Repsol Reports Lower Profits, Citing Drops in Fossil Fuel Prices and Reduced Refining Margins

In the first quarter of 2023, Repsol, the largest Spanish oil company, reported a net profit of 969 million euros. This was a decrease of 12.9% compared to the same period in 2023. The adjusted result, which measures operating performance, was 1,267 million euros. This decline is attributed to the drop in fossil fuel prices, particularly natural gas, and lower refining margins.

Repsol’s shares fell around 2% on the Ibex 35 index as a result of these financial challenges. Despite this increase in leverage, liquidity remains strong at 10,332 million euros, covering nearly four times all short-term debt maturities.

The business segments within Repsol showed heterogeneity in their financial performance. The exploration and production of crude oil and gas recorded a profit of 442 million euros but was lower due to various factors including the price of gas and recent divestments. The industrial area saw a significant drop in profits to 731 million euros mainly due to refining margin reductions. The client segment achieved an adjusted profit of 156 million euros but this was slightly lower than before. Low-carbon generation and corporations also recorded negative figures amid challenges in the wholesale electricity market in Spain.

Repsol increased investments in the first quarter to 2,129 million euros with renewables receiving half of this amount. The company has committed to investing between 16,000 and 19,000 million between 2022 and 2027 with most allocated to the Iberian Peninsula. In addition to investments, Repsol recently distributed dividends to shareholders and began a share buyback program which enhances indirect remuneration for investors and supports its financial strategy amidst changing market conditions.

Overall Repsol’s financial performance continues to face challenges due to external factors such as fluctuations in fossil fuel prices but it is committed to increasing investments into renewable energy sources while maintaining liquidity levels strong enough cover short-term debt maturities