As for the renewables and new businesses segment, it recorded EBITDA of €35 million, reflecting higher renewable power generation year-on-year, as a result of the increase in installed capacity.
Galp Energia made a profit of €250 million in the first quarter of 2023, 62% higher than the 155 million in the same period last year, compared with €273 million in the previous quarter.
In a statement sent to the Portuguese Securities Market Commission (CMVM), the oil company said the quarter’s net profit on an adjusted basis (‘RCA’, excluding non-recurring events and the stock effect) “reflects taxes of €389 million, including €14 million related to the Brazilian temporary tax on oil exports and €46 million from the Iberian windfall tax”, applied to excess profits.
“Galp’s first quarter results reflect a strong operating performance, namely in [the] ‘industrial & midstream’ segment and in commercial activities. The generation of free cash flow was robust, at €352 million, allowing a reduction in net debt in the period by €214 million,” it notes.
At the end of the first quarter, Galp’s net debt was €1.34 billion, 44% down on the same period last year, and net debt over adjusted EBITDA was 0.4 times.
From January to March, EBITDA (earnings before interest, taxes, depreciation and amortisation) on an adjusted basis rose 1% year-on-year to €864 million, “supported by the robust performance of all business units”.
Adjusted operating cash flow fell 43% to €363 million, “reflecting a high concentration of tax payments (phasing effect) related to upstream activities in Brazil”.
Adjusted EBIT (operating profit) rose 25% to €674 million, reflecting the reduction of depreciation and amortisation resulting from the exclusion of upstream assets in Angola and the fact that the first quarter of 2022 includes an impairment of €120 million related to the exploration and evaluation of assets in Brazil.
In the exploration and production area (‘upstream’), Galp’s EBITDA fell 32% year-on-year to €548 million, “reflecting the sale of Angolan assets, less favourable oil prices and the negative contribution of the Coral Sul [project] in Mozambique, which is still in the commissioning phase”.
As for the renewables and new businesses segment, it recorded EBITDA of €35 million, reflecting higher renewable power generation year-on-year, as a result of the increase in installed capacity (to a total of 1.4 GW-gigawatts) and the 100% contribution from Titan Solar.
“Renewable energy generation totalled 448 GWh [gigawatt hours], more than doubling compared to the same period of the previous year,” Galp points out.
In the industrial and energy management area (industrial & ‘midstream’, where refining is included), adjusted EBITDA was €235 million, “supported by the contribution of industrial activities” and “despite the increase in costs due to planned maintenance activities”.
According to Galp, “the strong performance of ‘midstream’ activities benefited from the greater flexibility given by the more limited pre-sale and ‘pre-hedged’ contracts, despite the reduction in volumes and lower natural gas prices in Europe”.
From January to March, the company’s refining margin increased to $14.3 per barrel compared to $4.8 in the first quarter of 2022 and $13.5 in the last quarter of last year.
In the commercial area, meanwhile, EBITDA increased 26% year-on-year to €71 million, “supported by an overall recovery in oil volumes, namely in the B2B [business to business] aviation segment, which is already close to pre-pandemic levels”.
Overall, Galp’s sales totalled €5,146 million in the first quarter, down 9% compared to the same period in 2022, and the cost of goods sold fell 17% to €3.57 billion.
For the full year 2023, Galp expects to reach an adjusted EBITDA of €3.2 billion and anticipates an average Brent oil price of $85 per barrel, a refining margin of $9 per barrel and an average natural gas price in the Iberian market of €60 per MWh.