Published On : 05/17/2024

Engie Q1 profit drops on warmer winter, steady market

By America Hernandez

PARIS (Reuters) – French energy company Engie said on Friday first-quarter earnings fell 3.2% as a warmer than usual winter depressed demand for natural gas and price volatility eased.

The company, which produces, transports and sells gas and electricity, said earnings before interest and tax (EBIT), excluding nuclear, totalled 3.7 billion euros ($4.02 billion), versus 3.8 billion euros in the same period of 2023.

“We’ve started the year pretty well, despite less favourable conditions than last year as the market stabilises, which shows the resilience of our business model,” said finance chief Pierre-Francois Riolacci.

Engie in recent years has sought to sell off assets and refocus on its core business of natural gas infrastructure and sales, while spending the profits on renewables.

Profits at oil and gas firms are still retreating from 2022 records, when natural gas prices spiked after Russia invaded Ukraine.

Spot gas prices in Europe have tumbled about 40% in the last year, hit by mild winter weather and easing supply worries.

Engie’s revenues for the quarter fell 24.6% to 22 billion euros, it said.

Overall, the company said it made 136 million euros less across distribution networks and sales because winter temperatures in France were higher than normal.

Much of the decline was offset by renewables, largely thanks to higher hydroelectric production in France, and flexible generation businesses.

Engie increased its renewable assets by buying two biogas sites in the Netherlands, acquiring Orsted’s portfolio of French onshore wind farms, and securing financing for newly commissioned wind and solar projects in the United States totalling 1.3 gigawatts (GW).

The company also won a 1.3 GW offshore wind contract in Australia via Ocean Winds, its joint venture with EDP, and started up a battery storage project in Chile

Engie has been unable to find a buyer for its loss-making subsidiary EV Box, which makes electric vehicle charging stations and software, and now hopes to sell off individual sites.

“It’s an activity that has suffered in recent years … with the Ukraine crisis and soaring energy prices, plus national governments revising their subsidy schemes leading to a massive slowdown in installations,” Riolacci said.

“We’ve done all we could to set the company right, but in the end it’s not our main business,” he added, saying it was premature to discuss closures or layoffs for some 700 workers in mostly the Netherlands.

Engie said it was still targeting an annual net recurring income on a group share basis of 4.2-4.8 billion euros.

($1=0.9211 euros)

(This story has been corrected to fix the name of company whose assets were acquired in paragraph 9)

(Reporting by America Hernandez; Editing by MarkPotter)

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