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    Engie Sees First-Half Earnings Slump


The second quarter was hit badly by Covid-19.

by: William Powell

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Engie Sees First-Half Earnings Slump

French utility Engie took a hit of €0.85bn on its H1 2020 current operating income (COI), particularly in Customer Solutions, owing to Covid-19, it reported July 31. Supply networks, renewables and thermal were relatively resilient, but overall its pretax earnings (Ebitda) was down, from €5.3bn to €4.5bn. 

The company announced the same day its planned accelerated expansion into networks and renewables funded by disposals of other assets, including the majority of its customer solutions business.

Current operating income (COI) was down a third, from €3.1bn to €2.2bn. It said its networks enjoyed “clarity through regulatory frameworks; renewables and thermal generation benefit from purchase price agreements and long-term contracts, and market prices and spreads are near pre-crisis levels for merchant power generation activities.” But warm temperatures in France also hit networks, whose COI was down 11% year on year at €1.27bn, or over half the total.

CFO Judith Hartmann said that the company continued to work on mitigating the impacts of the Covid-19 crisis to drive a strong recovery from Q2 levels, while maintaining a strong financial position.  

Interim CEO Claire Waysand said: “Client solutions activities, which were the most affected, are now getting back close to normal in most of our countries of operations. Looking ahead, with carbon-neutrality at the heart of our strategy and purpose, we are well positioned to benefit from opportunities arising from green recovery efforts across our portfolio. Notably in the EU, for example through increased support for renewable energy, focus on green hydrogen, and through increased focus on energy efficiency programmes.”

Assuming a continued, gradual return from lockdowns across its key geographies, Engie expects pretax earnings between €9bn and €9.2bn and COI of €4.2-4.4bn – implying a second half very similar to the first half in terms of business.

Client Solutions’ COI fell to a loss of €142mn, mainly as a result of the Covid-19 crisis. After a year over year increase of 5% in Q1 2020, revenues fell 16% in Q2. But Engie managed to reduce costs by 9% in Q2 2020.