In the first quarter of 2023, Repsol, the largest Spanish oil company, reported a net profit of 969 million euros. While this was a decrease of only 12.9% compared to the same period in 2022, it was still a significant decline. The adjusted result, which measures operating performance, was even lower at 1,267 million euros, representing a drop of over 33%.
The decline in profits can be attributed to several factors, including the drop in fossil fuel prices, particularly natural gas. Lower refining margins also played a role in Repsol’s financial performance. Despite this increase in leverage, liquidity remains strong at 10,332 million euros, covering nearly four times all short-term debt maturities.
Repsol’s business segments 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 than before due to various factors such as 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. On the other hand, the client segment involving fuel and electricity marketing achieved an adjusted profit of 156 million euros but was slightly lower than before. Low-carbon generation and corporations also recorded negative figures amid challenges in the wholesale electricity market in Spain.
In terms of investments, Repsol increased its spending to 2,129 million euros in the first quarter 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. Additionally, Repsol recently distributed dividends to shareholders and began a share buyback program that will enhance indirect remuneration for investors and support its financial strategy amid changing market conditions.
Overall Repsol’s first-quarter financial report shows that despite some challenges such as declining fossil fuel prices and lower refining margins ,the company’s liquidity remains strong . As they continue their investments towards low carbon energy sources ,Repsol is well positioned for future growth while maintaining its financial stability .