Engie to speed disposals with incoming chief eyeing up to €20bn
French utility Engie is considering a widespread restructuring with between €10bn to €20bn worth of disposals under Isabelle Kocher, the incoming chief executive.
People close to the group told the FT that Ms Kocher will try to accelerate the company’s move away from thermal energy and mature markets in Europe, instead putting greater emphasis on renewables and emerging markets.
This could involve the French group selling much of its exploration and production assets, thermal power generation plants in United States and coal-fired power plants, all of which should yield about €10bn, added these people.
Alongside those plans there is a likely initial public offering of Engie’s Belgian unit Electrabel, as well as the sale of other non-core assets, which could yield another €5bn to €10bn over the next three years.
All of the group’s mature market “merchant” business — areas where prices are unregulated and move with the markets — will come under scrutiny. This includes thermal power generation and gas storage.
The plan by Ms Kocher, who starts formally in May, comes as the utilities sector endures chronic low power prices in developed markets, while the shift to renewable energy squeezes margins at traditional plants burning coal and gas.
The strategy of shifting into renewables and high-growth markets is not new for Engie. Gérard Mestrallet, the long-time chief executive of the group, has had the same approach in recent years.
However, Ms Kocher will be looking to go faster than her predecessor, said people close to the group, in part to stamp her authority on the company.
Mr Mestrallet was appointed chief executive of French utility Suez in 1995, In 2008 the group merged with GDF to form GDF Suez, which Mr Mestrallet then ran. Last year GDF Suez was renamed Engie.
Ms Kocher spent three years as the company’s chief finance officer from 2011 before being appointed deputy chief executive officer in October 2014. There she prepared for succession and helped with the rebranding.
Her appointment as chief executive of a company in Paris’s CAC 40 index is a first for a French woman. She is the only second woman to take up such a role, the first being Pat Russo, the American chief of Alcatel-Lucent between 2006-2008.
However, Ms Kocher will not be alone at the top. While Mr Mestrallet had said that he would step down completely, last week the French government announced that he would in fact stay on as non-executive president.
This would help provide a steady hand for the group in a difficult period, said one person close to the group, but others have expressed concerns that this could Ms Kocher from making bolder restructuring efforts.
Ms Kocher and Mr Mestrallet last year changed hundreds of top-level positions in a reorganisation of the group’s management.
Engie is reporting its full-year results February 25, where the company is likely to give clarity on restructuring and also further cost-cutting measures. This will be followed by an investor day in May.
French weekly La Lettre de l’Expansion reported this week that the disposals at Engie could be as much as €20bn, with people close to the group telling the FT that this would be at the top end of the scale.