Top U.S. liquefied natural gas exporter Cheniere Energy Inc (A:LNG) surpassed expectations with its second-quarter earnings report, exceeding Wall Street forecasts and revising its full-year profit outlook upwards.
Despite facing lower LNG prices and experiencing a decline in LNG shipments during the period, the company delivered better-than-expected results. Notably, its earnings were boosted by a $782 million gain in the value of its derivatives portfolio, a significant turnaround from the losses incurred in the same period last year.
Cheniere’s LNG volumes for the quarter ended June 30th amounted to 547 trillion British thermal units (Btu), slightly lower than the 570 trillion Btu recorded a year ago. The dip in volumes was partly attributed to maintenance outages.
The company’s adjusted earnings stood at $1.8 billion, comfortably surpassing the market consensus of $1.62 billion, which led to a modest 1% rise in its share price during early trading, even amidst a broader market decline.
Buoyed by its strong performance, Cheniere Energy raised its full-year earnings forecast by $100 million, now expecting earnings in the range of $8.3 billion to $8.8 billion. This adjustment was met with enthusiasm by analysts, who had projected an average of $8.61 billion, according to Refinitiv.
The company faced headwinds due to the significant drop in U.S. natural gas prices, averaging $2.417 per million British thermal units (Btu) during the April-June quarter, representing a staggering 63% decrease from the year-ago quarter. This downturn was a result of the surge in demand after Russia’s invasion of Ukraine.
Cheniere Energy’s second-quarter net income soared to $1.37 billion, a substantial increase from $741 million in the same period last year, largely attributable to gains in derivative instruments used to hedge against international gas prices. This solidifies Cheniere’s potential inclusion in the S&P 500 index in the future, according to investment firm Jefferies.
However, there was some disappointment as the company’s $350 million share buyback during the quarter fell short of expectations. Jefferies analysts expressed surprise at the decline in the buyback despite the company’s robust free cash flow generation and the recent pressure on the share price during May and June.
The Houston, Texas-based energy firm experienced a 49% decline in quarterly revenue, which amounted to $4.1 billion, a direct result of the weaker prices and shipment volumes.
Overall, Cheniere Energy showcased resilience and strategic management in navigating through challenging market conditions, and its improved earnings outlook provides a positive outlook for the future.
Featured Image: Freepik @ freepik
Author Faith Yakubu 
