ENGIE May 18th, 2021
ENGIE Q1 2021 Financial information
Solid operational performance underpins 10% organic1 growth in EBIT2
Full-year guidance reaffirmed
Business Highlights | Financial Performance |
- c. 0.5 GW of additional Renewables capacity commissioned, incl. first fixed wind offshore project
- On track to commission 3 GW of renewables in 2021
- Successful integration of 1.7 GW Portuguese hydro assets acquired in December 2020
- High Belgian nuclear availability at 95%
- High levels of Network safety and reliability maintained
- Progress on Group simplification: ENGIE EPS disposal announced and exit from Turkey
- Strong gross and organic growth, both at EBITDA and EBIT levels
- Higher contribution from Networks and Nuclear, more than offsetting impacts of normalized GEM performance and Texas extreme weather event
- FX impact of EUR -77 million at EBIT level, mainly due to BRL depreciation
- Net financial debt stable at EUR 22.5bn, with cash flow generation funding investments
- 2021 guidance3 reaffirmed
Catherine MacGregor, CEO, said: "ENGIE has had a strong start to the year with growth in operating profit underpinned by solid operational performance. We continued to progress on Group simplification while maintaining a sharp focus on delivery.
We have reaffirmed our guidance for 2021 and our priorities are clear: to drive improved performance by focussing on our deep industrial expertise; complete the strategic reviews underway; and create value from allocating capital to activities that will accelerate the transition to carbon-neutrality."
Key financial figures as of March 31, 2021
In € billion | 03/31/2021 | 03/31/2020 | 2021/20 | 2021/20 | |
gross | organic | ||||
Revenues | 16.9 | 16.5 | +2.3% | +4.8% | |
EBITDA | 3.2 | 3.1 | +5.3% | +7.3% | |
EBIT | 2.1 | 1.9 | +8.3% | +10.0% | |
Cash Flow From Operations4 | 1.7 | 0.2 | EUR +1.5 bn | ||
Net financial debt | 22.5 | EUR +0.1 bn vs. 12/31/2020 | |||
2021 Outlook and Guidance
In the first quarter, the Group delivered a solid operational performance, including higher availability of Belgian nuclear assets, and benefitted from higher power prices in Europe. There was an impact of the extreme weather event in Texas where the Group's estimate of a potential full-year impact of EUR 80 to 120 million remains unchanged, pending further information on Supply receivables.
-------
N.B. Footnotes are on page 5.
___________________________________________________________________________________________________________________________
ENGIE CORPORATE HEADQUARTERS
Tour T1 - 1 place Samuel de Champlain - Faubourg de l'Arche - 92930 Paris La Défense cedex - Franceengie.com ENGIE - SA WITH CAPITAL OF €2,435,285,011 - RCS NANTERRE 542 107 651 - Tel.: +33 (0)1 44 22 00 00
For the full year 2021, ENGIE reaffirms its guidance range with Net Recurring Income Group Share expected between EUR 2.3 billion and EUR 2.5 billion. Further details on guidance are on page 4.
Solid operational performance underpins 10% organic growth in EBIT
The Group delivered a solid operational performance in the period.
ENGIE commissioned c. 0.5 GW of renewables capacity in the first quarter, including its first fixed wind offshore project (Seamade in Belgium), and the Group is on track to commission 3 GW of Renewables in 2021. Also in Renewables, the 1.7 GW Portuguese hydro assets acquired in December 2020 were successfully integrated. The Group maintained high levels of Network safety and reliability and continued the installation of smart meters in France. The construction of 2,800 km of power lines in Brazil is on track.
In Client Solutions, following a very impacted 2020, activity levels have improved and residual Covid-19 impact in Q1 was in line with expectations. In Thermal and Supply, ENGIE captured higher spreads in Europe and delivered good commercial performance. The availability of Belgian nuclear reactors reached record high levels (95% vs. 69% in Q1 2020).
A new organisation structure was announced in January and the Group continued to progress on simplification. The review of Client Solutions remains on track, the disposal of ENGIE EPS was announced and the exit from Turkey was completed.
Financial performance
Revenues at EUR 16.9 billion, up 2% on a gross basis and up 5% on an organic basis.
EBITDA at EUR 3.2 billion, up 5% on a gross basis and up 7% on an organic basis. Both gross and organic variations were broadly in line with the EBIT evolutions.
EBIT at EUR 2.1 billion was up 8% on a gross basis and up 10% on an organic basis.
- Scope: overall increase includes a positive scope effect of EUR 49 million mainly due to the sale of 29.9% of SUEZ which contributed negatively in Q1 2020, and positive contribution from the hydro acquisition in Portugal in December 2020.
- Foreign exchange: deterioration of foreign exchange is reflected in EBIT with a total adverse impact of EUR 77 million mainly driven by the depreciation of the Brazilian Real and, to a lesser extent, of the US dollar.
- French temperature: compared to average, the negative temperature effect was limited, at c. EUR 41 million, generating a positive variation of EUR 128 million compared to a warmer than average Q1 2020 across Networks, Supply and Others5 in France.
___________________________________________________________________________________________________________________________
ENGIE CORPORATE HEADQUARTERS | engie.com |
Tour T1 - 1 place Samuel de Champlain - Faubourg de l'Arche - 92930 Paris La Défense cedex - France | |
ENGIE - SA WITH CAPITAL OF €2,435,285,011 - RCS NANTERRE 542 107 651 - Tel.: +33 (0)1 44 22 00 00 |
2
Q1 2021 EBIT contribution by activity:
2021/20 | 2021/20 | of which | |||
In € million | 03/31/2021 | 03/31/2020 | temp. effect | ||
gross | organic | ||||
vs. Q1 2020 | |||||
Renewables | 272 | 327 | -17% | -7% | |
Networks | 1,070 | 933 | +15% | +16% | +78 |
Client Solutions | 149 | 114 | +31% | +9% | |
Thermal | 286 | 274 | +4% | +10% | |
Supply | 226 | 206 | +10% | +11% | +40 |
Nuclear | 53 | (80) | - | - | |
Others | 10 | 133 | -93% | -93% | +10 |
TOTAL ENGIE | 2,065 | 1,907 | +8% | +10% | +128 |
Renewables: good start to the year, EBIT lower mainly due to Texas extreme weather event Renewables reported a 7% organic EBIT decrease. Excluding Texas, Renewables performed in line with expectations with improved contribution from hydro assets, driven by higher achieved prices in France (which more than offset lower volumes), and by good performance in Brazil, as well as from assets commissioned last year. However, overall Renewables performance was impacted by the Texas extreme weather event (c. EUR -80million). This impact was driven by a combination of reduced power production due to wind blade icing and associated buyback of hedges to meet contractual obligations.
Networks: solid operational performance and positive effect of weather versus 2020
Networks reported a 16% organic EBIT increase, mainly due to colder temperature compared to last year in Europe, notably in France, with positive effects on French gas distribution activities (+11 TWh vs. 2020). Networks further benefited from increased contribution in Brazil from the power transmission lines under construction as well as higher contribution from TAG, and recovery from 2020 Covid-19 impacts in France.
Client Solutions: EBIT up benefitting from good performance in the US and colder temperature in France
Client Solutions reported a 9% organic EBIT increase, with better performance in the US on installations and energy efficiency activities, and in France, mainly with district heating networks benefitting from colder temperature. These positive effects were partially offset by lower projects volumes and margins in the UK (mainly explained by residual Covid-19 effects). Client Solutions also continued to benefit from actions on both costs and working capital management that were put in place in 2020.
Thermal: EBIT increase with higher spreads in Europe and positive timing effect on French capacity remuneration recognition
Thermal showed a 10% organic EBIT increase, mainly attributable to improved spreads captured in Europe and to positive timing effects on French capacity remuneration recognition. These positive effects were partly offset by a significant drop in energy margins in Chile, where the electric system was affected by a series of negative events that led to an increase of spot sourcing prices.
Supply: higher EBIT due to colder temperature in France and Benelux despite negative timing effects in France
Supply EBIT increased by 11% on an organic basis, primarily driven by favourable temperature effects (mainly in France and Benelux) and recovery from 2020 Covid-19 impacts. These positive effects were partly offset by timing effects on energy margins in France.
___________________________________________________________________________________________________________________________
ENGIE CORPORATE HEADQUARTERS | engie.com |
Tour T1 - 1 place Samuel de Champlain - Faubourg de l'Arche - 92930 Paris La Défense cedex - France | |
ENGIE - SA WITH CAPITAL OF €2,435,285,011 - RCS NANTERRE 542 107 651 - Tel.: +33 (0)1 44 22 00 00 |
3
Nuclear: increased contribution driven by higher achieved prices and better availability
Nuclear EBIT improved significantly benefitting from higher captured prices and from higher volumes produced in Belgium (12.3 TWh, +37% compared to Q1 2020) due to the very good availability level. A lower depreciation level, mainly due to the value adjustment booked in December 2020, also contributed to this increase.
Others' EBIT was down organically mainly due to a combination of normalization following a particularly strong GEM performance and a record high contribution from GTT in 2020.
Update on European Court Tax ruling
ENGIE is analysing the recent European Court tax ruling regarding the procedure of State aid granted by Luxemburg. The Group is reviewing its options for a potential appeal. A payment of the EUR 123 million has been done in 2018 by ENGIE and any potential P&L impact would be non-recurring.
Robust financial position: solid balance sheet and stable net financial debt
Net financial debt stood at EUR 22.5 billion up EUR 0.1 billion compared to December 31, 2020.
- Capital expenditures over the period of EUR 1.5 billion;
- other elements, EUR 0.3 billion, mainly related to foreign exchange rates and new leases;
- and dividend paid to non-controlling interests of EUR 0.1 billion;
were offset by:
- Cash Flow From Operations of EUR 1.7 billion;
- and disposals of EUR 0.1 billion.
Cash Flow From Operations amounted to EUR 1.7 billion, up EUR 1.5 billion compared to Q1 2020, mainly due to lower energy trading margin calls as well as management actions on operational working capital.
Net financial debt to EBITDA ratio of 2.4x, was in line with December 31, 2020. The average cost of gross debt was 2.56%, up 18 bps compared with December 31, 2020.
Economic net debt to EBITDA ratio stood at 3.9x, in line with target ratio of equal to or below 4.0x.
On March 24, 2021, Fitch downgraded its long-term rating to A- and maintained its short-term rating at F1.
2021 Guidance
ENGIE reaffirms the guidance announced at year-end results in February.
As a reminder, ENGIE's guidance for 2021 is a net recurring income Group share between EUR 2.3 billion and EUR 2.5 billion. This guidance is based on an indicative EBITDA range of EUR 9.9 billion to EUR 10.3 billion and EBIT range of EUR 5.2 billion to EUR 5.6 billion.
ENGIE remains committed to a "strong investment grade" rating and continues to target an economic net debt to EBITDA ratio of below or equal to 4.0x over the long-term.
___________________________________________________________________________________________________________________________
ENGIE CORPORATE HEADQUARTERS | engie.com |
Tour T1 - 1 place Samuel de Champlain - Faubourg de l'Arche - 92930 Paris La Défense cedex - France | |
ENGIE - SA WITH CAPITAL OF €2,435,285,011 - RCS NANTERRE 542 107 651 - Tel.: +33 (0)1 44 22 00 00 |
4
For 2021, ENGIE expects growth Capex to be between EUR 5.5 billion and EUR 6.0 billion, and c. EUR 4.0 billion of maintenance Capex and nuclear provisions funding.
*************************************
The presentation of the Group's first quarter 2021 financial results used during the investor video conference is available to download from ENGIE's website: https://www.engie.com/en/finance/results/2021
UPCOMING EVENTS | |
May 20, 2021 | Annual General Meeting |
May 26, 2021 | Payment of the dividend for the fiscal year 2020 |
July 30, 2021 | Publication of H1 financial results |
November 10, 2021 Publication of 9M financial information
Footnotes
- Organic variation = gross variation without scope and foreign exchange effect
- The Group's main operating performance indicator "Current Operating Income (COI)" has been renamed "EBIT" in order to align on market practice. There is no change in its definition and calculation. EBIT, formerly COI, is current earnings before interest and taxes but after share of net recurring income of equity-accounted companies; calculated as result of operating activities before non-recurring items such as MtM on financial instruments of an operational character, impairment losses, restructuring, scope effects and other non-recurring items
- Main assumptions for these targets and indications: average weather in France for 2021, full pass through of supply costs in French regulated gas tariffs, no major regulatory or macro-economic changes, no change in Group accounting policies, market commodity prices as of 12/31/2020, average forex for 2021: €/$: 1.23; €/BRL: 6.27, up to 0.1bn€ dilution effect at the EBIT level from c. €2bn disposals in addition to previously signed transactions. Projections assumes no additional stringent lockdowns and a gradual easing of restrictions over 2021
- Cash Flow From Operations = Free Cash Flow before maintenance Capex
- First effects in the "Others" activities due to the transfer of Entreprises & Collectivités from "Supply" to "Others".
___________________________________________________________________________________________________________________________
ENGIE CORPORATE HEADQUARTERS | engie.com |
Tour T1 - 1 place Samuel de Champlain - Faubourg de l'Arche - 92930 Paris La Défense cedex - France | |
ENGIE - SA WITH CAPITAL OF €2,435,285,011 - RCS NANTERRE 542 107 651 - Tel.: +33 (0)1 44 22 00 00 |
5
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original document
- Permalink
Disclaimer
Engie SA published this content on 18 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 May 2021 06:22:02 UTC.
