Spanish Repsol Raises Austerity Targets to Combat Losses

Spanish producer Repsol reported October 29 a nine-month loss of €2.578 ($3.02)bn as it cut the value of its its upstream assets (€1.7bn) and the value of its inventories (€1.048bn).

Following success in its earlier austerity measures year to date it is now raising its January 2020 planned savings for this year's operating costs to €500mn for the year, up from €350mn at the end of Q3; cutting investments to €1.2bn; and raising working capital optimisation to nearly €700mn, up from January's planned €400mn. 

But the company managed a modest adjusted net income for Q3 of €7mn, versus a Q2 loss of €258mn. "This was achieved in a context of extreme difficulty and one in which the supply of services essential to society was given priority," it said.

Strong cash flow generation in the period and a positive operating cash flow in all businesses, totalling €2.122bn in the first nine months of the year showed Repsol's "robustness even in an extremely complex scenario of depressed raw material prices and unusually low demand.”

Upstream obtained a neutral operating result and generate €1.308bn of operating cash flow, despite the very adverse global context. It also reduced the production of certain assets, which, together with the shutdowns in Libya, placed average production for the January-September period at 655,300 barrels of oil equivalent/day.

At the close of the third quarter, net debt has fallen by €882mn this year to €3.338bn and Repsol has issued bonds totalling €3.850bn, saying these were oversubscribed. Its electricity and gas unit now has more than 1.1mn customers.