Eni and BP Cut Dividends as Losses Buildup due to Lower Energy Demand
Posted on 08/04/2020
The second quarter of 2020 has been a test for the financial fortitude of the world’s largest energy corporations – and Italy’s Eni S.p.A. is no exception. On July 30th, the Italian oil giant released its Q2 financial report that demonstrated COVID-19’s total erasure of energy demand. Second quarter profits went from US$ 642 million in fiscal year 2019 to a loss of US$ 839 million in 2020.
In response to these devastating losses, Eni has announced that they must cut their dividend in hopes of staying afloat. Earlier this year, the company offered to pay a 0.89 euros per dividend; however, as of July 30, 2020 that is down 38% to just 0.55 euros per share.
This downbeat news on less energy demand comes at a time when Eni CEO Claudio Descalzi is attempting to guide the company into a more environmentally-focused position. Descalzi has made green business 17% of business investments, which the company claims will rise to 26% by 2023. For investors however, environmental concerns are the least of their worries, while Eni S.p.A. produces such poor bottom-line results.
Eni rival BP Plc reported a significant loss for the second quarter of 2020 as net profit came in at -US$ 6.7 billion. U.K.-based BP announced that it had halved its dividend to 5.25 cents per share for Q2, compared to 10.5 cents per share for the first three months of the year.