Spain: Repsol Q1 Net Income Grows 2.6 Pct

Repsol posted net income of 1.054 billion euros in the first half of 2013, a rise of 2.6% from the year-earlier period calculated at current cost of supply. Calculated based on MIFO criteria, net income was 901 million euros. These earnings are especially significant as the first quarter of 2012 included earnings from YPF.

The improved results are based on a strong performance from all of the company’s business units. Net income from continued operations rose 4.7% to 945 million euros.

The Upstream unit (exploration and production) continued its growth trend and, despite the weak worldwide economic environment, improved earnings by 1.5% following the start-up of new projects that are the result of the exploratory success of previous years.

During the first half, the company started up important projects in Russia and Brazil, meeting the timing and costs targets laid out in the 2012-2016 Strategic Plan.

Additionally, Repsol made relevant discoveries in Alaska, Algeria, Russia and Brazil in the first six months that allowed the company to meet its resources incorporation gaols for the whole year.

The downstream unit (refining, marketing, trading, chemicals and LPG) continued to be affected by the weakness in the Spanish local market which caused a fall in sales volumes and margins at forecourts, which were compensated by increased distillation at refineries.

In the first half of the year the company reinforced its financial strength with the sale of 1.2 billion euros of bonds at what was then the lowest coupon seen amongst Spanish corporates since the start of the Euro.

Additionally, the company surpassed its 2012-2016 divestment goals at the end of February following the agreement to sell to Shell LNG (liquefied natural gas) assets for $6.653 billion. The transaction is expected be complete in the fourth quarter of the year.

In March, Repsol sold treasury shares amounting to five percent of the company’s stock to Temasek of Singapore for 1.036 billion euros. At the Annual General Shareholders’ meeting on May 31, Rene Duhan was appointed board member of Repsol nominated by Temasek, which now owns 6.4% of Repsol’s shares.

At the end of the quarter, the Repsol Group (excluding Gas Natural Fenosa) had significant liquidity and the company’s net financial debt fell 1.112 billion euros from the end of 2012 to 6.320 million euros at the end of the first half of 2013.

On May 31, the AGM voted to continue with the “Repsol Flexible Dividend” formula. This remuneration system allows shareholders to choose between paid up new shares or a payment in cash through the sale to the company of free allocation rights at a guaranteed price. Almost 60% of shareholders chose to receive their dividend in shares from the new share issue carried out to replace the traditional final dividend from 2012 earnings.

In the first half the company made an offer to repurchase its preference shares for 97.5% of their face value in conditions more favorable than those offered in the market. The repurchase offer had an acceptance rate of more than 97%.

[mappress]