By Terje Solsvik
OSLO -Norway’s Equinor posted a sharp increase in second-quarter profit on Wednesday as prices of oil and gas rose, but its earnings fell short of expectations as its Norwegian unit missed forecasts.
Adjusted earnings before tax rose to $4.64 billion in the April-June quarter from $350 million in the pandemic-hit year-earlier period, the company said, lagging the $4.83 billion predicted in a poll of 20 analysts compiled by Equinor.
The company also said it would begin the first phase of a long-planned share buyback, and aims to spend $300 million on the program by Sept. 28.
“Strict capital discipline and a net cash flow of more than $4.5 billion reduced our net debt ratio to 16.4% and make us robust for volatility in commodity prices going forward,” Chief Executive Anders Opedal said in a statement.
The net debt ratio was down from 24.6% in the first quarter.
“Developments related to the ongoing pandemic … will continue to impact energy demand, energy prices, and related volatilities in 2021 and beyond,” Equinor said.
Lockdowns and vaccination efforts to stem the spread of COVID-19 could thus be key factors, it added.
“At the same time, markets are currently showing signs of increased demand relative to supply, reflected in higher price levels for oil and gas in the near term,” the company said.
Equinor’s largest division, known as Exploration and Production Norway, swung to a pretax profit of $3.96 billion from a loss of $85 million in the second quarter of 2020, but still fell short of the $4.1 billion expected by analysts.
The state-controlled firm, under pressure from minority shareholders to boost its climate ambitions, last month vowed to speed up investments in renewable energy and low carbon solutions even as its petroleum output continues to climb.
However, the renewables unit posted a pretax loss for the second quarter of $31 million, while analysts had predicted a deficit of $5 million.
“Compared to the same quarter last year the renewables segment experienced lower winds for the offshore wind assets, partially offset by improved availability,” Equinor said.