Engie Hit by Warm Weather, Asset Sales

French utility Engie reported May 12 a 1.8% dip in its Q1 2020 pre-tax earnings (Ebitda) relative to the same period of 2019. Revenues in the first quarter were €16.5 (€17.6)bn, down 3.7% on both a gross and organic basis.

At €3.1bn, Ebitda was however up 1.4% on an organic basis and Engie said it had been a “good first quarter relative to a highly disrupted economic environment” and “an unseasonably warm winter.” The weaker Brazilian real also hit revenues. Current operating income (COI) of €1.91bn was down 6.6% on a reported basis but only 2.1% on an organic basis.

It said the energy transition will remain a dynamic and profitable growth industry and that its operational and capital allocation focus will be strictly governed by growth and returns criteria by activity and geography.

Interim CEO Claire Waysand said: "The world's recovery from the Covid-19 crisis is a unique opportunity to address the energy transition and climate change challenges with renewed urgency. Engie is well positioned to further drive the transition towards carbon neutrality for our clients, which will create sustainable value for our stakeholders.” But in the short-term it is problematic: it said that owing to Covid-19 it distributed and sold less energy in Europe and Latin America.

Renewables, nuclear and energy management activities all recorded satisfactory organic performances, owing partly to higher prices for nuclear power, and better rainfall in France. Thermal results, down 33.6% on a gross basis and 16.1% on an organic basis, primarily reflected 2019 disposals as well as negative impacts from prices in Europe and Chile that were only partly offset by the restoration of the UK capacity market.

Networks reported a 5% organic COI decrease, mainly because of warmer temperatures notably in Romania, affecting gas distribution, partly offset by good results in gas transmission, driven by the French annual tariff review in April 2019.

Supply activities were even worse impacted by lower demand in Belgium, the Netherlands, Romania and Germany, and by lower revenues in the UK mainly arising from the disposal of the supply business at the beginning of the year. COI was down 16.6% on an organic basis and 18.4% gross.