Repsol posted net income of $1.784 billion (1.327 billion) euros in the first half of the year, an increase of 47% from the year-earlier period.
This reflects a good performance of the company’s businesses as well as the success in securing a compensation agreement for the expropriation of YPF.
Adjusted net income at current cost of supply was 922 million euros, in line with the year-earlier period. The start-up of new production projects, the strength of the downstream businesses and an improved performance from the corporate area made up for the effect on the upstream operations of temporary output halts in Libya.
During the semester, Repsol reached a compensation agreement over the expropriation of YPF and YPF Gas, receiving bonds from the Republic of Argentina which were sold to JPMorgan for almost $5 billion. Repsol also sold its remaining 12.38% stake in YPF for $1.3 billion.
Repsol’s strong performance and its financial solidity were recognised by the international ratings agencies, which raised the company’s credit ratings. In addition, analysts incorporated the company’s potential into their assessments and increased their target price and recommendations on the stock.
Of the analysts that follow the company, 97.6% have hold or buy recommendations on the stock, the highest proportion amongst the largest European oil companies. The company’s average target price rose by 5% in the first half of the year to 21.45 euros per share.
Repsol’s Board of Directors agreed to a proposal made by the Chairman to pay an extraordinary dividend of one euro per share gross to shareholders following the successful recovery of the value of YPF. This remuneration was in addition to the final dividend from 2013 earnings, paid under the Repsol Flexible Dividend formula. In the latter, 75.84% of shareholders agreed to be paid in shares, a demonstration of confidence in the company’s future.
With these payments, Repsol’s dividend-per-share return for the year is above 10% and the highest amongst the Ibex-35 companies.
Shareholder remuneration has been accompanied by a significant reduction in debt. At the end of the first half, net debt declined 55.4% from the end of the previous year to 2.392 billion euros. As the same time, Repsol has 11.195 billion euros in available liquidity.
Press Release, July 24, 2014