Eni Reports 94% Decline in Net Profit During Q1 2020

Eni announced on Monday that its Adjusted net profit dropped by 94% in the first quarter of 2020 to €59 million, a 94% drop compared to the average expectations of the company, which amounted to about €240 million.

The Italian giant reported a net loss of €2.929 billion in Q1 2020. This compares very unfavorably to the €1.092 billion net profit that the company reported in Q1 2019.

Also, the impact of the novel coronavirus (COVID-19), which includes a cut in capital spending, lowered production expectations to about 1.8 million barrels per day from the earlier estimates of 1.84 million bpd.

The company also reported an adjusted operating profit of €1.307 billion in the recent quarter, representing  a 44.48% decline compared to the €2.354 billion in the corresponding quarter of last year.

"The global economy, especially the energy sector, and in particular the oil and gas industry is witnessing a steep plunge, not witnessed in 70 years. The complexity is  greater due to the overlap between the effects of the epidemic and the collapse in oil prices," said CEO Claudio Descalzi.

Descalzi pointed out that the Italian company relies on a safe operating system for its employees and contractors, and in spite of the difficult circumstances, the company will be able to quickly resume its march towards an increasingly profitable and sustainable business model in its latest strategic plans.

On his part, Energy Analyst at RBC Europe Biraj Borkhataria told Bloomberg that the prospects seem disappointing, and pidends in the oil sector seem to be more difficult than other commodity sectors in times of falling prices.

Meantime, investors are wondering whether Eni would be able to maintain pidends given the high debt-to-equity ratio last quarter.

Eni's Stock price ended trading up by 1.87% to €8.40 per share, as its utility arm did much better and provided the firm with the needed stability in the quarter.

It is noteworthy that Eni is an Italian multinational oil and gas company headquartered in Rome. It is considered one of the seven major oil companies in the world, as it operates in 79 countries, and is currently the world's 11th largest industrial company with a market capitalization of more than €68 billion.