Spain's Naturgy Gains on Disposals, Infrastructure

Spanish gas and power company Naturgy saw a year of weak prices in LNG trade and European power, but growth in overseas activities and infrastructure, it reported February 5. Also its restructuring plan is yielding results.

Pre-tax earnings (Ebitda) and net income in the period reached €4.668 ($5.17)bn and €1.432bn respectively, up 6% and 15% on the year. Ebitda in International LNG was €344mn, down 30.6%; European power Ebitda was €270mn, down 34%; but international power Ebitda was €380mn, up 31%.

Naturgy’s subsidiary in Chile CGE completed an asset swap in Argentina, whereby CGE transferred its 50% stake in two electricity distribution subsidiaries, in exchange for a 50% stake in a gas distribution company and the associated trade. As a result, CGE now controls and consolidates 100% of the gas distribution subsidiaries.

Naturgy also increased its stake in the Medgaz line to 49%, transforming a financial position into a strategic stake which will allow the joint control together with Algerian state Sonatrach. The transaction includes a plan to expand the line by 2bn m³/yr.

Gas & Power saw a big increase in services sales, which experienced margin recovery in power supply. The company’s new commercial policies and de-risking efforts, together with efficiencies, also helped offset the low gas prices in the period. Net sales totaled €23.035bn, 5.4% below 2018, mainly as a result of lower energy prices and volumes sold in the liberalised businesses that have not been offset by growth in the infrastructure businesses. 

Gas sales declined by 9.4% during the year, mainly as a result of lower sales in the Spanish industrial and residential segments (- 14.5% and -10.2% respectively), as a result of increased competition and mild weather respectively. Those were partially compensated by higher sales to CCGTs (+20.7%) and third parties (+0.4%)

Among the asset disposals were: a 20% minority stake in the gas distribution business in Spain for €1,500mn, which turned into a gain of €1bn in equity; its gas distribution and supply business in Italy, together with the transfer of the gas supply contract. which yielded €194mn; and $7mn from its 41.9% of the gas distribution business in Colombia.