Italy's Eni beats expectations in Q4

The energy company has slashed its investments to offset fallout from the pandemic

In 2020, Eni reported a loss of $900.7 million compared to a $3.5 billion profit in 2019. Reuters

Italian energy group Eni's fortunes improved in the final quarter of the year on firmer oil prices after "a year like no other" sent full-year profit tumbling.

Adjusted net profit in the fourth quarter was €0.66 billion ($798 million), down 88 per cent on the year but beating analyst expectations for a loss of €0.04bn.

For the full year, it reported a loss of €742m compared to a €2.9bn profit in 2019 after what Eni chief executive Claudio Descalzi said had been "a year like no other in the history of the energy industry".

The unprecedented fall in demand triggered by the Covid-19 pandemic led bigger European rivals Shell and BP and US majors Exxon Mobil and Chevron to report heavy losses for the year.

Eni shares fell sharply last year, hitting their lowest in a quarter of a century as the health pandemic shook oil markets.

In the fourth quarter, production fell 11 per cent to 1.713 million barrels of oil equivalent per day but the company said full-year production was in line with the target.

Like its rivals, Eni has slashed its investments to offset fallout from the pandemic and spent 35 per cent less last year at €5bn.

Adjusted cash flow for the year fell to €6.7bn compared to guidance for €11.5bn at a Brent oil price of $60 per barrel.

"Through leveraging the actions we put in place, our 2020 adjusted cash flow ... was able to finance our capex," Mr Descalzi said.

The company, which said it was well equipped to deal with an uncertain trading environment this year with liquidity of around €20.4bn, confirmed its 2020 dividend of €0.36 a share.

In a note Royal Bank of Canada said Eni remained one of the more leveraged names among the integrated oil companies.

"We see Eni's aggressive strategy around the energy transition posing risks to shareholders over time," it said.

Eni, like other European peers, is cleaning up its business as investors crank up pressure on the oil and gas sector to fight climate change.