Eni, the new 2024-2027 strategic plan presented
In the 2024-2027 plan Eni's net investments amount to 27 billion (net of cash deriving from portfolio activities) for an annual average of 7 billion, more than 20% lower than last year's plan, thanks to the optimization of spending , to the improving the quality of projects and to the greater contribution of portfolio management. Furthermore, the energy giant expects to achieve 1.8 billion euros of reduction in corporate costs over the period of the Plan, in line with the evolution of Eni's strategy and with the opportunities deriving from the development of the satellite model.
But the market does not reward the six-legged dog. In fact, after the presentation of the plan, Eni slipped to the bottom of the list on Piazza Affari and the stock closed down by 3.04%.
In the 2024-2027 plan of Eni “shareholder remuneration is further enhanced.” Eni intends to distribute “between 30%-35% of the annual Cffo (Cash Flow From Operations, ed.) through dividends and buybacks, an increase compared to the previous 25%-30%”. The proposed dividend for 2024 is equal to 1.00 euros per share, an increase of over 6% and the buyback is set at 1.1 billion euros. In the presence of upside, it is expected to allocate up to 60% of the incremental cash flows compared to the Plan, an increase compared to the previous 35%. Furthermore, the giant plans to generate a cash flow from operations before working capital of approximately 13.5 billion euros in 2024 and 62 billion over the four-year plan, up 30% on a constant scenario.
It is expected that in 2024 Ggp (Global Gas & Lng Portfolio, ed.) will generate 800 million euros of pro-forma Ebit, which reflects the forecasts of reduction in gas prices and lower volatility; in the event of a positive definition of ongoing or expected negotiations, and a recovery in price and market volatility, Ggp could reach a pro-forma Ebit of over 1 billion euros, in relation to the excellent positioning of the activities, which are in able to seize the opportunities arising from a possible return of volatility.
Eni, Descalzi: “Challenges of the transition focusing on growth”
“Let's face them challenges posed by the energy transition with our distinctive strategy of growth and value creation, capable of responding to the needs of security and competitiveness of energy supplies, while achieving the decarbonisation objectives”. This was said by Eni's CEO, Claudio Descalzi, presenting the plan 2024-2027. “We are significantly increasing our cash generation – added the manager – also through the diversification of sources, the reduction of risks and the expansion into new areas of opportunities linked to the transition. To support this, we are enhancing our large portfolio of activities in a disciplined manner, balancing investments with greater returns for shareholders. Thanks to these actions, we are making Eni even more profitable, better diversified and with more solid fundamentals, enhancing remuneration to shareholders. In conclusion, we believe that the energy transition can be achievable if it generates adequate and sustainable returns, and lays the foundations for new and profitable forms of business. And that's exactly what we're doing.”
“Our upstream business will continue to grow and generate significant cash flows – continued the CEO of Eni – with the Cffo per barrel expected to increase by over 30% over the period of the Plan. Natural gas will have a greater weight in our production and we will realize the full margin of the value chain thanks to midstream activities that will increasingly intermediate our equity supplies. E&P (exploration and production) has a competitive advantage ensured by the continuous successes of our exploration activities, which allow the application of the distinctive fast track development model of our projects capable of generating growth and value”. “The businesses linked to the transition energy represent a significant opportunity and will become increasingly relevant, generating greater growth for Eni, in terms of activities and returns”, observed Descalzi.
“Enilive, Plenitude, Ccs and the Novamont/biochemistry activities Taken together, they represent a portfolio of business solutions capable of satisfying the demand for increasingly decarbonised products from our customers. These businesses will become increasingly important cash generation levers and will contribute to diversifying and significantly increasing Eni's value. Enilive and Plenitude have established themselves as relevant businesses in our portfolio; CCS and biochemistry, with Novamont, are rapidly maturing businesses in which we have a leadership position. Each of the businesses linked to the transition is an ideal candidate for our satellite model, which allows us to reduce the financial commitment for growth and explain their market value. Our cash flow from operating activities will grow over the Plan by 30%, with Plenitude and Enilive contributing together over 20% of the growth”, highlighted the manager.
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