EUR 100.00 For Business Accounts Only

IBERIAN DAILY 31 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: IBERDROLA, REPSOL.


A negative week for stock markets
European stock markets fell around -1% after a week marked by tariffs once more. Along with the FTSE 100, the Ibex was the European index that endured the corrections better, remaining above 13,300 points. Thus, in the STOXX 600, most sectors (14/20) ended with drops last week, led by Technology and Autos vs. the bigger gains of Utilities and Insurance. On the macro side, in the euro zone March’s economic confidence index fell, as opposed to expectations. In Germany, March’s unemployment rate climbed one tenth more than expected to 6.3%. In the US, February’s core consumption deflator rose above expectations and February’s personal outlays increased less than expected. In Japan, February’s retail sales and industrial output rose more than expected. In China, March’s manufacturing and non-manufacturing PMI climbed more than expected. On the geopolitical front, D. Trump would be studying the possibility of toughening restrictions on Russian crude oil in view of Putin’s refusal to negotiate.
What we expect for today
Stock markets would open with drops of up to -1.0% in view of the imminent tariffs this week. Currently, S&P futures are down -0.7% (the S&P 500 ended -0.12% lower vs. the European closing bell). Asian markets are falling (China’s CSI 300 -0.85% and Japan’s Nikkei -3.97%).
Today in Germany we will learn February’s retail sales and March’s inflation and in the US March’s Chicago PMI.


COMPANY NEWS

REPSOL, OVERWEIGHT
Yesterday Donald Trump notified the partners of PDVSA (Venezuelan State Oil Company), among them REP, that he was cancelling their permits to export crude oil and derivatives from Venezuela, giving them until 27 May to liquidate their operations. However, the official US organisation in charge of putting this measure into force has not yet made the decision officially public.
Negative news, although of little impact, as it would not jeopardise the current buyback plan under way. Over the last few years REP has reduced its exposure to Venezuela (€ 504 M, 3.5% of market cap), as well as its debt with PDVSA (€ 369 M not provisioned, 7.8% of NFD’24). At the same time, cash generation from production in Venezuela (~40/50 kboe/day vs. 575 kboe/day in 2024) is very low (€~150 M annual average), and the sanction starting in June could have an impact of around € -90 M on cash flows (around -1.5% of the CFFO’25e guidance of € 6.0-6.5 Bn). With this sanction, REP will minimise gas production (as it does not generate cash), but also capex.