Earnings Release • May 10, 2017
Earnings Release
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Registered Head Office, Piazzale Enrico Mattei, 1 00144 Rome Tel. +39 06598.21 www.eni.com
| IVQ 16 | IQ 17 | IQ 16 | % Ch. | ||
|---|---|---|---|---|---|
| 49.46 | Brent dated | \$/bbl | 53.78 | 33.89 | 59 |
| 1.078 | Average EUR/USD exchange rate | 1.065 | 1.102 | (3) | |
| 1,856 | Hydrocarbon production | kboe/d | 1,795 | 1,754 | 2 |
| 1,286 | Adjusted operating profit (loss) (a) | € million | 1,834 | 583 | 215 |
| 1,400 | of which: E&P | 1,415 | 95 | ||
| (72) G&P | 338 | 285 | 19 | ||
| 75 R&M and Chemicals | 189 | 177 | 7 | ||
| 459 | Adjusted net profit (loss) (a)(b) | 744 | 2 | ||
| 0.13 | ‐ per share (€) | 0.21 | 0.00 | ||
| 340 | Net profit (loss) (b) | 965 | (383) | ||
| 0.09 | ‐ per share (€) | 0.27 | (0.11) | ||
| 1,556 | Adjusted cash flow from operations (c) | 2,597 | 1,473 | 76 | |
| 3,248 | Net cash flow from operations | 1,932 | 1,370 | 41 | |
| 2,250 | Capital expenditure | 2,831 | 2,455 | 15 | |
| 14,776 | Net borrowings | 14,931 | 12,222 | 22 | |
| 0.28 | Leverage | % | 0.28 | 0.23 |
(a) Non‐GAAP mea s ure. For further informa tion see the pa ragraph "Non‐GAAP mea s ures " on page 12.
(b) Attri butable to Eni's s ha rehol ders ‐ continui ng opera ti ons.
(c) Non GAAP mea s ure. Net ca s h flow from opera ti ons be fore changes i n worki ng capi tal and excl uding inventory holding gains or losses.
Yesterday, Eni's Board of Directors approved group results for the first quarter 2017 (unaudited). Commenting on the results, Claudio Descalzi, CEO of Eni, remarked:
"Eni has markedly improved its financial and operational performance in the first quarter of 2017. The Group has delivered a 60% increase in adjusted net profit to €750 million, compared with €460 million in the fourth quarter of 2016 when oil prices had already recovered to levels close to those experienced in this quarter. The operating growth is even bigger if compared with the first quarter 2016, when oil prices were at their lowest. Furthermore, the Group has seen with €2.6 billion its strongest cash generation in seven quarters. This performance was driven by the ongoing execution of Eni strategy across all business segments on 2017 targets, which are all confirmed. Flagship upstream projects,such asJangkrik in Indonesia and OCTP in Ghana, are all about to come on stream, while Zohr in Egypt is progressing ahead of schedule. All this makes me confident about the full year budget production guidance. The disposal of assets in Egypt and Mozambique, which are expected to close before the end of the year, will contribute to a further strengthening of the Group's financial position while maintaining future growth prospects. We expect that in 2017 organic cash generation, coupled with proceeds from disposals, will allow us to fully fund our capex and dividend requirements at an oil price well below the current level."
1 Excluding reimbursement of capex relating to asset disposals, see page 10.
Confirmed 2017 target of 0.8 bln boe of new resources, at a unitary discovery cost of approximately 1 \$/bbl.
Confirmed FY production target of 1.84 mln boe/d (up by 5% from 2016) leveraging on new project start-ups and ramp-ups of fields entered into operations in 2016, mainly in Egypt, Kazakhstan, Angola, Indonesia and Norway. Other initiatives of production optimization are expected to be implemented, which were not included in the initial plans. These additions will absorb mature fields decline and Val d'Agri shutdown lasting up to 90 days. Actions are underway in order to reduce the expected downtime period.
Planned cost position improvements by leveraging on long-term supply contracts revision and logistic cost reduction. Eni plans to retain market share in the large customers and retail segments, increasing the value of the existing customer base by developing innovative commercial initiatives, integrating services and optimizing operations.
Refinery intakes on own account are expected to slightly decrease y-o-y due to the lack of availability of certain assets at the Sannazzaro Refinery, partially offset by higher volumes at Livorno and Milazzo refineries. Against a backdrop of strong competition, management expects to consolidate volume and market share in the Italian retail market by leveraging innovation and product and service differentiation. In the rest of Europe, sales are expected to remain stable, excluding the effects of asset disposals in Eastern Europe.
In the Chemical business, sales are expected to trend up, due to higher production supplies. Cracker and polyethylene margins are expected to decline, while a recovery is expected in the butadiene and styrenics businesses.
Confirmed the target of 18% reduction in capex y-o-y on a pro-forma basis, i.e. net of the capex which will be reimbursed in connection with asset disposals.
Cash neutrality: confirmed the organic coverage of capex and dividends at a Brent price of approximately 60 \$/bbl in 2017.
Leverage at the end of 2017: projected to decline from 2016 level, also reflecting the expected closing of portfolio transactions, particularly the Mozambique deal.
| IVQ 16 | IQ 17 | IQ 16 | % Ch. | ||
|---|---|---|---|---|---|
| Production | |||||
| 906 | Liquids | kbbl/d | 832 | 890 | (6.5) |
| 5,184 | Natural gas | mmcf/d | 5,254 | 4,718 | 11.2 |
| 1,856 | Hydrocarbons | kboe/d | 1,795 | 1,754 | 2.3 |
| Average realizations | |||||
| 44.56 | Liquids | \$/bbl | 48.65 | 29.69 | 63.9 |
| 3.50 | Natural gas | \$/kcf | 3.60 | 3.31 | 9.0 |
| 32.95 | Hydrocarbons | \$/boe | 33.42 | 24.09 | 38.7 |
In the first quarter of 2017, oil and natural gas production averaged 1,795 kboe/d, up by 2.3% from the same period a year ago, driven by new project start-ups and the ramp-up at fields started up in 2016, mainly in Egypt, Kazakhstan, Norway and Angola, for an overall contribution of 110 kboe/d. These additions were partly offset by planned and unplanned facilities downtime particularly in Nigeria, the United States and Lybia, OPEC production cuts and mature fields declines. When excluding the negative price effect on PSAs contracts and OPEC cuts (overall 55 kboe/d), hydrocarbon production increased by 5.7%.
Liquids production (832 kbbl/d) decreased by 58 kbbl/d, or 6.5%. Natural gas production (5,254 mmcf/d) increased by 536 mmcf/d, or 11.2%.
| IVQ 16 | (€ million) | IQ 17 | IQ 16 | % Ch. |
|---|---|---|---|---|
| 1,720 | Operating profit (loss) | 1,628 | 94 | |
| (320) | Exclusion of special items | (213) | 1 | |
| 1,400 | Adjusted operating profit (loss) | 1,415 | 95 | |
| 123 | Net finance (expense) income | 56 | (58) | |
| 77 | Net income (expense) from investments | 18 | 4 | |
| (741) | Income taxes | (859) | (307) | |
| 46.3 | tax rate (%) | 57.7 | ||
| 859 | Adjusted net profit (loss) | 630 | (266) | |
| 1,871 | Capital expenditure | 2,706 | 2,242 | 20.7 |
For the disclosure of the business segment special charges/gains see page 8.
| IVQ 16 | IQ 17 | IQ 16 | % Ch. | ||
|---|---|---|---|---|---|
| 202 | PSV | €/kcm | 219 | 153 | 43.1 |
| 182 | TTF | 195 | 136 | 43.4 | |
| Natural gas sales | bcm | ||||
| 10.25 | Italy | 10.38 | 10.79 | (3.8) | |
| 11.73 | Rest of Europe | 11.53 | 11.11 | 3.8 | |
| 1.15 | of which: Importers in Italy | 1.04 | 1.13 | (8.0) | |
| 10.58 | European markets | 10.49 | 9.98 | 5.1 | |
| 1.28 | Rest of World | 1.37 | 1.39 | (1.4) | |
| 23.26 | Worldwide gas sales | 23.28 | 23.29 | (0.0) | |
| 9.79 | Power sales | Tw h | 9.37 | 9.45 | (0.8) |
In the first quarter 2017, natural gas sales were 23.28 bcm, in line with the same period of the previous year. Sales in Italy were down by 3.8% to 10.38 bcm due to lower spot volumes. Sales in the European markets (10.49 bcm) increased by 5.1% mainly in Germany/Austria reflecting higher volumes sold to wholesalers and in Turkey due to higher sales to Botas, partly offset by lower sales in Hungary following the 2016 asset disposal.
Power sales (9.37 TWh) were 0.8% lower than the first quarter of 2016, mainly due to lower volumes sold to the middle market.
| IVQ 16 | (€ million) | IQ 17 | IQ 16 | % Ch. |
|---|---|---|---|---|
| 5 | Operating profit (loss) | 214 | 83 | |
| (56) | Exclusion of inventory holding (gains) losses | (44) | 128 | |
| (21) | Exclusion of special items | 168 | 74 | |
| (72) | Adjusted operating profit (loss) | 338 | 285 | 18.6 |
| (1) | Net finance (expense) income | 6 | 2 | |
| (8) | Net income (expense) from investments | (1) | 5 | |
| 50 | Income taxes | (133) | (128) | |
| tax rate (%) | 38.8 | 43.8 | ||
| (31) | Adjusted net profit (loss) | 210 | 164 | 28.0 |
| 53 | Capital expenditure | 19 | 22 | (13.6) |
In the first quarter of 2017, the Gas & Power segment reported an adjusted operating profit of €338 million, an increase of €53 million from the first quarter of 2016. This result reflected better margins due to positive effects of past renegotiations of purchase and supply contracts, as well as cost optimization and the higher profits from trading activities. These positives were partly offset by lower non-recurring gains relating to renegotiations and by unfavorable scenario effects. The adjusted net profit was €210 million, an increase of 28% from the first quarter of 2016.
For the disclosure of the business segment special charges/gains see page 8.
| IVQ 16 | IQ 17 | IQ 16 | % Ch. | ||
|---|---|---|---|---|---|
| 4.7 | Standard Eni Refining Margin (SERM) | \$/bbl | 4.2 | 4.2 | |
| 5.22 | Throughputs in Italy | mmtonnes | 5.18 | 5.20 | (0.4) |
| 0.75 | Throughputs in the rest of Europe | 0.64 | 0.70 | (8.6) | |
| 5.97 | Total throughputs | 5.82 | 5.90 | (1.4) | |
| 0.06 | Green throughputs | 0.02 | 0.04 | (50.0) | |
| 84.2 | Average plant utilization rate | % | 85.5 | 85.6 | (0.1) |
| Marketing | |||||
| 2.08 | Retail sales | mmtonnes | 2.00 | 2.00 | |
| 1.47 | Retail sales in Italy | 1.42 | 1.37 | 3.6 | |
| 0.61 | Retail sales in the rest of Europe | 0.58 | 0.63 | (7.9) | |
| 24.4 | Retail market share in Italy | % | 24.8 | 23.8 | |
| 2.92 | Wholesale sales | mmtonnes | 2.36 | 2.55 | (7.5) |
| 2.08 | Wholesale sales in Italy | 1.68 | 1.84 | (8.7) | |
| 0.84 | Wholesale sales in the rest of Europe | 0.68 | 0.71 | (4.2) | |
| Chemicals | |||||
| 1,336 | Production of petrochemical products | ktonnes | 1,525 | 1,438 | 6.1 |
Wholesale sales in Italy were 1.68 mmtonnes, down by 8.7% compared to the corresponding period of 2016: lower volumes of gasoil, gasoline and fuel oil were partly offset by higher sales of jet fuel and LPG.
Retail and wholesale sales in the rest of Europe decreased by 6% compared to the same period of the previous year mainly due to the disposal of certain operations in Eastern Europe.
Petrochemical production of 1,525 ktonnes increased by 6.1% reflecting better plant performance.
| IVQ 16 | (€ million) | IQ 17 | IQ 16 | % Ch. |
|---|---|---|---|---|
| 168 | Operating profit (loss) | 364 | 48 | |
| (181) | Exclusion of inventory holding (gains) losses | (199) | 63 | |
| 88 | Exclusion of special items | 24 | 66 | |
| 75 | Adjusted operating profit (loss) | 189 | 177 | 6.8 |
| 68 | of which: Refining & Marketing | 66 | 66 | |
| 7 | Chemicals | 123 | 111 | 10.8 |
| 1 | Net finance (expense) income | 1 | ||
| 9 | Net income (expense) from investments | 10 | 20 | |
| (35) | Income taxes | (71) | (54) | |
| 41.2 | tax rate (%) | 35.7 | 27.3 | |
| 50 | Adjusted net profit (loss) | 128 | 144 | (11.1) |
| 303 | Capital expenditure | 100 | 85 | 17.6 |
In the first quarter of 2017, the Refining & Marketing and Chemicals segment reported an adjusted operating profit of €189 million, up by 6.8% from the first quarter of 2016.
The Refining & Marketing business reported an adjusted operating profit of €66 million, in line with the first quarter of 2016. The break-even margin was lower than 4 \$/barrel, notwithstanding the shutdown of the EST plant at the Sannazzaro refinery. Lower results at the Venice green refinery, following a planned standstill, were offset by the positive performance in the oxygenates business and in the portfolio supply activities. Marketing activities reported improved results compared to the last year.
The Chemical business reported an adjusted operating profit of €123 million, up by 10.8% from the first quarter of 2016. The improvement was driven by higher volumes and the restructuring plan executed in recent years, which allowed the business to fully capture favorable trends in certain market segments, particularly in the butadiene market due to global shortage of this commodity. Those positives were partly offset by lower cracker and polyetilene margins. Sales volumes increased by approximately 3% driven by products shortage due to a number of shutdowns at steam crackers and butadiene plants worldwide, as well as to higher production supplies.
Adjusted net profit of €128 million declined by €16 million from the same period of the previous year due to an increased tax rate.
For the disclosure on the business segment special charges see page 8.
| IVQ 16 | (€ million) | IQ 17 | IQ 16 | % Ch. |
|---|---|---|---|---|
| 15,807 | Net sales from operations - continuing operations | 18,047 | 13,344 | 35.2 |
| 1,640 | Operating profit (loss) - continuing operations | 2,111 | 105 | |
| (237) | Exclusion of inventory holding (gains) losses | (259) | 329 | |
| (117) | Exclusion of special items (a) | (18) | 149 | |
| 1,286 | Adjusted operating profit (loss) - continuing operations | 1,834 | 583 | |
| Breakdown by segment: | ||||
| 1,400 | Exploration & Production | 1,415 | 95 | |
| (72) | Gas & Power | 338 | 285 | 18.6 |
| 75 | Refining & Marketing and Chemicals | 189 | 177 | 6.8 |
| (118) | Corporate and other activities | (115) | (90) | (27.8) |
| 1 | Impact of unrealized intragroup profit elimination and other consolidation adjustments (b) | 7 | 116 | |
| 340 | Net profit (loss) attributable to Eni's shareholders - continuing operations | 965 | (383) | |
| (162) | Exclusion of inventory holding (gains) losses | (186) | 224 | |
| 281 | Exclusion of special items (a) | (35) | 161 | |
| 459 | Adjusted net profit (loss) attributable to Eni's shareholders - continuing operations | 744 | 2 | |
| 340 | Net profit (loss) attributable to Eni's shareholders | 965 | (796) | |
| 340 | Net profit (loss) attributable to Eni's shareholders - continuing operations | 965 | (383) | |
| Net profit (loss) attributable to Eni's shareholders - discontinued operations | (413) | |||
| (a) For further information see "Breakdown of special items". |
(b) Unrealized intragroup profit elimination mainly pertained to intra-group sales of commodities and services recorded in the assets of the purchasing business segment as of the end of the period.
The break-down by segment of special items of the operating profit (a net gains of €18 million) is:
R&M and Chemicals: net charges of €24 million mainly composed of: the write down of capital expenditure relating to certain Cash Generating Units in the R&M business, which were impaired in previous reporting periods and continued to lack any prospects of profitability (€19 million); environmental provisions (€7 million) and provisions for redundancy incentives (€2 million), as well as the effects of fair-valued commodity derivatives that lacked the formal criteria to be accounted as hedges under IFRS (€11 million).
Non-operating special items included the tax effects related to the operating special items and the provision on a tax claim in a foreign jurisdiction for a total negative effect on net profit of €35 million.
Net profit attributable to Eni's shareholders was €965 million for the first quarter of 2017 compared to a loss from continuing operations of €383 million in the first quarter of 2016 (net loss attributable to Eni's shareholders in the first quarter 2016 included a loss in the discontinued operations of €413 million relating to the closing of the Saipem deal, in particular the impairment taken to align the book value of Eni's retained interest in Saipem to its fair value). The 2017 performance was driven by a robust E&P operating performance (up by €1.53 billion) boosted by an ongoing recovery in Brent prices (the Brent benchmark was up by 59%), as well as the capital gain recorded on the disposal of a 10% interest in the Zohr asset (€339 million). The increase also reflected a normalized tax rate (equal to approximately 52 percentage points) due to an improved profitability that reduced the concentration of taxable profit in PSA contracts, which bear higher-than average rates of tax, and incidence of certain non-deductible expenses.
| IVQ 16 | (€ million) | IQ 17 | IQ 16 | Change |
|---|---|---|---|---|
| 341 | Net profit (loss) ‐ continuing operations | 967 | (380) | 1,347 |
| Adjustments to reconcile net profit (loss) to net cash provided by operating activities: | ||||
| 1,740 | ‐ depreciation, depletion and amortization and other non monetary items | 2,056 | 1,892 | 164 |
| (11) | ‐ net gains on disposal of assets | (343) | (18) | (325) |
| 749 | ‐ dividends, interests and taxes | 1,146 | 440 | 706 |
| 1,455 | Changes in working capital related to operations | (924) | 226 | (1,150) |
| (1,026) | Dividends received, taxes paid, interests (paid) received | (970) | (790) | (180) |
| 3,248 | Net cash provided by operating activities | 1,932 | 1,370 | 562 |
| (2,250) | Capital expenditure | (2,831) | (2,455) | (376) |
| (6) | Investment and purchase of consolidated subsidiaries and businesses | (36) | (1,124) | 1,088 |
| 33 | Disposal of consolidated subsidiaries, businesses tangible and intangible assets and investments | 557 | 805 | (248) |
| 614 | Other cash flow related to capital expenditure, investments and disposals | 185 | (39) | 224 |
| 1,639 | Free cash flow | (193) | (1,443) | 1,250 |
| 42 | Borrowings (repayment) of debt related to financing activities | (160) | 5,987 | (6,147) |
| (798) | Changes in short and long‐term financial debt | 150 | (3,702) | 3,852 |
| (33) | Dividends paid and changes in non‐controlling interests and reserves | |||
| 22 | Effect of changes in consolidation, exchange differences and cash and cash equivalent related to discontinued operations |
(6) | (22) | 16 |
| 872 | NET CASH FLOW | (209) | 820 | (1,029) |
| Change in net borrowings | ||||
| IVQ 16 | (€ million) | IQ 17 | IQ 16 | Change |
| 1,639 | Free cash flow | (193) | (1,443) | 1,250 |
| Net borrowings of divested companies | 5,818 | (5,818) | ||
| (374) | Exchange differences on net borrowings and other changes | 38 | 274 | (236) |
| (33) | Dividends paid and changes in non‐controlling interest and reserves | |||
| 1,232 | CHANGE IN NET BORROWINGS | (155) | 4,649 | (4,804) |
As of March 31, 2017, net borrowings2 were €14.93 billion, almost unchanged compared to December 31, 2016 (up by a modest €0.155 billion).
Cash flow from operating activities amounted to €1.93 billion, or €2.60 billion when excluding changes in working capital at replacement cost. Gains from disposal (€0.56 billion) related to the closing of the sale of a 10% stake of Zohr to BP. The total consideration includes the reimbursement of capex borne by Eni since January 1, 2016 (the 2017 amount being \$64 million). Approximately 50% of the cash consideration will be cashed-in by tranches. Other inflows relating to investing activities amounted to €0.6 billion. These inflows almost completely covered capital expenditure for the period (€2.83 billion), which peaked in the quarter because of the upcoming conclusion of certain relevant projects starting from 2017. On a pro-forma basis, i.e. excluding the share of capex to be borne by the operators who purchased interests in certain Group exploration assets under development (namely in Egypt and Mozambique) with retroactive economic effects, the capex share of which will be reimbursed to Eni at the closing of the underlying transactions, capex for the first quarter would be €2.42 billion.
Cash flow from operations was also influenced by a lower level of receivables due beyond the end of the reporting period, being sold to financing institutions compared to the amount sold at the end of the previous reporting period (approximately €0.2 billion).
Summarized Group Balance Sheet
| (€ million) | March 31, 2017 | Dec. 31, 2016 | Change |
|---|---|---|---|
| Fixed assets | 79,571 | 79,729 | (158) |
| Net working capital | |||
| Inventories | 4,728 | 4,637 | 91 |
| Trade receivables | 12,456 | 11,186 | 1,270 |
| Trade payables | (11,163) | (11,038) | (125) |
| Tax payables and provisions for, net deferred tax liabilities | (4,125) | (3,073) | (1,052) |
| Provisions | (13,960) | (13,896) | (64) |
| Other current assets and liabilities | 1,301 | 1,171 | 130 |
| (10,763) | (11,013) | 250 | |
| Provisionsfor employee post‐retirements benefits | (862) | (868) | 6 |
| Assets held forsale including related liabilities | 118 | 14 | 104 |
| CAPITAL EMPLOYED, NET | 68,064 | 67,862 | 202 |
| Eni's shareholders equity | 53,081 | 53,037 | 44 |
| Non‐controlling interest | 52 | 49 | 3 |
| Shareholders' equity | 53,133 | 53,086 | 47 |
| Net borrowings | 14,931 | 14,776 | 155 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 68,064 | 67,862 | 202 |
| Leverage | 0.28 | 0.28 |
As of March 31, 2017, the ratio of net borrowings to shareholders' equity including non-controlling interest – leverage3 – was to 0.28, unchanged compared to 0.28 as of December 31, 2016. Total equity increased by €47 million, driven by the result of the period, offset by unfavorable foreign currency translation differences (€0.7 billion) and the negative change in the cash flow hedge reserve (down by €0.3 billion). Foreign currency differences relating to net borrowings were negative for €0.1 billion.
2 Details on net borrowings are furnished on page 19.
3 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 12 and subsequent.
Article No. 36 of Italian regulatory exchanges (Consob Resolution No. 16191/2007 and subsequent amendments). Continuing listing standards about issuers that control subsidiaries incorporated or regulated in accordance with laws of extra‐EU Countries. Certain provisions have been enacted to regulate continuing Italian listing standards of issuers controlling subsidiaries that are incorporated or regulated in accordance with laws of extra‐EU Countries, also having a material impact on the consolidated financialstatements of the parent company. Regarding the aforementioned provisions, as of March 31, 2017, Eni's subsidiaries ‐ Eni Congo SA, Eni Norge AS, Eni Petroleum Co Inc, Nigerian Agip Oil Co Ltd, Nigerian Agip Exploration Ltd, Eni Finance USA Inc, Eni Trading & Shipping Inc, Eni Canada Holding Ltd, Eni Turkmenistan Ltd, Eni Ghana Exploration and Production Ltd and Eni Suisse SA – fall within the scope of the new continuing listing standards. Eni has already adopted adequate procedures to ensure full compliance with the new regulations.
This press release on the results of the first quarter 2017 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 each quarter. Results and cash flow are presented for the first quarter of 2017, for the first quarter and the fourth quarter of 2016. Information on the Company's financial position relates to end of the periods as of March 31, 2017, and December 31, 2016. 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 2016 Annual report on form 20‐F filed with the US SEC on March 22, 2017, which investors are urged to read.
Non‐GAAP financial measures and other alternative performance indicators disclosed throughout this pressrelease are accompanied by explanatory notes and tablesin 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.
Eni's Chief Financial Officer, Massimo Mondazzi, in his position as manager responsible for the preparation of the Company's financial reports, certifies that data and information disclosed in this press release correspond to the Company's evidence and accounting books and records, pursuant to rule 154‐bis paragraph 2 of Legislative Decree No. 58/1998.
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This pressrelease, in particular the statements under the section "Outlook", contains certain forward‐looking statements particularly those regarding capital expenditure, development and management of oil and gas resources, dividends, 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 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 first quarter of the year cannot be extrapolated on an annual basis.
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Press Office: +39.0252031875 ‐ +39.0659822030 Freephone for shareholders (from Italy): 800940924 Freephone for shareholders (from abroad): +80011223456 Switchboard: +39‐0659821 [email protected] [email protected] [email protected] Website: www.eni.com
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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 first quarter 2017 (unaudited) is also available on Eni's website eni.com.
Management evaluates underlying business performance on the basis of non-GAAP financial measures under IFRS ("Alternative performance measures"), such as adjusted operating profit and adjusted net profit, which are arrived at 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 affect 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. Management includes them in order 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 actual performance:
Adjusted operating and 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).
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.
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; in this respect, from the reporting period 2017 special items comprise an adjustment to align the doubtful credit allowance of the retail G&P business (included in the G&P reportable segment) to the "expected loss" accounting model replacing the criteria of the incurred loss in the evaluation of the recoverability of trade receivables. The new criterion will be adopted in GAAP accounts effective January 1, 2018. This result adjustment is consistent with management assessment of this business performance and improves the correlation between revenues and costs incurred in the period with respect to the current accounting method; or (iii) 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. Those items 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 exchange rate market.
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. Also, special items allow to allocate to future reporting periods gains and losses on re-measurement at fair value of certain non hedging commodity derivatives and exchange rate derivatives relating to commercial exposures, lacking the criteria to be designed as hedges, including the ineffective portion of cash flow hedges and certain derivative financial instruments embedded in the pricing formula of long-term gas supply agreements of the Exploration & Production segment.
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.
Adjusted cash flow is defined as net cash provided from operating activities before changes in working capital at replacement cost.
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 is calculated as total finance debt less cash, cash equivalents and certain very liquid investments not related to operations, including among others non-operating financing receivables and securities not related to operations. Financial activities are qualified as "not related to operations" when these are not strictly related to the business operations.
(€ million)
| First Quarter 2017 | ||||||
|---|---|---|---|---|---|---|
| Exploration & | Gas & Power | Refining & Marketing and Chemicals |
Corporate and other | mpact of unrealized intragroup profit elimination |
||
| Production | activities | GROUP | ||||
| Reported operating profit (loss) | 1,628 | 214 | 364 | (118) | I 23 |
2,111 |
| Exclusion of inventory holding (gains) losses | (44) | (199) | (16) | (259) | ||
| Exclusion of special items: | ||||||
| environmental charges | 7 | 7 | ||||
| impairments losses (impairment reversals), net | 19 | 1 | 20 | |||
| net gains on disposal of assets | (343) | (343) | ||||
| risk provisions | 84 | 84 | ||||
| provision for redundancy incentives | 2 | 2 | 2 | 6 | ||
| commodity derivatives | 188 | (11) | 177 | |||
| exchange rate differences and derivatives | 9 | (14) | (1) | (6) | ||
| other | 35 | (8) | 8 | 2 | 37 | |
| Special items of operating profit (loss) | (213) | 168 | 24 | 3 | (18) | |
| Adjusted operating profit (loss) | 1,415 | 338 | 189 | (115) | 7 | 1,834 |
| Net finance (expense) income (a) | 56 | 6 | (207) | (145) | ||
| Net income (expense) from investments (a) | 18 | (1) | 10 | 15 | 42 | |
| Income taxes (a) | (859) | (133) | (71) | 78 | (985) | |
| Tax rate (%) | 57.7 | 38.8 | 35.7 | 56.9 | ||
| Adjusted net profit (loss) | 630 | 210 | 128 | (229) | 7 | 746 |
| of which: | ||||||
| - Adjusted net profit (loss) of non-controlling interest | 2 | |||||
| - Adjusted net profit (loss) attributable to Eni's shareholders | 744 | |||||
| Reported net profit (loss) attributable to Eni's shareholders | 965 | |||||
| Exclusion of inventory holding (gains) losses | (186) | |||||
| Exclusion of special items | (35) | |||||
| Adjusted net profit (loss) attributable to Eni's shareholders | 744 |
(a) Excluding special items.
| First Quarter 2016 | Exploration & Production |
Gas & Power | Refining & Marketing and Chemicals |
Corporate and other activities |
mpact of unrealized intragroup profit elimination I |
GROUP | DISCONTINUED OPERATIONS |
CONTINUING OPERATIONS |
|---|---|---|---|---|---|---|---|---|
| Reported operating profit (loss) | 94 | 83 | 48 | (98) | (22) | 105 | 105 | |
| Exclusion of inventory holding (gains) losses | 128 | 63 | 138 | 329 | 329 | |||
| Exclusion of special items: | ||||||||
| environmental charges | 23 | 23 | 23 | |||||
| impairments losses (impairment reversals), net | 13 | 4 | 17 | 17 | ||||
| impairment of exploration projects | 7 | 7 | 7 | |||||
| provision for redundancy incentives | 1 | 4 | 2 | 7 | 7 | |||
| commodity derivatives | 4 | 103 | 26 | 133 | 133 | |||
| exchange rate differences and derivatives | (39) | (3) | (42) | (42) | ||||
| other | (11) | 10 | 3 | 2 | 4 | 4 | ||
| Special items of operating profit (loss) | 1 | 74 | 66 | 8 | 149 | 149 | ||
| Adjusted operating profit (loss) | 95 | 285 | 177 | (90) | 116 | 583 | 583 | |
| Net finance (expense) income (a) | (58) | 2 | 1 | (34) | (89) | (89) | ||
| Net income (expense) from investments (a) | 4 | 5 | 20 | (7) | 22 | 22 | ||
| Income taxes (a) | (307) | (128) | (54) | 16 | (38) | (511) | (511) | |
| Tax rate (%) | 43.8 | 27.3 | 99.0 | 99.0 | ||||
| Adjusted net profit (loss) | (266) | 164 | 144 | (115) | 78 | 5 | 5 | |
| of which: | ||||||||
| - Adjusted net profit (loss) of non-controlling interest | 3 | 3 | ||||||
| - Adjusted net profit (loss) attributable to Eni's shareholders | 2 | 2 | ||||||
| Reported net profit (loss) attributable to Eni's shareholders | (796) | 413 | (383) | |||||
| Exclusion of inventory holding (gains) losses | 224 | 224 | ||||||
| Exclusion of special items | 574 (413) | 161 | ||||||
| Adjusted net profit (loss) attributable to Eni's shareholders | 2 | 2 |
(a) Excluding special items.
| Fourth Quarter 2016 | ||||||
|---|---|---|---|---|---|---|
| Exploration & Production |
Gas & Power | Refining & Marketing and Chemicals |
Corporate and other activities |
mpact of unrealized intragroup profit elimination |
GROUP | |
| I | ||||||
| Reported operating profit (loss) | 1,720 | 5 | 168 | (254) | 1 | 1,640 |
| Exclusion of inventory holding (gains) losses | (56) | (181) | (237) | |||
| Exclusion of special items: | ||||||
| environmental charges | 1 | 18 | 9 | 28 | ||
| impairments losses (impairment reversals), net | (789) | 81 | 40 | 28 | (640) | |
| net gains on disposal of assets | (3) | (3) | (6) | |||
| risk provisions | (1) | 17 | 27 | 43 | ||
| provision for redundancy incentives | 19 | 3 | 7 | 4 | 33 | |
| commodity derivatives | (265) | (14) | (279) | |||
| exchange rate differences and derivatives | (1) | 33 | 5 | 37 | ||
| other | 455 | 109 | 8 | 95 | 667 | |
| Special items of operating profit (loss) | (320) | (21) | 88 | 136 | (117) | |
| Adjusted operating profit (loss) | 1,400 | (72) | 75 | (118) | 1 | 1,286 |
| Net finance (expense) income (a) | 123 | (1) | 1 | (391) | (268) | |
| Net income (expense) from investments (a) | 77 | (8) | 9 | 4 | 82 | |
| Income taxes (a) | (741) | 50 | (35) | 81 | 5 | (640) |
| Tax rate (%) | 46.3 | 41.2 | 58.2 | |||
| Adjusted net profit (loss) | 859 | (31) | 50 | (424) | 6 | 460 |
| of which: | ||||||
| - Adjusted net profit (loss) of non-controlling interest | 1 | |||||
| - Adjusted net profit (loss) attributable to Eni's shareholders | 459 | |||||
| Reported net profit (loss) attributable to Eni's shareholders | 340 | |||||
| Exclusion of inventory holding (gains) losses | (162) | |||||
| Exclusion of special items | 281 | |||||
| Adjusted net profit (loss) attributable to Eni's shareholders | 459 |
(a) Excluding special items.
(€ million)
| IVQ 16 | (€ million) | IQ 17 | IQ 16 |
|---|---|---|---|
| 28 | Environmental charges | 7 | 23 |
| (640) | Impairments losses (impairment reversals), net | 20 | 17 |
| Impairment of exploration projects | 7 | ||
| (6) | Net gains on disposal of assets | (343) | |
| 43 | Risk provisions | 84 | |
| 33 | Provisions for redundancy incentives | 6 | 7 |
| (279) | Commodity derivatives | 177 | 133 |
| 37 | Exchange rate differences and derivatives | (6) | (42) |
| 667 | Other | 37 | 4 |
| (117) | Special items of operating profit (loss) | (18) | 149 |
| 56 | Net finance (income) expense | 6 | 96 |
| of which: | |||
| (37) | - exchange rate differences and derivatives reclassified to operating profit (loss) | 6 | 42 |
| 362 | Net income (expense) from investments | (2) | 365 |
| of which: | |||
| (5) | - gains on disposal of assets | ||
| 415 | - impairments/revaluation of equity investments | 365 | |
| (20) | Income taxes | (21) | (36) |
| of which: | |||
| 122 | - net impairment of deferred tax assets of Italian subsidiaries | ||
| 6 | - net impairment of deferred tax assets of upstream business outside Italy | ||
| (148) | - taxes on special items of operating profit (outside Italy) and other special items | (21) | (36) |
| 281 | Total special items of net profit (loss) | (35) | 574 |
| Attributable to: | |||
| - Non-controlling interest | |||
| 281 | - Eni's shareholders | (35) | 574 |
4 For further details on impairments and reversals of continuing operations, see the following page.
| IVQ 16 | (€ million) | IQ 17 | IQ 16 | Ch.% |
|---|---|---|---|---|
| 4,855 | Exploration & Production | 4,950 | 3,356 | 47.5 |
| 11,986 | Gas & Power | 13,942 | 10,030 | 39.0 |
| 5,125 | Refining & Marketing and Chemicals | 5,515 | 3,869 | 42.5 |
| 4,141 | - Refining & Marketing | 4,294 | 2,916 | 47.3 |
| 1,082 | - Chemicals | 1,346 | 1,019 | 32.1 |
| (98) | - Consolidation adjustment | (125) | (66) | |
| 391 | Corporate and other activities | 348 | 310 | 12.3 |
| (6,550) | Consolidation adjustments | (6,708) | (4,221) | |
| 15,807 | 18,047 | 13,344 | 35.2 |
| IVQ 16 | (€ milion) | IQ 17 | IQ 16 | Ch.% |
|---|---|---|---|---|
| 12,346 | Purchases, services and other | 13,619 | 10,651 | 27.9 |
| 87 | of which: - other special items | 91 | 23 | |
| 741 | Payroll and related costs | 784 | 808 | (3.0) |
| 33 | of which: - provision for redundancy incentives and other | 6 | 7 | |
| 13,087 | 14,403 | 11,459 | 25.7 |
| IVQ 16 | (€ million) | IQ 17 | IQ 16 | Ch.% |
|---|---|---|---|---|
| 1,757 | Exploration & Production | 1,646 | 1,624 | 1.4 |
| 92 | Gas & Power | 89 | 86 | 3.5 |
| 106 | Refining & Marketing and Chemicals | 89 | 96 | (7.3) |
| 95 | - Refining & Marketing | 75 | 88 | (14.8) |
| 11 | - Chemicals | 14 | 8 | 75.0 |
| 17 | Corporate and other activities | 16 | 19 | (15.8) |
| (7) | Impact of unrealized intragroup profit elimination | (7) | (7) | |
| 1,965 | Total depreciation, depletion and amortization | 1,833 | 1,818 | 0.8 |
| (656) | Impairment losses (impairment reversals), net | 20 | 17 | |
| 1,309 | Depreciation, depletion, amortization, impairments and reversals | 1,853 | 1,835 | 1.0 |
| 212 | Write-off | 144 | 35 | |
| 1,521 | 1,997 | 1,870 | 6.8 |
| IVQ 16 | (€ million) | IQ 17 | IQ 16 |
|---|---|---|---|
| 849 | Asset impairment | 20 | 17 |
| (1,505) | Impairment reversals | ||
| (656) | Sub-total | 20 | 17 |
| 16 | Impairment of losses on receivables related to non recurring activities | ||
| (640) | Impairments losses (impairment reversals), net | 20 | 17 |
(€ million)
| First Quarter 2017 | Exploration & Production |
Gas & Power |
Refining & Marketing and Chemicals |
Corporate and other activities |
Group |
|---|---|---|---|---|---|
| Share of gains (losses) from equity-accounted investments | 13 | (1) | 2 | 15 | 29 |
| Dividends | 3 | 8 | 11 | ||
| Other income (expense), net | 2 | 2 | 4 | ||
| 18 | (1) | 12 | 15 | 44 |
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.
| Mar 31, 2016 |
(€ million) | Mar. 31, 2017 |
Dec. 31, 2016 |
Change vs. Dec. 31, 2016 |
|---|---|---|---|---|
| 23,929 | Total debt | 27,285 | 27,239 | 46 |
| 4,485 | Short-term debt | 7,060 | 6,675 | 385 |
| 19,444 | Long-term debt | 20,225 | 20,564 | (339) |
| (6,029) | Cash and cash equivalents | (5,465) | (5,674) | 209 |
| (5,007) | Securities held for trading and other securities held for non-operating purposes | (6,410) | (6,404) | (6) |
| (671) | Financing receivables held for non-operating purposes | (479) | (385) | (94) |
| 12,222 | Net borrowings | 14,931 | 14,776 | 155 |
| 52,879 | Shareholders' equity including non-controlling interest | 53,133 | 53,086 | 47 |
| 0.23 | Leverage | 0.28 | 0.28 |
Net borrowings are calculated under Consob provisions on Net Financial Position (Com. no. DEM/6064293 of 2006).
| (€ million) | |
|---|---|
| Issuing entity | Amount at March 31, 2017 (a) |
| Eni SpA | 3,626 |
| Eni Finance International SA | 103 |
| 3,729 |
(a) Amounts include interest accrued and discount on issue.
| Issuing entity | Nominal amount (€ million) |
Currency | Amount at March 31, 2017 (a) (€ million) |
Maturity | Rate | % |
|---|---|---|---|---|---|---|
| Eni SpA | 750 | EUR | 745 | 2027 | fixed | 1.500 |
| 750 | 745 |
(a) Amounts include interest accrued and discount on issue.
| (€ million) | ||
|---|---|---|
| Mar. 31, 2017 | Dec. 31, 2016 | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 5,465 | 5,674 |
| Other financial activities held for trading | 6,172 | 6,166 |
| Other financial assets available for sale | 238 | 238 |
| Trade and other receivables | 19,429 | 17,593 |
| Inventories | 4,728 | 4,637 |
| Current tax assets | 366 | 383 |
| Other current tax assets | 519 | 689 |
| Other current assets | 1,403 | 2,591 |
| 38,320 | 37,971 | |
| Non-current assets | ||
| Property, plant and equipment | 70,703 | 70,793 |
| Inventory - compulsory stock | 1,279 | 1,184 |
| Intangible assets | 3,262 | 3,269 |
| Equity-accounted investments | 4,057 | 4,040 |
| Other investments | 276 | 276 |
| Other financial assets | 1,859 | 1,860 |
| Deferred tax assets | 3,783 | 3,790 |
| Other non-current assets | 1,403 | 1,348 |
| 86,622 | 86,560 | |
| Assets held for sale | 261 | 14 |
| TOTAL ASSETS | 125,203 | 124,545 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities | ||
| Short-term debt | 2,778 | 3,396 |
| Current portion of long-term debt | 4,282 | 3,279 |
| Trade and other payables | 17,063 | 16,703 |
| Income taxes payable | 526 | 426 |
| Other taxes payable | 2,186 | 1,293 |
| Other current liabilities | 1,736 | 2,599 |
| 28,571 | 27,696 | |
| Non-current liabilities | ||
| Long-term debt | 20,225 13,960 |
20,564 13,896 |
| Provisions for contingencies | 862 | 868 |
| Provisions for employee benefits Deferred tax liabilities |
6,569 | 6,667 |
| Other non-current liabilities | 1,740 | 1,768 |
| 43,356 | 43,763 | |
| Liabilities directly associated assets held for sale | 143 | |
| 72,070 | 71,459 | |
| TOTAL LIABILITIES | ||
| SHAREHOLDERS' EQUITY | ||
| Non-controlling interest | 52 | 49 |
| Eni shareholders' equity: | ||
| Share capital | 4,005 | 4,005 |
| Reserve related to the fair value of cash flow hedging derivatives net of tax effect | (41) | 189 |
| Other reserves | 48,733 | 52,329 |
| Treasury shares | (581) | (581) |
| Interim dividend | (1,441) | |
| Net profit (loss) | 965 53,081 |
(1,464) 53,037 |
| Total Eni shareholders' equity | ||
| TOTAL SHAREHOLDERS' EQUITY | 53,133 | 53,086 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 125,203 | 124,545 |
| REVENUES 15,807 18,047 13,344 Net sales from operations 347 485 207 Other income and revenues 18,532 13,551 16,154 Total revenues OPERATING EXPENSES 12,346 13,619 10,651 Purchases, services and other 741 784 808 Payroll and related costs (21) (117) 94 Other operating (expense) income 1,833 1,818 1,965 Depreciation, Depletion and Amortization (656) 20 17 Impairment Losses (Impairment reversals), net 212 144 35 Write-Off 2,111 105 1,640 OPERATING PROFIT (LOSS) FINANCE INCOME (EXPENSE) 1,898 1,326 1,833 Finance income (1,920) (1,498) (2,077) Finance expense 68 1 (37) Income (expense) from other financial activities held for trading (370) 20 146 Derivative financial instruments (324) (151) (135) INCOME (EXPENSE) FROM INVESTMENTS (199) 29 55 Share of profit (loss) of equity-accounted investments (81) 15 (35) Other gain (loss) from investments (280) 44 20 2,004 (10) 1,036 PROFIT (LOSS) BEFORE INCOME TAXES (1,037) (370) (695) Income taxes 967 (380) 341 Net profit (loss) - continuing operations (413) Net profit (loss) - discontinued operations 967 (793) 341 Net profit (loss) Eni's shareholders: 965 (383) 340 - continuing operations (413) - discontinued operations 965 (796) 340 Non controlling interest 2 3 1 - continuing operations - discontinued operations 2 3 1 Net profit (loss) per share attributable to Eni's shareholders (€ per share) 0.09 0.27 (0.22) - basic 0.09 0.27 (0.22) - diluted Net profit (loss) per share - continuing operations attributable to Eni's shareholders (€ per share) 0.09 0.27 (0.11) - basic 0.09 0.27 (0.11) - diluted |
IVQ 16 | (€ million) | IQ 17 | IQ 16 |
|---|---|---|---|---|
| (€ million) | IQ 17 | IQ 16 |
|---|---|---|
| Net profit (loss) | 967 | (793) |
| Items that may be reclassified to profit in later periods | ||
| Currency translation differences | (718) | (1,864) |
| Change in the fair value of cash flow hedging derivatives | (304) | (44) |
| Share of "Other comprehensive income" on equity-accounted entities | 18 | 40 |
| Taxation | 74 | 12 |
| Total other items of comprehensive income (loss) | (930) | (1,856) |
| Total comprehensive income (loss) | 37 | (2,649) |
| attributable to: | ||
| Eni's shareholders | 35 | (2,652) |
| - continuing operations | 35 | (2,239) |
| - discontinued operations | (413) | |
| Non-controlling interest | 2 | 3 |
| - continuing operations | 2 | 3 |
| - discontinued operations |
| 57,409 | |
|---|---|
| (2,649) | |
| (1,872) | |
| (9) | |
| (4,530) | |
| 52,879 | |
| 52,832 | |
| 47 | |
| 53,086 | |
| 37 | |
| 10 | |
| 47 | |
| 53,133 | |
| 53,081 | |
| 52 | |
| IVQ 16 | (€ million) | IQ 17 | IQ 16 |
|---|---|---|---|
| 341 | Net profit (loss) - continuing operations Adjustments to reconcile net profit (loss) to net cash provided by operating activities: |
967 | (380) (*) |
| 1,965 | Depreciation, depletion and amortization | 1,833 | 1,818 |
| (656) | Impairment losses (impairment reversals), net | 20 | 17 |
| 212 | Write-off | 144 | 35 |
| 199 | Share of (profit) loss of equity-accounted investments | (29) | (55) |
| (11) | Gain on disposal of assets, net | (343) | (18) |
| (66) | Dividend income | (11) | (22) |
| (41) | Interest income | (48) | (68) |
| 161 | Interest expense | 168 | 160 |
| 695 | Income taxes | 1,037 | 370 |
| 20 | Other changes | 91 | 70 |
| Changes in working capital: | |||
| (145) | - inventories | (219) | 530 |
| (648) | - trade receivables | (1,501) | (189) |
| 1,827 | - trade payables | 257 | 13 |
| (280) | - provisions for contingencies | 47 | (1,076) |
| 701 | - other assets and liabilities | 492 | 948 |
| 1,455 | Cash flow from changes in working capital | (924) | 226 |
| Net change in the provisions for employee benefits | (3) | 7 | |
| 83 | Dividends received | 4 | 5 |
| 70 | Interest received | 8 | 45 |
| (360) | Interest paid | (184) | (226) |
| (819) | Income taxes paid, net of tax receivables received | (798) | (614) |
| 3,248 | Net cash provided by operating activities | 1,932 | 1,750 |
| Investing activities: | |||
| (2,185) | - tangible assets | (2,727) | (2,441) |
| (65) | - intangible assets | (104) | (14) |
| (6) | - investments | (36) | (1,124) |
| (53) | - securities | (65) | (70) |
| (268) | - financing receivables | (320) | (286) |
| 42 | - change in payables in relation to investments and capitalized depreciation | 495 | (72) |
| (2,535) | Cash flow from investments | (2,757) | (4,007) |
| Disposals: | |||
| 7 | - tangible assets | 557 | 1 |
| - consolidated subsidiaries and businesses net of cash and cash equivalent disposed of |
(426) | ||
| 26 | - investments | 341 | |
| 4 | - securities | 7 | |
| 777 | - financing receivables | 215 | 6,337 |
| 154 | - change in receivables in relation to disposals | (300) | 32 |
| 968 | Cash flow from disposals | 472 | 6,292 |
| (1,567) | Net cash used in investing activities (*) | (2,285) | 2,285 |
(*) From continuing opera tions.
| IVQ 16 | (€ million) | IQ 17 | IQ 16 |
|---|---|---|---|
| 272 | Increase in long-term debt | 753 | 211 |
| (143) | Repayments of long-term debt | (67) | (1,849) |
| (927) | Increase (decrease) in short-term debt | (536) | (2,064) |
| (798) | 150 | (3,702) | |
| (33) | Dividends paid to Eni's shareholders | ||
| (831) | Net cash used in financing activities | 150 | (3,702) |
| (4) | Effect of change in consolidation (inclusion/exclusion of significant/insignificant subsidiaries) |
5 | |
| Effect of cash and cash equivalents relating to discontinued operations | 889 | ||
| 26 | Effect of exchange rate changes on cash and cash equivalents and other changes | (11) | (22) |
| 872 | Net cash flow for the period | (209) | 820 |
| 4,802 | Cash and cash equivalents - beginning of the period (excluding discontinued operations) |
5,674 | 5,209 |
| 5,674 | Cash and cash equivalents - end of the period (excluding discontinued operations) |
5,465 | 6,029 |
(*) Net cash used in investing activities included investments and divestments (on net basis) in held-for-trading financial assets and other investments/divestments in certain short-term financial assets. Due to their nature and the circumstance that they are very liquid, these financial assets are netted against finance debt in determing net borrow ings. Cash flow s of such investments w ere as follow s:
| IVQ 16 | IQ 17 | IQ 16 | |
|---|---|---|---|
| 42 | Net cash flow from financing activities | (160) | 5,987 |
| IVQ 16 | (€ million) | IQ 17 | IQ 16 |
|---|---|---|---|
| Effect of disposals of consolidated subsidiaries and businesses | |||
| Current assets | 6,493 | ||
| 1 | Non-current assets | 8,541 | |
| Net borrowings | (5,390) | ||
| Current and non-current liabilities | (6,303) | ||
| 1 | Net effect of disposals | 3,341 | |
| Current value of residual interests following the loss of control | (1,006) | ||
| (1) | Gains (losses) on disposal | ||
| Non-controlling interest | (1,872) | ||
| Selling price | 463 | ||
| less: | |||
| Cash and cash equivalents disposed of | (889) | ||
| Cash flow on disposals | (426) |
| IVQ 16 | (€ million) | IQ 17 | IQ 16 | % Ch. |
|---|---|---|---|---|
| 1,916 | Exploration & Production | 2,771 | 2,297 | 20.6 |
| - acquisition of proved and unproved properties | 2 | |||
| 45 | - g&g costs | 65 | 55 | 18.2 |
| 134 | - exploration | 199 | 90 | |
| 1,725 | - development | 2,495 | 2,122 | 17.6 |
| 12 | - other expenditure | 12 | 28 | (57.1) |
| 53 | Gas & Power | 19 | 22 | (13.6) |
| 303 | Refining & Marketing and Chemicals | 100 | 85 | 17.6 |
| 184 | ‐ Refining & Marketing | 68 | 49 | 38.8 |
| 119 | ‐ Chemicals | 32 | 36 | (11.1) |
| 26 | Corporate and other activities | 7 | 9 | (22.2) |
| (3) | Impact of unrealized intragroup profit elimination | (1) | 97 | |
| 2,295 | Capital expenditure - continuing operations | 2,896 | 2,510 | 15.4 |
| 45 | Cash out in net cash flow from operating activities | 65 | 55 | 18.2 |
| 2,250 | Cash out in net cash flow from investment activities | 2,831 | 2,455 | 15.3 |
In the first quarter of 2017, capital expenditure amounted to €2,831 million (€2,455 million in the first quarter of 2016) and mainly related to:
development activities (€2,495 million) deployed mainly in Egypt, Angola, Ghana, Iraq, Indonesia and Congo. Exploratory activities (€199 million) concerned mainly Cyprus, Libya, Norway and Egypt;
refining activity in Italy and outside Italy (€55 million) aimed at plants improvement, as well as initiatives in the field of health, security and environment; marketing activity, mainly regulation compliance and stay in business initiatives in the refined product retail network in Italy and in the Rest of Europe (€13 million); - initiatives relating to gas marketing (€14 million) as well as initiatives to improve flexibility and upgrade
combined-cycle power plants (€5 million).
Cash-outs comprised in net cash from operating activities relate to geological and geophysical studies as part of the exploration activities, which are charged to expenses.
| IVQ 16 | IQ 17 | IQ 16 | ||
|---|---|---|---|---|
| 1,856 | Production of oil and natural gas (a) (b) | (kboe/d) | 1,795 | 1,754 |
| 159 | Italy | 154 | 154 | |
| 240 | Rest of Europe | 202 | 190 | |
| 680 | North Africa | 707 | 616 | |
| 334 | Sub-Saharan Africa | 302 | 343 | |
| 133 | Kazakhstan | 142 | 118 | |
| 103 | Rest of Asia | 93 | 132 | |
| 184 | America | 172 | 178 | |
| 23 | Australia and Oceania | 23 | 23 | |
| 161.1 | Production sold (a) | (mmboe) | 151.3 | 151.5 |
| IVQ 16 | IQ 17 | IQ 16 | |
|---|---|---|---|
| 906 | Production of liquids (a) (kbbl/d) |
832 | 890 |
| 67 | Italy | 65 | 61 |
| 140 | Rest of Europe | 107 | 89 |
| 241 | North Africa | 225 | 244 |
| 237 | Sub-Saharan Africa | 215 | 260 |
| 78 | Kazakhstan | 87 | 67 |
| 58 | Rest of Asia | 51 | 81 |
| 82 | America | 79 | 86 |
| 3 | Australia and Oceania | 3 | 2 |
| IVQ 16 | IQ 17 | IQ 16 | ||
|---|---|---|---|---|
| 5,184 | Production of natural gas (a) (b) | (mmcf/d) | 5,254 | 4,718 |
| 504 | Italy | 484 | 511 | |
| 543 | Rest of Europe | 513 | 548 | |
| 2,394 | North Africa | 2,629 | 2,032 | |
| 527 | Sub-Saharan Africa | 479 | 453 | |
| 301 | Kazakhstan | 302 | 279 | |
| 247 | Rest of Asia | 226 | 278 | |
| 555 | America | 509 | 502 | |
| 113 | Australia and Oceania | 112 | 115 |
(a) Includes Eni's share of production of equity-accounted entities.
(b) Includes volumes of gas consumed in operation (476 and 428 mmcf/d in the first quarter 2017 and 2016, respectively and 556 mmcf/d in the fourth quarter 2016).
| IVQ 16 | (bcm) | IQ 17 | IQ 16 | % Ch. |
|---|---|---|---|---|
| 10.25 | ITALY | 10.38 | 10.79 | (3.8) |
| 2.55 | - Wholesalers | 2.96 | 2.26 | 31.0 |
| 2.63 | - Italian exchange for gas and spot markets | 1.77 | 2.90 | (39.0) |
| 1.19 | - Industries | 1.14 | 1.14 | |
| 0.44 | - Medium-sized enterprises and services | 0.36 | 0.66 | (45.5) |
| 0.25 | - Power generation | 0.22 | 0.21 | 4.8 |
| 1.53 | - Residential | 2.34 | 2.09 | 12.0 |
| 1.66 | - Own consumption | 1.59 | 1.53 | 3.9 |
| 13.01 | INTERNATIONAL SALES | 12.90 | 12.50 | 3.2 |
| 11.73 | Rest of Europe | 11.53 | 11.11 | 3.8 |
| 1.15 | - Importers in Italy | 1.04 | 1.13 | (8.0) |
| 10.58 | - European markets | 10.49 | 9.98 | 5.1 |
| 1.52 | Iberian Peninsula | 1.25 | 1.38 | (9.4) |
| 1.84 | Germany/Austria | 1.99 | 1.37 | 45.3 |
| 1.63 | Benelux | 1.57 | 1.94 | (19.1) |
| Hungary | 0.73 | |||
| 0.95 | UK | 0.68 | 0.37 | 83.8 |
| 1.98 | Turkey | 2.18 | 1.59 | 37.1 |
| 2.46 | France | 2.52 | 2.23 | 13.0 |
| 0.20 | Other | 0.30 | 0.37 | (18.9) |
| 1.28 | Rest of World | 1.37 | 1.39 | (1.4) |
| 23.26 | WORLDWIDE GAS SALES | 23.28 | 23.29 | (0.0) |
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