MOSCOW (MRC) -- Italian energy group Eni is planning to spin off a minority stake in its new retail and renewable business next year, after announcing first quarter profits that missed expectations, reported Reuters.
Several European energy companies, including Spain's Repsol , aim to divest parts of their renewables business to raise money to reduce debt and pay for the shift away from oil and gas. Eni said it planned to list or sell a minority stake in the business that includes renewable energy and retail energy sales next year.
Analysts at Jefferies said the business, which has 10 million customers and plans to grow green power generation to over 5 gigawatts (GW) by 2025, could be worth EUR9 billion (USD10.89 billion) including debt. Eni expects the new unit to almost double its core earnings, or EBITDA, by 2024 to EUR1 billion.
"The combination of these two entities clearly could move the vehicle to the range of a double-digit multiple (to EBITDA)," CFO Francesco Gattei said on a call with analysts.
In the first quarter, Eni's adjusted net profit jumped almost five times to 270 million euros (USD327 million) as firmer oil prices offset lower production. The result was below an analyst consensus of about EUR440 million, in part due to a weaker performance in gas and refining margins. Cash flow from operations fell 12% to EUR1.6 billion.
Pandemic lockdowns throttled fuel demand last year prompting energy groups like Eni to rein in investments and returns. But Europe's energy companies this year have posted increased earnings boosted by higher oil prices as demand starts to pick up.
The group said it was looking for acquisitions to grow its green business to reach 4 GW of renewable capacity by 2024 from 1 GW this year, with a focus on the US and southern Europe. In 2021 the company expects to make disposals worth around EUR500 million while buying assets worth EUR1 billion.
As MRC wrote previously, Italian energy group Eni is evaluating conversion of its Livorno refinery in northwest Italy into a biorefinery, as part of the Italian company's wider strategy to make its activities more environmentally sustainable. Eni has already converted two of its Italian refineries and is looking to almost double its biorefining capacity to around 2 million mt/year by 2024, and expand this to at least five times by 2050, as part of its pledge to achieve complete carbon neutrality by 2050.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 576,270 tonnes in the first three month of 2021, up by 4% year on year. Low density polyethylene (LDPE) and high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers increased.
Eni, abbreviation of Ente Nazionale Idrocarburi, in full Eni SpA, Italian energy company operating primarily in petroleum, natural gas, and petrochemicals. Established in 1953, it is one of Europe's largest oil companies in terms of sales.