Engie’s First-Quarter Profit Slips 15% on Lower Energy Sales
(Bloomberg) -- Engie SA reported lower first-quarter earnings after a warm winter cut gas demand in France, while nuclear power sales were squeezed by the shutdown of reactors in Belgium.
Earnings before interest and taxes fell 15% to €3.52 billion ($4.14 billion) from a year earlier, the French utility said Thursday.
Engie is seeking to offset its exposure to French gas assets and capitalize on an expected surge in electricity demand by investing in wind, solar and battery storage worldwide. The company just completed its acquisition of a UK power-distribution network — almost two months ahead of schedule — underscoring its efforts to retreat more broadly from fossil fuels.
The utility has also been cutting costs to help counter a loss of earnings from Belgium, where three of its five reactors in the country were closed last year. Engie is now in talks to sell its entire Belgian nuclear business to the state to eliminate risks related to energy policy changes and focus on assets with more predictable income and expenses.
“The idea of both parties is that it should have a neutral finance impact,” Chief Financial Officer Pierre-Francois Riolacci said on a conference call Thursday. Given that the two reactors still in operation are due to be frequently halted for lifetime extension works in coming years, a sale to the Belgian government “wouldn’t change anything in our numbers going forward,” he said.
The shares of the company traded 1.5% lower at 12:27 p.m. in Paris, paring this year’s gain to 21%.
Excluding its nuclear activities, quarterly Ebit declined 8.4%, the firm said in a statement. Engie stuck to its full-year profit forecast, citing the expansion of its renewables division and lower costs across the group.
It also announced an agreement to sell stakes in gas-fired power plants in Qatar, following similar deals in the region last year.
The company may sell as much as €1.5 billion of assets this year to reduce its debt following the acquisition of UK Power Networks for about €19 billion including debt, Riolacci said. Divestment should pick up next year, with Engie selling stakes in businesses that it has little control over, and minority interests in some of the group’s “highly” capital intensive assets. Businesses up for sale should be little impacted by the Persian Gulf war, he said.
Despite the continuing war in the Middle East, the company said its gas customers haven’t seen any disruption to supply because it gets the fuel from a wide range of sources.
Engie is also sticking with plans to develop renewable-energy projects in the region, where tenders and construction are continuing, Riolacci said.
In the US, where the Trump administration has moved to halt or slow renewable energy developments, the CFO said it’s “difficult” to get permits for onshore wind, while solar and battery-storage projects are growing amid “very strong” demand.
(Updates with CFO comments on Belgian nuclear talks, asset sales.)
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