Portugal’s oil and gas company Galp Energia cut its dividend payout by half on Monday after posting a 98% plunge in fourth-quarter net profit as the coronavirus pandemic hammered refining margins and output fell.
The company said it would propose a dividend of 0.35 euros ($0.4237) per share for 2020, halving the 0.70 euros per share paid the previous year.
“The dividend cut reflects the impact from unexpected and unprecedented market conditions”, Galp said in a statement, adding that it would target a 2021 payout of 0.50 euros per share.
Galp suspended production at its largest unit in Sines and its smallest, Matosinhos, between April and June. It stopped production again at Matosinhos in early October, and it remains suspended.
The company said production in the fourth quarter fell to 122,800 barrels of oil equivalent per day (boepd) on a working interest basis, from 136,900 boepd a year earlier.
Its refining margin fell to $1.6 per barrel in the fourth quarter from $3.3 in the same period last year.
Adjusted net profit fell to 3 million euros from 157 million a year earlier, while earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 37% to 410 million euros.
For the full year, Galp swung to a loss of 42 million euros from a profit of 560 million euros in 2019, while EBITDA fell 34% to 1.57 billion euros.
The company said that due to the pandemic, it is incorporating “additional layers of prudency given the uncertain macro circumstances”, and expects EBITDA of between 1.6 and 1.8 billion euros in 2021.
Net profit and EBITDA has been adjusted to reflect changes in the company’s stocks of crude. ($1 = 0.8251 euros)