Financial results
In 2009 adjusted net profit was €2,916 million, increasing by €268 million from 2008 (up 10.1%) due to the positive performance recorded by the Marketing business. An improved scenario for energy parameters, the full contribution of the acquisition of Distrigas in terms of integration synergies and improved performance, as well as the impact of the renegotiation of long-term supply contracts, were the main positive drivers of the year. These positives were partly offset by lower sales volumes, mainly on the Italian market. Regulated Businesses in Italy recorded steady results. The International transport business reported weaker results.
Return on average capital employed (ROACE) on an adjusted basis was 12.3% (12.2% in 2008).
Capital expenditures totalled €1,686 million and mainly related to the development and upgrading of Eni’s transport and distribution networks in Italy, the upgrading of storage capacity and the ongoing plan for improving power generation efficiency standards.
Operating results
Key performance indicatorsIn 2009 Eni’s natural gas sales (103.72 bcm) were slightly down as a result of offsetting trends. On the negative side, volumes supplied to the Italian market were materially lower from a year ago against the backdrop of the economic downturn and stronger competitive pressures (down 12.83 bcm, or 24.3%). On the plus side, volumes gains were associated with the full contribution of the Distrigas acquisition (up 12.02 bcm for the full year) and organic growth achieved in a number of European markets.
Electricity volumes sold were 33.96 TWh, increasing by 4.03 TWh, or 13.5%, from 2008.
Natural gas volumes transported on the Italian network were 76.90 bcm, down 10.2% from 2008.
On February 4, 2009, Eni has formally presented to the European Commission a set of structural remedies relating to certain international gas pipelines. With prior agreement from its partners, Eni has committed to dispose of its interests in the German TENP, in the Swiss Transitgas and in the Austrian TAG gas pipelines. The European Commission intends to submit these remedies to a market test. In case the Commission approves those remedies upon conclusion of the market test, Eni will be in the position to resolve an inquiry started in May 2006 for alleged infringements of the European antitrust regulations in the gas sector, which involved the main players in the European gas market. Eni received a statement of objections from the European Commission which alleged that during the 2000-2005 period Eni was responsible for limiting the access of third parties to the gas pipelines TAG, TENP and Transitgas, thus restricting gas availability in Italy. Given the strategic importance of the Austrian TAG pipeline, which transports gas from Russia to Italy, Eni has negotiated a solution with the Commission which calls for the transfer of its stake to an entity controlled by the Italian State. The remedies negotiated with the Commission do not affect Eni’s contractual gas transport rights. For further details on this topic see note “Guarantees, commitments and risks‘ to the Consolidated Financial Statements.
In 2009, the mandatory tender offer on the minorities of Distrigas was finalized and Distrigas shares have been delisted from Euronext Brussels. Thanks to the achievement of synergies on integration, the Distrigas acquisition represented for Eni a remarkable result in strengthening its leadership in the European gas market.
Notwithstanding the unfavorable trends in natural gas demand, in 2009 Eni achieved organic growth outside Italy, increasing market shares in a number of European gas markets. This increase, coupled with the full contribution of Distrigas sales, determined a change in natural gas sales portfolio with international sales at 63.68 bcm representing 61% of total sales (49% in 2008).
Reorganization of regulated businesses in the Italian gas sector
In 2009 the reorganization of gas infrastructures was concluded through the sale of Italgas SpA and Stoccaggi Gas Italia SpA (Stogit) to Snam Rete Gas. The transaction is expected to create significant synergies in the segment of regulated businesses allowing Eni to maximize the value of both gas distribution and storage activities and to strengthen the financial soundness of the Group’s capital structure.
Strategic partnership with Gazprom
The strategic partnership between Eni and Gazprom, leading world natural gas producer, celebrated its 40th year of activity in 2009. The partners plan to proceed with the joint development of projects in the sectors of upstream and natural gas markets. In particular, concerning the gas business, Eni and Gazprom have agreed upon a new scope of work in the development project of the South Stream pipeline, aimed at increasing its transport capacity from an original amount of 31 bcm/y to 63 bcm/y.
In order to strengthen its European leadership in the storage business, Eni continued pre-development activities for a project to build an offshore storage facility in the Hewett area, near the Bacton terminal (North Sea basin). Eni targets to develop storage capacity in order to support the seasonal swings of gas demand in the United Kingdom. The project sanction is expected at some point in 2010, with start up in 2015.
| Key performance indicators (a) | 2007 | 2008 | 2009 | |
| Net sales from operations (b) | (€ million) | 27,793 | 37,062 | 30,447 |
| Operating profit | 4,465 | 4,030 | 3,687 | |
| Adjusted operating profit | 4,414 | 3,564 | 3,901 | |
| Market | 2,284 | 1,309 | 1,721 | |
| Regulated businesses in Italy | 1,685 | 1,732 | 1,796 | |
| International transport | 445 | 523 | 384 | |
| Adjusted net profit | 3,127 | 2,648 | 2,916 | |
| EBITDA pro-forma adjusted (b) | 5,029 | 4,310 | 4,403 | |
| Market | 3,061 | 2,271 | 2,392 | |
| Regulated businesses in Italy | 1,248 | 1,284 | 1,345 | |
| International transport | 720 | 755 | 666 | |
| Capital expenditures | 1,511 | 2,058 | 1,686 | |
| Adjusted capital employed, net at year end (c) | 21,364 | 22,273 | 25,024 | |
| Adjusted ROACE (c) | (%) | 15.2 | 12.2 | 12.3 |
| Worldwide gas sales (d) | (bcm) | 98.96 | 104.23 | 103.72 |
| LNG sales (e) | 11.7 | 12.0 | 12.9 | |
| Customers in Italy | (million) | 6.61 | 6.63 | 6.88 |
| Gas volumes transported in Italy | (bcm) | 83.28 | 85.64 | 76.90 |
| Electricity sold | (TWh) | 33.19 | 29.93 | 33.96 |
| Employees at year end | (units) | 11,893 | 11,692 | 11,404 |
(a) From January 1, 2009, results of the gas storage business are reported within the Gas & Power segment reporting unit, within the regulated businesses results, following restructuring of Eni regulated gas businesses in Italy. As of that date, the results of the regulated businesses in Italy therefore include results of the Transport, Distribution, Regasification and Storage activities in Italy. Results of the power generation activity are reported within the marketing business as it is ancillary to the latter. Prior period results have been restated accordingly.
(b) Before the elimination of intragroup sales.
(c) For a detailed explanation of adjusted capital employed and adjusted ROACE, see paragraph “Return On Average Capital Employed (ROACE)‘.
(d) Include volumes marketed by the Exploration & Production division of 6.17 bcm (5.39 and 6.00 bcm in 2007 and 2008, respectively), of which 2.57 bcm in Europe (3.59 and 3.36 bcm in 2007 and 2008, respectively) and in the Gulf of Mexico (1.80 bcm and 2.84 bcm in 2007 and 2008, respectively).
(e) Refer to LNG sales of the G&P division (included in worldwide gas sales) and the E&P division.
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Last updated on 16/04/10