Italy's Eni to boost buyback after Q3 profit beats expectations

By Francesca Landini

MILAN (Reuters) -Italian energy group Eni will increase its share buyback programme by 25% to 2 billion euros ($2.2 billion), it said on Friday, after beating third-quarter profit expectations.

It reported an adjusted net profit of 1.27 billion euros, topping the 1.08 billion expected by analysts in a poll compiled by the company but down from 1.82 billion last year.

The state-controlled group had indicated in July that it could raise the 1.6-billion-euro programme to up 2.1 billion if the macroeconomic situation improved.

Despite lower oil price expectations, Eni said that it would increase rewards for investors as progress on its disposal plan and cost controls was helping it keep debt in check.

Analysts have warned that a drop in oil prices after more than two years of bumper profits could push big energy companies to borrow to maintain shareholder payouts or force them to cut buybacks.

Eni announced on Thursday that U.S. fund KKR would buy a 25% stake in its biofuel business Enilive for 2.9 billion euros, continuing efforts to spin off growth businesses to fund its energy transition.

Citi analysts said the third-quarter beat was mainly driven by positive gas trading results, an improved performance at the group's downstream business and lower upstream tax.

Its gas and LNG division recorded a proforma adjusted operating profit of 250 million euros.

The chemicals business again incurred a loss and Eni pledged to invest 2 billion euros in the next five years to overhaul and decarbonise the business.

LOWER OIL PRICES

With Eni expecting the Brent crude oil price to drop to an average of $83 a barrel this year, down from a previous estimate of $86, the company trimmed its full-year guidance for underlying cashflow from operations and operating profit.

Third-quarter underlying cashflow from operations (CFFO) at 2.9 billion euros was in line with consensus.

The group's leverage ratio, which measures total debt in relation to equity, was stable compared with the second quarter at 22%. It is now expected to fall towards the lower end of a 15%-20% range on a proforma basis.

The four-year disposal plan is proceeding faster than expected with excellent visibility for almost all the 8 billion euros in net proceeds planned, Eni said in a statement.

The group could soon agree to sell a stake in one of its recent upstream discoveries, it added, without elaborating.

($1 = 0.9238 euros)

(Reporting by Francesca Landini; editing by David Goodman and Jason Neely)