Italy's Eni says strong gas business to support 2023 results

By Francesca Landini

MILAN (Reuters) - Positive expectations for Eni's gas division are supporting the 2023 outlook, CFO Francesco Gattei said on Friday, after the Italian energy group's first-quarter profit declined, but exceeded expectations.

Eni's adjusted net profit in the first three months fell 11% year-on-year to 2.91 billion euros ($3.2 billion), but was above analysts' consensus forecasts of 2.31 billion euros.

Profit was hurt by falling oil prices, with Brent crude down 20% so far this year compared to the first quarter of 2022, when Russia's invasion of Ukraine unsettled energy markets.

However, Eni said its gas and liquefied natural gas division (GGP) would remain strong after reporting earnings before interest and taxes (EBIT) that were nearly double analysts' estimates for the first quarter. The unit's performance is more related to the spread between the gas price in Italy and the rest of Europe than on the retail price in Italy itself, which fell 42%.

"We currently see full-year EBIT for GGP exceeding 2 billion euros," Gattei said during a call with analysts.

First-quarter results were also supported by a rise in hydrocarbons production and a solid performance at the refining and biofuel business.

However, Eni trimmed its overall forecast for the year on a stronger euro, lower gas price and a higher refining margin. It now expects its full-year EBIT at 12 billion euros versus a previous guidance of 13 billion euros.

Bernstein analysts supported Eni's view that the underlying performance was actually healthier than previously expected.

"Adjusting for their refining, European gas and FX updated planning prices, then EBIT guidance would have been down by 2.2 billion (euros). Hence, this is a material 1.2 billion underlying EBIT raise," Bernstein said. It has an "Outperform" rating on the stock.

The group also cut the expectation on 2023 capital expenditures to around 9.2 billion euros from 9.5 billion euros.

Separately Eni's chemicals division Versalis said it agreed to acquire the majority share of Italian chemicals group Novamont it does not already own.

Versalis, which was advised by UniCredit, did not disclose financial terms of the deal.

($1 = 0.9084 euros)

(Reporting by Francesca Landini; Editing by Kenneth Maxwell, Keith Weir, Alvise Armellini and Sharon Singleton)