Engie Takes Q1 Hit in Belgium, France

French Engie reported May 5 a 5.9% drop in earnings before tax, interest, depreciation and amortisation, to €3.3bn ($3.62bn) in Q1 2017; and a drop of 8.5% in operating income, down to €2.2bn, compared with Q1 2016.

This was despite revenues of €19.513bn, up 3.2% on a gross basis and +3.1% on an organic basis, mainly owing to more gas purchase and sales, new assets in Mexico and Peru, hydro in Brazil and to tariff revisions for gas infrastructure.

France and Belgium were its weak spots relative to the year before, although otherwise its European earnings were up. It was hit by high prices in the south of France this January as Algerian LNG cargoes failed to arrive, as traders continued sending spot cargoes to the cheaper northeast Asian market. In Belgium, Engie-Electrabel's Tihange 1 nuclear plant was taken offline in September. Wholesale power prices were also lower.

Storage revenues were also down as the market is discounting seasonality at Europe’s over-supplied gas hubs. On the positive side, gas-fired power was up; higher transportation and distribution tariffs boosted income and so did the gas sales volumes during the cold winter. It did not make any comment on the effects of lower gas contract prices, and remains locked in dispute with Dutch wholesaler GasTerra.

Profit from North America was unchanged on the year, as worse power generation activities were offset by better trading and cost savings.

Engie CEO, Isabelle Kocher

(Credit: Engie)

Profit from Africa/Asia was up thanks to the good performance of assets in Australia where power prices were higher; and the commissioning of the AzZour North power plant in the Middle East, which was partly offset by lower plant availability in Thailand.

Upstream gas suffered from a drop in production of 2.2mn barrels of oil equivalent, to 13.4mn boe at the end of March 2017. This was due to the closure of Norway’s Njord platform for modernisation in Norway and to depletion in the Netherlands and in Germany. Prices were higher but not by enough to cancel out the output drop.

Net debt was down €4.4bn to €20.4bn, thanks in part to the closure of thermal merchant activities in the US in February 2017, which reduced net debt by €3.1bn.

William Powell