French Engie Eyes Further Disposals

French utility Engie announced plans to sell more assets November 13 as it needs capital for decarbonising and the energy transition. However it said that Q3 saw a strong financial recovery after the Q2 lockdown. Some impact will still be felt in client solutions, in particular asset-light activities; and to a lesser extent, supply.

For the first nine months, revenues were down 8.5% at €39.6bn ($47bn); pre-tax earnings were down 13% at €6.2bn and current operating income was down 27.9% at €2.8bn. But despite the present health crisis, it expects to be on track for its target as the company's fortunes improved in Q3.

"Overall, Q3 current operating income (COI) was up 2% organically versus last year reflecting growth in renewables and more than offsetting favourable operational one-offs in 2019 and Covid-19 impacts," it said. For the rest of the business, the "impacts are expected to be relatively limited." 

It has already sold off a 29.9% stake in Suez to Veolia for €3.4bn and now it is looking at selling its 40% stake in LNG technology firm GTT and demerging its client solutions business as an initial step.

Its results for the nine months of the year suffered an estimated €1bn hit from Covid-19, of which €150mn in the third quarter, where it weathered the storm better. More than 80% came from client solutions and supply activities, which experienced a strong decrease in activity levels and energy consumption, especially at the height of lockdown measures in Q2.

Networks, renewables, and thermal power generation benefited from regulated earnings, long-term power purchase agreements and hedged output for its merchant plant. But a mild winter hit networks and supply with a total negative impact of €187mn at COI level.

The Group’s COI also reflects a loss of €193mn on foreign exchange, mainly driven by the depreciation of the Brazilian real. 

For other client solutions activities, a new entity will be created as a leader in asset-light activities and related services. These activities benefit from strong growth prospects and leadership positions, however, they are less aligned with Engie’s new strategic orientation.