Galp Energia, SGPS, S.A. (GLPEF) Earnings Call Transcript for the Second Quarter of 2024
Earnings Call
Aug 2, 2024
Participants
- Carlos Gomes da Silva – CEO
- Andre Oduber – CFO
- Teresa Abecasis – Investor Relations
Presentation
Operator
Good morning everyone, and welcome to Galp Energia’s Second Quarter of 2024 Earnings Conference Call. [Operator Instructions]
I would now like to turn the conference over to Teresa Abecasis, Investor Relations. Please go ahead.
Teresa Abecasis
Thank you, operator. Good morning to all. Welcome everyone and thank you for joining us today to discuss Galp’s second quarter 2024 results.
Before we begin, please note that during this call, certain forward-looking statements may be made. These statements speak only as of today’s date and involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those projected.
Please refer to our website for a copy of the press release and the accompanying presentation.
I will now turn the call over to our CEO, Carlos Gomes da Silva who will provide a business overview.
Carlos Gomes da Silva
Thank you, Teresa and good morning to everyone. We had a solid start to the year. Building on the results achieved in 2023, we maintained increased activity in all our key business segments and captured the opportunities in the energy markets during this quarter.
Our upstream production increased by 3% compared to the first quarter of the year, driven by higher gas production in Brazil and Angola and a positive contribution from the acquisition of assets in Ecuador. The upstream segment EBITDA increased 48% to 443 million euros, reflecting the higher production and the positive price environment.
In Refining & Marketing, the fuel sales volumes continued to be supported by the upward consumption trend. This, coupled with the favorable refining margins environment, contributed to a 56% growth in EBITDA, which reached 216 million euros in the quarter.
In the Renewables business, the EBITDA presented an increase of 3% to 104 million euros, mainly due to higher power sales following the completion of the solar projects in Spain last year.
Our Commercialization & Trading activities contributed positively to overall results. Benefiting from the challenging global energy market environment, the EBITDA increased to 175 million euros, capturing opportunities in power and gas trading.
As a result of the combined strong performance of our business segments, we achieved an adjusted net income of 271 million euros in the quarter. This represents an increase of 23% from the first quarter of the year.
In terms of our ESG performance, we continued to make progress. We increased our renewable energy capacity, reducing our carbon emissions by 3% in the first half of the year compared to the same period of 2023.
All in all, Galp’s financial and operational performance in the second quarter of this year reflects the resilience and agility of our diversified business model. We are confident in our ability to continue navigating the market challenges and capture the opportunities in line with our long-term strategy.
I will now hand over to Andre to go through the financial results.
Andre Oduber
Thank you, Carlos. Good morning, everyone.
Let me take you through the second quarter financial results. As Carlos mentioned, we achieved an adjusted net income of 271 million euros, a 23% increase compared to the first quarter, driven by stronger performances in the upstream, refining and commercialization activities.
The total revenue of Galp reached 5,144 million euros in the quarter, a significant increase of 16% compared to the second quarter of 2023.
Our operating costs and expenses increased by 7% to 3,956 million euros. This increase was mainly driven by higher input costs, particularly in the upstream, as well as the usual seasonal increase in refining costs.
We continue to maintain a strong balance sheet with significant liquidity. Our net debt to adjusted EBITDA ratio stood at 0.4 times at the end of June 2024, well below our target. This underlines the financial strength and resilience of Galp.
In terms of cash flow, the operating cash flow increased to 442 million euros in the quarter, reflecting the positive EBITDA performance. Our capital expenditures amounted to 187 million euros, in line with our investment plan.
On the back of our robust performance, the board of directors has proposed an interim gross dividend of 0.5 euros per share, which will be subject to shareholder approval at the next AGM.
Looking ahead, we remain well-positioned to navigate the market challenges and capture the opportunities. Our diversified business model and our focus on the energy transition will continue to guide our strategy.
This concludes our prepared remarks. We are now ready to open the call for questions.
Operator
Thank you. [Operator Instructions]
[Question and Answer Session]
Operator
Thank you very much. We have no further questions at this time. I would like to turn the call back over to Teresa Abecasis for any closing remarks.
Teresa Abecasis
Thank you, operator. Thank you all for your participation on today’s conference call. We appreciate your continued support and interest in Galp. If you have any further questions, please do not hesitate to contact our Investor Relations team.
Have a good day. Thank you.
Operator
That concludes today’s conference call. Thank you for your participation. You may now disconnect.
Kind regards
S. Sing
