Santos Reports 33% Profit Fall in Challenging Year
Santos, the Australian energy company, has announced a significant decline in annual profit, citing lower production and sales revenue. This comes after a year fraught with legal challenges and failed merger talks.
According to the company’s latest financial report, Santos reported a 33% fall in net profit for the 12 months through December, dropping from US$2.11 billion to US$1.42 billion compared to the previous year. The underlying profit, excluding one-off items, also experienced a significant decrease of 42%, amounting to US$1.42 billion.
The decline in profit can be attributed to a 24% drop in annual sales revenue, which reduced to US$5.89 billion. Santos explained that this decrease was largely due to lower prices for its liquefied natural gas and crude oil. Despite this, the company managed to generate a noteworthy US$2.1 billion in free cash flow.
Despite the challenges faced throughout the year, Santos’s directors have approved a 17.5 U.S. cents per share final dividend, which represents an increase from 15.1 U.S. cents a year earlier. This decision reflects the company’s commitment to rewarding shareholders amidst a challenging operating environment.
This announcement follows a tumultuous year for Santos, marked by a legal dispute over its Barossa growth project and unsuccessful merger negotiations with Woodside Energy. These obstacles undoubtedly added to the company’s challenges and impacted its financial performance.
As the energy industry continues to navigate economic uncertainties and market fluctuations, Santos remains focused on adapting to the changing landscape. Despite the profit decline, the company’s ability to generate substantial free cash flow and increase dividend payouts demonstrates its resilience in the face of adversity.
Analyst comment
Negative news. The decline in annual profit and sales revenue, along with legal challenges and failed merger talks, pose challenges for Santos. However, the company’s ability to generate significant free cash flow and increase dividend payouts demonstrates resilience. Market may experience short-term volatility, but Santos’s focus on adapting to the changing landscape may help in the long run.
