Energy company Engie to exit 20 countries and back renewables
French group punished by Belgian unit but plans to invest billions over three years
Engie will exit 20 countries and look to invest billions in renewables, infrastructure and services as part of a three-year plan.
The French energy company meanwhile reported mixed full-year results as it was punished by outages at its Belgian nuclear plants.
The group posted net recurring income of €2.5bn last year, shy of the €2.4bn forecast, based on revenues of €60.6bn, below analysts’ expectations but up 1.7 per cent from the year before. Earnings before interest, taxes, depreciation and amortisation climbed 0.4 per cent to €9.2bn, bang in line with expectations. A Reuters poll showed that analysts had predicted revenues of €64.4bn.
Engie was hit by “a very significant 134 per cent organic decrease” in Benelux earnings, “mainly due to nuclear activities which were severely affected by unscheduled outages”.
However, as important for analysts were Engie’s longer term targets, including a new €800m cost-cutting programme through to 2021 and a compound annual growth rate over the same period of 3.5 to 6 per cent.
Engie said it “intends to invest approximately €4bn annually in growth capital expenditures and smaller bolt-on acquisitions over the 2019-2021 period, while €6bn of asset disposals are expected over the period”. The group intends to concentrate its efforts on renewables, networks and services.
“In 2018, we achieved our objectives thanks to the commitment of our teams, notwithstanding the exceptional challenges we have faced and addressed in Belgium,” said Engie’s chief executive Isabelle Kocher in a statement on Thursday.
Engie says it “will also exit approximately 20 countries over the next three years in a move to enhance focus and economic returns”.
For 2019, Engie expects growth in net recurring income group share to be between €2.5bn and €2.7bn, based on an indicative range for earnings of €9.9bn to €10.3bn.
The group announced a medium-term dividend policy which provides for a 65-75 per cent payout ratio range, with a payout in 2019 at the upper end. For 2018, Engie confirmed the payment of a €0.75 per share cash dividend.
Engie is at the end of its current three-year transformation plan that cut costs and reduced the company’s exposure to carbon-intensive industries and from markets most exposed to fluctuating prices.
Engie aimed to sell off €15bn of fossil fuel-focused assets between 2016 and 2018 and reinvest the proceeds in renewables and energy services. Ms Kocher has said that the “fundamental repositioning” of the company is now complete.
To date, said Engie on Thursday, €16.5bn of disposals have been announced, of which €14bn have been booked. The group added that the “capital expenditure program has also been completed, with €14.3bn of growth investments since 2016”.