Portugal's oil and gas company Galp has seen its profits slump to a 42 million euros loss in 2020.
Galp Energia recorded losses of 42 million euros in 2020, a negative result that compares with the 560 million euros of profit achieved in the previous year, according to information sent this Monday to the Portuguese Securities Market Commission (CMVM). The company revised its outlook for this year and will thus propose a dividend of 35 cents per share to shareholders.
In this period, EBITDA sank 33 percent to 1,570 million euros, “reflecting the impact of the significantly weaker macro conditions resulting from the pandemic,” the company explains in a statement.
“Galp’s results in 2020 reflect the unprecedented challenges created by the Covid-19 global pandemic and the measures taken to address it,” the company further explains in a statement sent to the media.
According to the results, Galp increased investment by 5% in 2020, for a total of 898 million euros (42 million euros more than the previous year) and net debt increased 44% now amounting to 2.06 billion euros. A debt that the oil company justifies with the “544 million euros in dividends paid to shareholders and to minorities during the period, as well as 129 million euros of other effects, mostly related with impacts from the BRL and USD devaluations.”
Following the decision to concentrate refining activities in the Sines complex, discontinuing refining operations in Matosinhos starting in 2021, and according to “current best estimates”, Galp recorded 35 million of restructuring costs, as well as impairments and provisions amounting to 247 million, “all considered as non-recurring events”, for a total after-tax of 200 million. “The company is currently defining a detailed decommissioning plan, as well as assessing alternative uses for the complex.”
For 2021, “Incorporating additional layers of prudency given the uncertain macro circumstances and its potential effects on the company’s operations and results,” Galp expects Brent barrels to stand at 50 dollars and the average euro-dollar exchange rate to be 1.2. The company anticipates producing between 125 and 135 thousand barrels per day and that the use of crude oil at the Sines refinery will be 90%.
For 2021, EBITDA should be around 1.6 or 1.8 billion euros and net investment will be between five and seven million euros. A figure that already includes divestments, namely the 368 million euros related to the sale of its 75.01% stake in Galp Gás Natural Distribuição to Allianz Capital Partners. The transaction is expected to be completed in Q1 2020.
The adjustment of the target for 2021 also implies a downward revision of the dividend. The board of directors will propose a dividend of 35 cents per share for 2020, which represents a 50% reduction compared to the dividend for the previous year, “reflecting the impacts resulting from adverse market conditions,” explains Galp. This dividend will be paid in May.