We have obtained the highest net profit in the last eight years,
a result bolstered by the strength of our integrated business
and the success of the efficiency program
As in previous years, I am writing to you to report on the results obtained during 2018, as well as to offer you up-to-date and detailed information about the company's projects and future plans.
Without a doubt, 2018 has been a good year for Repsol, both economically and strategically. We have obtained the highest net profit in the last eight years, 2.341 billion euros, a result bolstered by the strength of our integrated business and the success of the efficiency program we have applied across the company.
These measures have helped us achieve –two years ahead of schedule– all the goals established in the 2016-2020 Plan, which has led us to update our strategy through the year 2020. Repsol's new roadmap, focused on growth, is supported by three pillars: an increase in shareholder return; profitable business growth, both Upstream and Downstream; and the development of new low-emission businesses as part of the energy transition.
I would like to emphasize that updating the strategy entails a boost to the transformation process that the company has been working on for years, in order to become a global multi-energy supplier capable of delivering to customers the energy and the services they need, safely, competitively, and sustainably.
As you can see in the company's roadmap, we are going to invest 2.5 billion euros over the course of the next two years in our new low-emission business. Our goal by 2025 is to reach a generation capacity of around 4,500 megawatts (MW), 2.5 million-retail gas and electricity customers in Spain, and a market share in the country of over 5%.
In this sense, our main milestone in 2018 was the launch of Repsol Electricidad y Gas, following the incorporation, in November, of Viesgo's unregulated low-emission electricity generation businesses and its retail business. This acquisition, valued at 733 million euros, has made us a relevant player in the Spanish electricity market, with a portfolio of 830,000 customers and a total installed capacity of 2,952 MW.
During the past year, we also acquired the 264 MW Valdesolar photovoltaic project, which is currently in the administrative processing phase. With the inclusion of these assets, the company will reach more than 70% of its strategic objective in terms of low-emission generation capacity.
We are also participating in the construction of one of the largest floating wind farms in the world, off the coast of Portugal, which will have an installed capacity of 25 MW.
Regarding shareholder return in 2018, following its approval in the Annual General Meeting, it is expected that said returns are increased by 5.6%; this would entail an equivalent of 0.95 euros/share, making it one of the highest in the industry. This return will be paid during the year 2019, and we are committed to continuing with this line of action, as was established when we updated our strategy; therefore, we will continue to increase it until it reaches one euro per share in 2020.
Furthermore, the company has continued to reduce its debt, bringing it down to 3.439 billion euros, 45% less than the previous year, and credit rating agencies have improved our rating. This past October, Fitch improved Repsol's outlook to “positive” with a long-term credit rating of BBB. In early December, Moody's announced an increase in the rating to Baa1, with a “stable” outlook and, days later, S&P Global Ratings improved its outlook to “positive” and confirmed the long-term credit rating of BBB.
As I have mentioned, one of the pillars of the new plan is the profitable growth of the company's businesses, Upstream and Downstream. The former will be focused on higher returns and improvements to its asset portfolio, while the latter will consolidate the excellent performance seen in recent years and create new drivers for growth and value creation.
In 2018, the Upstream area doubled its profit to 1.325 billion euros, keeping up the positive trend of recent years. For this good performance, the effects of the measures of the efficiency and digitalization programs were significant and they continue to prove their effectiveness. An increase in production and a rise in oil prices were also decisive.
In terms of production, we reached an average of 715,000 barrels of oil equivalent per day, 3% more than in the previous year. The company produced 63% of gas, a percentage that rises to 73% if we factor in our reserves, which shows Repsol's commitment to this hydrocarbon as a key energy source in the energy transition.
The Downstream area obtained a profit of 1.583 billion euros, with a better performance in commercial businesses, Marketing, and LPG and favorable performance in terms of Trading & Gas.
At Repsol, we have continued to work to provide more value to our customers in 2018, offering them products and services that meet their needs at all times.
The international expansion of some of our Downstream businesses is one of the growth drivers we have identified when we updated our Plan and, in line with this, in March we launched an ambitious project in Mexico focused on opening and increasing the number of service stations in the country. We currently have over 180 stations in the country and we have signed contracts to increase the number to 240. In Mexico, we have also continued to internationalize our lubricants businesses, after partnering with the local company Bardahl to produce and market our products in the country.
This has been coupled with another relevant operation in Peru, where we have acquired Puma Energy's service stations. With this operation, we will increase our sales volume in that market by 10%.
Innovation in our products and services has been a constant line of work over the past year. In line with this, we have undertaken different projects, such as launching a carsharing service in Madrid last July, called WiBLE, or updating our Waylet mobile app, which has over one million registered users, to make it a universal payment method.
We also continue to make progress to remain leaders in the supply of mobility energy, through the design of the most efficient fuels on the market, our commitment to AutoGas, and our participation in the largest public electric vehicle charging network in Spain.
Together with El Corte Inglés, we are also undertaking an expansion plan to open 1,000 “Supercor Stop&Go” stores at Repsol service stations over the next three years. Furthermore, we have recently strengthened our partnership with this chain of department stores to offer electricity and gas to their customers and employees.
Another relevant aspect of Repsol's development is the digital transformation, one of the main growth drivers included in our Strategic Plan. We estimate that our digitalization program, which already involves over 130 initiatives currently underway, will account for 300 million euros per year in 2020, which will increase to 1 billion by 2022, both from new revenue and from the optimization of investments and expenses.
Unsurprisingly, as it is part of our DNA, all projects and initiatives we undertake always put our commitment to sustainability and safety first. We continue to be ambitious on this aspect, as evidenced by our new goal to reduce emissions by three million tons of CO2 in 2025, compared to 2017.
Without a doubt, 2018 has been a demanding year full of challenges, especially in terms of the transformation process we are currently embarked on, and in which Repsol's performance has proven that it can rise to the challenges. All the successes we have achieved have been possible thanks to the constant commitment and efforts of everyone who is part of the company.
Once again, I would like to thank you for trusting Repsol, which is essential for us to continue generating value and to continue working with the strongest commitment to efficiency and sustainability.
Thank you very much.
Josu Jon Imaz
Chief Executive Officer