French Engie Restructuring Hits Milestones
French utility Engie reported July 28 it would hit its 2017 annual targets on the back of an acceleration of organic growth during the second quarter and that it was ahead of schedule with its 2016-18 transformation plan.
Announcing its first-half results, it said it has also cut its debt by €2.1bn ($2.46bn) since the end of 2016, and is ahead of the target, but so far no news on the sale of its international upstream business.
The aim is to make Engie more innovative, efficient and resilient over that period. The goal of reducing its trading exposure to less than 15% of total earnings before interest, tax, depreciation and amortisation (Ebitda) is already achieved.
Growth engines – low carbon generation, infrastructures and customer solutions – now represent 90% of its Ebitda, having grown 5.4% over the first half.
CEO Isabelle Kocher said: “These solid and encouraging results… prove the progress we have made at every level in our three-year transformation plan. They also allow us to confirm the targets set for 2017 and the group’s strategic choices to secure its future growth."
Revenues rose 1.6% on a reported basis to €33.1bn and by 2.6% on an organic basis compared with first half 2016; this would have been 3.0% if the weather had been normal and more gas sold. Organic revenue growth was driven by an increase in the midstream gas and LNG business in Europe, an improved performance by the thermal power generation plants in Europe and Australia, the impact of new assets commissioned and price rises in Latin America, and the impact of the 2016 price revisions in the infrastructure business in France.
Ebitda amounted to €5.0bn, globally stable (-0.1%) on a reported basis but up 4.0% on an organic basis thanks partly to new assets on stream in Latin America and a good performance of thermal power generation activities in Europe and Australia.
These positive factors were partly offset by the impact of lower renewable energy generation in France, the shutdown of the Tihange 1 nuclear power plant in Belgium from September 2016 to May 2017, mild weather and lower wind and hydro generation in France. Higher transport and distribution tariffs in France were offset partly by lower storage capacity sales in France.
Engie has announced to date €11bn of disposals, or 73% of total program, and of that, €8.0bn is already accounted for. On May 11, Engie entered into exclusive negotiations for the sale of its 70% interests in Exploration & Production International to a private equity team Carlyle and CVC Capital Partners, backing ex-Centrica CEO Sam Laidlaw's Neptune Oil & Gas. This will be a "major milestone in the Group´s transformation plan that contributes to significantly reduce the share of activities exposed to commodity prices in its Ebitda." The price was reported to be $4bn.
William Powell