Eni (E.US) beats Q3 earnings expectations, share buyback to increase by 25% to €2 billion

Italian energy group Eni (E.US) said on Friday it would increase its share buyback plan by 25% to 2 billion euros ($2.2 billion) after its third-quarter profit beat expectations.

The company reported an adjusted net profit of 1.27 billion euros in the third quarter, above analysts' expectations of 1.08 billion euros but below the 1.82 billion euros recorded a year ago.

Eni had said in July it might increase its 1.6 billion euros buyback plan to 2.1 billion euros if the macroeconomic outlook improved.

Despite the expected downward trend in oil prices, Eni said it would raise its return to investors as it controlled its debt through the progress of its disposal plans and cost control.

Analysts had warned that falling oil prices could force large energy companies to borrow to maintain shareholder dividends or force them to cut buybacks after two years of fat profits.

Eni on Thursday said it would sell a 25% stake in its Enilive biofuel business to US fund Kkr for 2.9 billion euros, as it continued its efforts to spin off its growth businesses to fund its energy transition.

Citi analysts said Eni's third-quarter results beat expectations mainly due to strong gas trading performance, improved downstream business and lower tax rate in its upstream business.

The company's adjusted operating profit in its gas and LNG division was 250 million euros.

The chemicals business again posted a loss, and Eni pledged to invest 2 billion euros over the next five years to overhaul and decarbonise the business.

Eni expects the average price of Brent crude oil this year to fall to $83 per barrel, down from its previous estimate of $86, and has therefore cut its full-year operating cash flow and operating profit expectations.

Operating cash flow from continuing operations was 2.9 billion euros in the third quarter, in line with market expectations.

The group's leverage ratio (a measure of total debt to equity) was stable at 22% compared with the second quarter, and Eni currently expects it to fall to the lower end of the 15%-20% range.

Eni said its disposal plan, which runs for four years, was progressing faster than expected, with almost all of the 8 billion euros of net proceeds expected to be highly predictable.

Eni also said it may sell a stake in a recently discovered oilfield, but did not give details.

Eni shares were up 0.39% before the market opened. The stock has fallen nearly 5% this year.