Portugal's Galp Q1 Profit Drops 33 Pct As Diesel Unit Costs Rise
LISBON, July 29 (Reuters) - Portugal's Galp Energia posted a slightly smaller than expected 33 percent drop in second quarter net profit on Monday mainly due to depreciation costs at its recently launched diesel unit and only a small offsetting rise in oil output.
The recession in Portugal and Spain was still affecting demand for oil products, which fell 6 percent in the quarter, and the company said it is also expecting lower sales to wholesale clients this quarter from a year earlier.
Galp said the market contraction was slowing down.
It also expected a rise in third-quarter crude output to 27,000 barrels per day mainly thanks to Brazilian projects, as offshore production unit Cidade Angra dos Reis was to resume normal operations and Cidade Paraty was ramping up production.
Galp said profit, adjusted to reflect changes in crude stocks, was 86 million euros ($114 million). Depreciation and amortisation costs at its refining division - of which diesel is a unit - jumped 40 percent to 68 million euros.
Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 7 percent to 304 million euros.
Analysts polled by Reuters had forecast an average adjusted net profit of 80 million euros and EBITDA of 288 million euros.
The company said on July 15 that its crude output edged up 3 percent in the second quarter from a year earlier and the amount of oil it processed rose 4.1 percent.
Mainly a refiner, Galp has made a breakthrough into oil production over the past few years, thanks to a large extent to a 10 percent interest in Brazil's giant Lula/Tupi field. It is also a partner in other prolific Brazilian projects and operates in Angola and Mozambique. ($1 = 0.7539 euros)
(Reporting by Andrei Khalip; Editing by Louise Ireland)
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