Portugal's Galp sees tougher year ahead after profit drop

By Sergio Goncalves

LISBON (Reuters) -Portugal's Galp Energia expects a weaker performance this year, it said on Monday, after reporting a lower than expected fourth-quarter core profit due to reduced oil output and falling crude prices.

Co-CEO Maria Joao Carioca said planned maintenance in upstream and refining, as well as a tougher than anticipated global economy, were likely to result in adjusted core earnings or EBITDA above 2.5 billion euros ($2.6 billion).

That first full-year forecast for 2025 compares with 3.3 billion euros in 2024, which was a 7% drop from 2023.

In the fourth quarter, EBITDA fell by 4% to 688 million euros, below the average of 715 million euros expected by 20 analysts polled by Galp.

Galp shares reversed early gains, supported by a proposed 15% dividend increase to 0.62 euros a share and a 250 million euro share buyback, to be down 4% on the day.

Jefferies analysts said in a research note that, despite "the larger-than-expected dividend increase, the weak fourth quarter and outlook for 2025 will drive downgrades".

Galp's oil and gas production fell 13% year-on-year to 110,000 barrels of oil equivalent per day, and the company expects a further drop towards 105,000 boepd this year due to one-off maintenance.

Quarterly adjusted net profit fell 75% to 71 million euros, well short of an estimated 171 million euros, while the full-year net profit fell 16% to 1.04 billion euros.

Still, at Galp's refining business, a drop in margins to $5.2 a barrel from $6.1 a year ago was more than offset by higher production, with the unit's EBITDA nearly tripling to 182 million euros in the last quarter of 2024.

Galp expects to trim net capex to below 800 million euros from 832 million last year, Carioca said.

Part of the planned capex will fund exploration work in Namibia, where Galp estimated the Mopane field could contain at least 10 billion barrels of oil.

It drilled four wells there in 2024 "to explore and appraise a first hub in the northwest region of the Mopane complex", and is drilling a fifth, this time in the field's southeast area, Carioca told a conference call.

"We expect results later this month and will then integrate all the data", to decide on the next steps, she added.

Promising offshore discoveries in Namibia have been complicated by a high amount of gas that will make development more expensive.

($1 = 0.9548 euros)

(Reporting by Sergio Goncalves; Editing by Barbara Lewis and David Holmes)