Eni reported group results for the fourth quarter and the full year 2015 (unaudited). In the Q4 2015, standalone adjusted operating profit from continuing operations was €0.86 billion, down by 64% from Q4 2014.
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This reflected a lower contribution from the E&P segment (down by €1.17 billion, or 58%) driven by the impact of sharply lower oil prices (down by approximately 43%), partly offset by production growth, cost efficiencies and the depreciation of the euro against the dollar (down 12.3%).
The G&P and R&M segments reported positive adjusted operating profit, albeit lower than in Q4 2014 (down by an overall amount of €0.2 billion) due to the negative oil price environment and, in the case of G&P, the unfavourable outcome of commercial arbitration.
Overall, despite production growth and efficiency gains of €0.7 billion, the low oil price environment had a fundamentally negative effect on the operating performance in Q4 down by €1.9 billion net of currency differences, while lower onetime effects associated with gas contract renegotiations negatively affected operating profit by €0.3 billion.
For the FY 2015, standalone adjusted operating profit from continuing operations was €4.1 billion and it was down by €7.34 billion or 64% y-o-y.
The decrease was driven mainly by the upstream segment which reported sharply lower results (down €7.44 billion, or 64%) due to falling commodity prices, with an impact of €8.8 billion net of currency differences, partially offset by production growth and efficiency and optimization gains of €2.2 billion, while lower onetime effects associated with gas contract renegotiations negatively affected operating profit by €0.7 billion.
In Q4 2015, standalone adjusted net loss from continuing operations was €0.20 billion, down by €0.73 billion from the adjusted net profit of €0.53 billion reported in Q4 2014. The drivers were a decline in operating profit and a higher tax rate.
This latter was due to the E&P tax rate, which was negatively affected by: the recognition of a major part of the positive pre-tax results in PSA contracts, which, although more resilient in a low-price environment, nonetheless bear higher-than-average rates of tax; a higher incidence of non-deductible expenses on the pre-tax profit that has been lowered by the scenario.
Standalone adjusted net profit from continuing operations in the FY 2015 amounted to €0.34 billion, down by €3.52 billion y-o-y, or 91%, due to the same factors mentioned above. The consolidated tax rate increased by 28 percentage points y-o-y to 93%.
Excluding the impact of the higher incidence on pre-tax profit of certain non-deductible expenses in E&P, where this incidence is expected to prospectively come down due to the effect of lower amortization charges going forward as a result of the impairment losses recorded in 2015 driven by the price outlook, and also restating the Group operating profit in accordance with the successful-effort-method accounting of exploration expenses, net of impaired exploration projects, the Group tax rate has been re-determined in 79% and 63% for the FY2015 and FY2014, respectively.
The standalone cash flow from operating activities from continuing operations came in at €12.19 billion in the FY2015 benefiting from the positive effect of working capital.
Non-recurring effects of the working capital positively influenced cash flow by approximately €2.2 billion. Proceeds from disposals were €2.26 billion and comprised the almost entirety available-for-sale shareholding in Snam due to the exercise of the conversion right from bondholders (€0.91 billion), the disposal of an available-for-sale interest in Galp (€0.66 billion), as well as non-strategic assets mainly in the Exploration & Production segment.
These inflows funded a fair amount of the financial requirements for the dividend payments to Eni shareholders (€3.46 billion, of which €1.44 billion related to the interim dividend 2015), capital expenditure for the year (€10.78 billion) and other changes related to capital expenditure (€1.35 billion).
As of December 31, 2015, net borrowings6 increased by €3.18 billion to €16.86 billion compared to December 31 2014, driven by the dividend payments, cash absorbed by the discontinued operations and currency translation effects as well as by the reclassification of Saipem net cash in the discontinued operations.
The board intends to submit a proposal for distributing a dividend of €0.80 per share (€1.12 in 2014) at the Annual Shareholders’ Meeting. Included in this annual payment is €0.40 per share which was paid as interim dividend in September 2015. The balance of €0.40 per share is payable to shareholders on May 25, 2016, the ex-dividend date being May 23, 2016. ■