Repsol, the Spanish multi-energy company, reiterated its commitment to its shareholder payout target on Thursday, despite reporting a less-than-anticipated decline in second-quarter adjusted profit.
The company’s results were impacted by a significant 175 million euro ($206 million) hit stemming from a massive power blackout in April, alongside a series of other smaller power-supply disruptions that occurred during the period, according to a Reuters report.
This resilience in maintaining shareholder commitments underscores the company’s robust financial management and strategic focus amidst operational challenges.
Blackout affects operations
On April 28, a widespread blackout plunged the Iberian Peninsula into disarray, leading to severe disruptions across multiple sectors.
Cities were gripped by traffic chaos as traffic lights ceased to function, bringing vehicular movement to a standstill.
Thousands of commuters faced significant hardship, finding themselves stranded on trains that halted mid-journey and trapped in elevators that lost power.
The far-reaching consequences of this outage extended to critical industrial infrastructure, significantly impacting Repsol’s operations in the region.
All five of Repsol’s refineries and three of its chemical plants experienced a complete cutoff of power supplies, raising concerns about potential production losses and safety implications.
Several of its facilities experienced disruptions due to external power supply issues on two separate occasions on April 22 and June 16.
These outages likely impacted operations and potentially led to downtime or delays within the affected areas.
Operational disruptions
Following these disruptions, it typically takes between one and two weeks for these facilities to return to full operational capacity.
This extended recovery period directly contributed to a considerable decline in their utilisation ratios during the quarter under review.
The cumulative effect of these events on plant efficiency and output was significant, highlighting the vulnerability of these operations to unforeseen circumstances.
Repsol’s Chief Executive Josu Jon Imaz was quoted in the report:
All businesses, both quarterly and half-yearly, have improved their results, except for Industrial, which was impacted by the general blackout on April 28 in Spain.
The company has officially announced that it is actively exploring potential legal avenues.
This consideration comes as a direct response to the recent outage, and the company’s decision to pursue legal action is contingent upon the formal determination of all parties responsible for the service disruption.
Probe
Repsol emphasised its commitment to holding accountable those found to be at fault once a comprehensive investigation identifies the specific responsibilities associated with the incident.
Spain’s antitrust and energy watchdog is investigating the blackout and has not yet announced when its findings will be released, according to the report.
The company announced an additional share buyback of 350 million euros, bringing the total for the year to 700 million euros, as previously committed.
This year, shareholders are projected to receive 30% to 35% of the company’s operating cash flow, including dividends.
This falls within the higher end of the company’s target range.
Repsol reported a quarterly adjusted profit of 702 million euros, surpassing the company’s average forecast of 500 million euros.
This figure is lower than the 859 million euros recorded in the same period last year.
Net profit for the Spanish group dropped to 237 million euros from 657 million. Additionally, the group announced the sale of its 40% stake in Hecate, a US renewables developer.
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