Repsol achieved a net profit of 2,341 million euros in 2018, 10% more than the 2,121 million in 2010 and the company's record in the last eight years despite the fact that oil is trading at levels much lower than at that time. Ebitda (gross operating profit) grew 12% to 7,513 million euros. The company improved the benefit despite the extraordinary provisions made in Venezuela and also managed to reduce its net debt by 45% to 3,439 million, as reported to the National Securities Market Commission (CNMV).
"These results reflect Repsol's ability to adapt and innovate - especially after the success of the efficiency program implemented in recent years - as well as its flexibility to incorporate and develop new capabilities," the company said in a statement.
The Upstream business (Exploration and Production) doubled its 2017 result, with 1,325 million euros, driven by the company due to the efficiency measures implemented, the higher volumes and the relative improvement in international prices. The production of hydrocarbons (gas and oil) increased by 3% to 715,000 barrels of oil equivalent per day, supported by the new volumes obtained after the start-up of projects in Algeria, Trinidad and Tobago, the United Kingdom, Malaysia and Peru, for the connection of new wells in Marcellus (USA) and for the acquisition of Visund, in Norway.
On the other hand, the result of downstream (Refining, Chemistry, Marketing, Lubricants, LPG, Trading and Gas, and Repsol Electricity and Gas) reached 1,583 million euros, with a better performance in the areas of Marketing, GLP, and Trading and Gas. The refining margin was in line with that of the previous year.
The good performance of the businesses, together with the sale of the stake in Naturgy Energy Group, affected the reduction of the group's net debt to 3,439 million euros, compared to the 6,267 million registered at the end of 2017, which It is a 45% drop. On the other hand, at the end of December, liquidity amounted to 8,742 million euros.
Extraordinary sanitation in Venezuela
Repsol's profit grows 10% despite some extraordinary negatives, mainly due to the "extraordinary sanitation in Venezuela". The provisions for credit risk in that country are the main item that explains the detriment of 612 million Repsol has signed up in the fourth quarter of the year.
The Spanish companies have reduced the patrimonial risk in Venezuela in their closing accounts of 2018, either by specific provisions, as in the case of Repsol, or by the loss of value of the bolivar, which has depreciated by 99.9% during the year in the midst of the political, social and economic crisis that the country is going through .
Repsol updated its strategy last June after having anticipated two years the achievement of the objectives of the 2016-2020 Plan. The plan is based on three pillars: increasing shareholder finance, profitable growth of Upstream and Downstream, and development of new businesses linked to the energy transition. In that sense, during the year it has taken significant steps in the consolidation of a low-emission business with the purchase in November of the purchase of unregulated assets of low emission electricity generation from Viesgo and its commercializing company, so it has become a relevant player in the Spanish generation market, with a total installed capacity of 2,952 megawatts (MW) and on-going plans that add up to an additional 289 MW.
Also, in the third quarter of the year, the company acquired the Valdesolar photovoltaic project, which includes facilities with a generation capacity of 264 MW in the municipality of Valdecaballeros (Badajoz) and which is in the process of administrative processing. With these additions, Repsol will reach more than 70% of its strategic objective of low emission generation capacity, set for 2025 at 4,500 MW. In addition, in October, financing was agreed for the construction of one of the largest floating wind farms in the world, which will be installed on the coast of Portugal and will have an installed capacity of 25 MW.
On the other hand, the group led by Antonio Brufau is developing a digitalization program throughout the company that will contribute 1 billion in 2022 from new revenues and the optimization of investments and expenses.