Galp Energia SGPS (GALP) Q3 2024 earnings summary

Executive summary

• Delivered robust Q3 2024 results and strong operational momentum despite less favorable refining and commodity prices, positioning for a strong year-end balance sheet.

• Key projects in downstream, industrial (green hydrogen, SAF), and upstream (Bacalhau, Namibia) are progressing well, with Bacalhau FPSO sail away scheduled and Namibia appraisal underway.

• Integration and convenience initiatives supported value chain performance, with 65% of stores revamped and record sales in non-fuel retail.

• Leadership transition in investor relations, with Otelo Ruivo moving to CFO of renewables and João Pereira taking over IR responsibilities.

• Net debt increased to €1.5bn, reflecting dividend payments and share buybacks, but remains stable versus year-end 2023.

Financial highlights

• RCA EBITDA reached €820m in 3Q24; nine-month RCA EBITDA was €2,609m; OCF at €540m; net capex at €229m for the quarter.

• 3Q24 turnover was €5,610m, up 4% YoY; nine-month turnover reached €16,405m, up 5% YoY.

• RCA net income for 3Q24 was €299m, up from €210m in 3Q23; nine-month RCA net income rose 24% YoY to €890m.

• Free cash flow for nine months was €1,032m; net capex for the period was €290m.

• Net debt to EBITDA at 0.48x as of September 2024, reflecting a strong balance sheet.

Outlook and guidance

• Confident in beating full-year 2024 guidance, with robust project execution across segments and FY24 guidance: RCA EBITDA > €3.1bn, OCF > €2.0bn, net capex < €1.0bn.

• CapEx guidance of €1B/year over three years remains, but actual spend expected to be below this due to Mozambique divestment timing.

• Brent price assumption at $80/bbl, Galp refining margin at $8/boe, Iberian PVB gas price at €30/MWh.

• Forward-looking guidance to be updated after key developments, but no specific date provided.

• Refining margins expected to remain under pressure in 2025 due to global economic uncertainty and increased exports from China and Nigeria.