Galp posts 98% drop in fourth-quarter profit
CEO Andrew Brown warns that the short-term outlook looks challenging and that Galp needs to ‘show prudence’ in its investments
Lisbon — Portuguese oil and gas company Galp Energia cut its dividend payout by half on Monday after reporting a 98% plunge in fourth-quarter net profit as the Covid-19 pandemic took its toll on margins and output.
The company said it would propose a dividend of 35 euro cents ($0.4237) per share for 2020, down from 70 euro cents paid the previous year.
“The dividend cut reflects the impact from unexpected and unprecedented market conditions”, Galp said in a statement, adding that it would target a 2021 payout of 50 euro cents per share.
CEO Andrew Brown warned that the short-term outlook remains challenging and that it needs to “show prudence” in its investments, which range from upstream oil and gas to refining and renewable energy.
“We have to be really clear on which things and which of these sources we're backing, because I don't think we can afford to do everything,” he told a conference call with analysts.
Galp suspended production at its largest refinery in Sines and the smaller Matosinhos plant between April and June. It stopped producing at Matosinhos again in early October ahead of being decommissioned.
The company said production in the fourth quarter fell to 122,800 barrels of oil equivalent per day on a working interest basis, against 136,900 bpd a year earlier.
Its refining margin fell to $1.60 per barrel from $3.30 in the same period in 2019.
Adjusted net profit slumped to €3m from €157m a year earlier, while ebitda fell 37% to €410m.
For the full year, Galp swung to a loss of €42m from a profit of €560m in 2019, while ebitda fell 34% to €1.57bn.
The company said it expects ebitda of between €1.6bn and €1.8bn in 2021.
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