairment of the book value of its refining assets, which constitute the largest part of the specific results of the semester with 1,844 million of euros.

CUT THE DEBT TO 5,031 MILLION.

Regarding the net debt of the company chaired by Antonio Brufau, it stood at 5,031 million euros at the end of June, lower by 869 million at the end of the previous quarter. For its part, liquidity stood at 9,380 million euros, enough to cover 3.9 times short-term debt maturities.

The CEO of the group, Josu Jon Imaz, highlighted that the effort made by the group "to continue generating employment and investment for Spain, transforming ourselves and being net zero emissions is proving to be remarkable".

"We assume this commitment with responsibility, just as we are contributing to society, helping our clients in a difficult moment and at the same time, guaranteeing supply. All this, despite the fact that the international context is uncertain and that we have just begun to overcome a pandemic that drags important losses," he added.

Likewise, Repsol, which will allocate more than 40% of the total investments foreseen in its strategic plan for the 2021-2025 period (19,300 million euros) to the Iberian Peninsula, indicated that it has contributed, in the fiscal field, 5,324 million euros in the first half of 2022.

EXPLORATION AND PRODUCTION, MORE THAN HALF OF THE PROFIT.

By business areas, Exploration and Production recorded a result of 1,678 million euros, more than half of the total obtained by the company.

Likewise, the international context had a very significant impact on the Industrial area, which obtained a result of 1,393 million euros. Repsol is betting on the transformation of this business, which in its refining activity had a negative net result of 612 million euros during 2020 and 2021.

Specifically, the refining margin indicator was sunk throughout last year and part of the first quarter of this year, affected by the reduction in fuel demand, a situation that was reversed in the second quarter, in which supply was insufficient to cover the demand for diesel, gasoline and aviation kerosene, which pushed up prices throughout the world.

This volatility of the environment is evident in the correction of the refining margin indicator in recent weeks, in which it stands at single-digit levels, compared to 15.5 dollars per barrel on average in the semester, or 23, 3 dollars per barrel in the second quarter.

To this increase in prices, Repsol pointed out that the endemic situation in refining in the European Union also contributed, which has seen its capacity reduced by more than 10% in the last decade after the closure of 24 facilities, mainly due to a environment of low profitability and regulatory uncertainty. On the contrary, the consumption of gasoline, diesel and kerosene has increased by 1.3% in the same period.

MORE THAN 150 MILLION SAVINGS TO CUSTOMERS.

With regard to the Commercial and Renewables area, it was impacted by the significant discounts on the sale of fuel at its gas stations, which translated, at the end of June, into savings of more than 150 million euros for its customers, a figure which had an impact on the results of the service stations in Spain, which in the second quarter did not obtain profits.

In the same way, Repsol pointed out that it has tried to mitigate the consequences that the price context of the electricity and gas retail market is having for its 1.5 million customers in this business, which contributed to the area posting losses.

As for the Renewables and Low Carbon Generation business, its results continued to improve thanks to the progressive increase in its generation capacity. In the period, the group agreed to sell 25% of Repsol Renovables for 905 million euros, in an operation that values ​​the company's renewables business at 4,383 million euros, including debt and minority interests.