Repsol continues its momentum with the government. The company froze 1.5 billion euros in renewable investments announced at Bilbao, Cartagena and Tarragona at the end of last year until Spain’s government clarified its tax policy, after PSOE and Sumar included in their governing program a consolidation of the energy tax. Now that figure has quadrupled, reaching 3.0 billion euros that the company plans to invest in industrial ventures worldwide through 2027, but it conditions this on how Spain’s regulatory and fiscal framework evolves.
Thus the energy group outlines in its 2024-2027 strategy update. After exceeding the goals set in its 2021-2025 roadmap two years ahead and following a difficult period shaped by the pandemic, followed by an extraordinary phase driven by war, Repsol revises its future plans with two major commitments: distribute up to 10 billion euros to shareholders and invest almost twice as much, up to 19 billion euros, which implies about 20% more annually than the previous period, when the company announced around 19.5 billion in total.
Of all those investments, 60% are planned for the Iberian Peninsula, although the company does not specify how much will go to Spain versus Portugal, and 25% in the United States. While what ultimately happens can vary due to many factors, including macroeconomic conditions, progress of various technologies, regulatory stability, project maturity, asset rotation progress, and disinvestments. At the same time, its global industrial ventures — principally refining and chemical businesses, mostly located in Spain — are expected to contribute net investments of between 5.5 and 6.8 billion euros to develop low-emission initiatives such as renewable fuels, renewable hydrogen, and biomethane, requiring net investments in the range of 2.0 to 3.0 billion euros, and tied to how Spain’s regulatory and fiscal framework evolves.
Meanwhile, the “low-carbon” initiatives are set to require net investments of about 5.0 billion euros. In its new electric-facing orientation, Repsol aims to double electricity and gas customers to a total of 4 million by 2027 and targets installed renewable capacity of between 9,000 and 10,000 megawatts. The company, which ranks fourth in lighting electricity sales in Spain, trails Iberdrola, Endesa and Naturgy with more than 2.2 million electricity and gas customers.
During the next four years, the company will maintain the same strategy presented in the prior plan to drive the energy transition and will pursue all energies that meet customer needs. The leadership believes this approach, where decarbonization acts as a value-creating opportunity to grow and stay profitable, is the right path for Repsol, said Josu Jon Imaz, the chief executive, in a press release.
Shareholder returns come into focus. The strategy update coincides with annual results showing net earnings of 3.168 billion euros, 25.5% below 2022. Still, the group delivered one of its strongest performances in history, with adjusted net income for its operations at 5.011 billion euros, down 26% from the prior year.
Following these figures, Repsol will raise this year’s dividend by 30% to 0.90 euros per share, surpassing the 0.75 euros per share outlined in the previous plan for 2025. A new buyback plan of 35 million shares will be launched and completed before mid-2023.
From this year and over the next four years, Repsol commits to annual cash payout growth of 3%, starting from the 0.90 euros per share this year, totaling up to 4.60 euros per share by 2027, complemented by plans to repurchase around 5.40 billion euros in shares. Taken together, 10.0 billion euros are slated for shareholder distributions over the next four years, representing roughly 25% to 35% of the expected operating cash flow, projected near 29.0 billion euros.