Junta General de Accionistas de Repsol YPF

Press Release 31/05/2005 07:00
  • Upstream to be driver behind companys growth
  • Downstream to be stable cash-flow generator
  • Portfolio to be transformed via investments and divestments
  • Total investments to surpass 21,000 million euros
  • Investments to be concentrated in North Africa, Caribbean, Atlantic Basin and Middle East
  • In Argentina new opportunities will be taken advantage of in the area of exploration of offshore blocks, and competitive advantages in refining and marketing
  • Divestment of 1,500 million euros in non-strategic areas and businesses
  • Intensify exploratory activity drilling 200 new wells
  • Reserves in North Africa to grow by 170%
  • 1,200 million euros in cost savings
  • Strategic alliance with Gas Natural to have cost savings of 10 million euros/year
  • ROACE to be 12%

Antonio Brufau, Repsol YPF Chairman and CEO, presided the Annual General Shareholders Meeting held today, at which he proposed a 25% year-on-year rise in the 2004 dividend, and informed the shareholders that the new Strategic Plan for 2005-2009 contemplates a 20% rise in the dividend against 2005. In his speech, Antonio Brufau summarised the highlights of 2004, mentioning the 17.8% jump in the companys operating income, the higher dividend, and the 24% revaluation in the share price during the year. The Chairman gave a detailed explanation of the Strategic Plan, setting the main lines of action for the company from 2005 to 2009.

2004 Results

Repsol YPF net reported income in 2004 was EUR1,950 million, falling 3.5% year-on-year because of large extraordinary provisions and write-offs amounting to EUR682 million during the year. Operating income rose 17.8% to EUR4,547 million, reflecting the companys sound capacity for high cash flow generation. This notable rise in operating income came from good performance by all business areas, all of which posted considerably improved results, with growth particularly in refining which posted 36.2% growth in operating income and record margins. Income from the exploration & production area, at EUR2,638 million, showed an increase of 12.2%, shored up by a 3% higher production of hydrocarbons. In chemicals, operating income rose 63.2% to EUR253 million, while the gas & power business reported a year-on-year rise of 29.2%, reaching EUR 274 million versus EUR212 million in 2003.

First quarter 2005 Results

In his speech, Antonio Brufau announced that Repsol YPF net income for the first quarter 2005 was EUR845 million, marking a 36.7% rise on first quarter 2004. Income from operations rose 39.6% to EUR1,483 million, showing the companys strength and high income generation capacity, with a 20.7% growth in cash flow to reach EUR1,509 million. Repsol YPF operating income in first quarter 2005 was considerably higher in all business areas, particularly in refining & marketing with 112.0% growth, and in chemicals which leaped 292.7%. Income from exploration & production, at EUR650, showed an increase of 1.9%, and gas & power reported a rise of 32.2%.

Dividend

The Repsol YPF Annual General Shareholders Meeting approved a gross overall dividend of EUR0.50 per share against the 2004 financial year, 25% up on that for 2003. This dividend was made possible by the companys good performance and revaluation of the share price on the Stock Market, and is in line with the corporate target of substantially increasing shareholder earnings.

Strategic Plan for 2005-2009

Repsol YPFs Chairman presented to the shareholders the 2005-2009 Strategic Plan, which contemplates investments of over EUR21 billion, and is based on three fundamental premises: growth, profitability, and transformation of the asset portfolio, all of which will lead to the primary objective of guaranteeing sustainable dividend growth for shareholders, starting with a rise of 20% in 2005, and further annual increases of approximately 15% thereafter up to 2009.

Growth

Oil Exploration & Production (Upstream) will be the driver behind Repsol YPFs growth in the 2005/2009 period, concentrating investments - primarily in the exploratory basins of North Africa, the Caribbean, the Middle East, the United States and Western Africa - and intensifying its exploration activities by drilling more than 160 new wells.

Profitability

Repsol YPFs Strategic Plan forecasts cost savings of EUR1.2 billion. The measures that will enable delivery on this target include the transfer of corporate functions to the businesses, the simplification of management procedures, the optimization of company logistics and greater energy efficiency. Refining & Marketing (Downstream), a benchmark for the sector in terms of profitability levels, will continue to provide the company with sound and stable income, taking advantage of its excellent position as a leader in growth markets (Spain and Portugal), and of having made large investments to improve conversion capacity.

Transformation of Asset Portfolio

Repsol YPFs 2005-2009 Strategic Plan includes the fundamental element of dynamically managing its portfolio of assets. In this period, Repsol YPF will invest a total of EUR21.1 billion (of which little over half will correspond to exploration & production projects), while divesting EUR1.5 billion, which will be spent on financing new projects of great interest for the company. 

Supplementary information

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