REPSOL: 4Q'19 TRADING STATEMENT WITH NO RECOVERY IN REFINING MARGIN (ANÃLISIS BANCO SABADELL)
4Q’19 Trading statement with refining margin below expectations: US$ 5.60 vs. >US$ 6 BS(e). BUYWe understand that the margin has stagnated at 3Q’19 levels (US$ 5.50) and has not improved due to the lower distillation capacity (85.7% on the quarter vs. 89.5% in 3Q’19) stemming from the longer stoppages (in order to take advantage of the higher margins in 2020). As a result, this would mean expecting adjusted consolidated Net Profit’19 of € 2.23 Bn, which is -5% below our estimate and -3.5% below the consensus. We believe that following the stock’s strong correction (-10% vs. the IBEX and -7% vs. the sector in 3 months), this lower Net Profit level is more than priced in, as the 2020 outlook changes radically with the IMO coming into effect. We expect Net Profit’20 to grow +8% vs. +16% consensus (significantly more optimistic than we are).
Repsol is an oil and gas company. Co. is engaged in all the activities relating to the oil and gas industry, including exploration, development and production of crude oil and natural gas, transportation of oil products, liquefied petroleum gas (LPG) and natural gas, refining, the production of a wide range of oil products and the retailing of oil products, oil derivatives, petrochemicals, LPG and natural gas, as well as the generation, transportation, distribution and supply of electricity. Co. operates in more than 40 countries. Co.'s operations are divided into four segments: Upstream, Downstream, LNG and Gas Natural Fenosa.
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