Spain's GN Names New Boss, 2017 Profits Flat
Spain’s Gas Natural (GN) reported February 7 a slight rise in 2017 profits and named the outgoing CEO of Spanish airports and toll-roads operator Abertis as its new executive chairman.
Francisco Reynes will replace both Isidro Faine, GN chairman, and CEO Rafael Villaseca who is retiring from the company to run its charitable foundation. The EU cleared a $20bn-plus takeover by German construction giant Hochtief of Abertis February 6.
GN reported full year 2017 net profits were €1.36bn, up just 1% increase year-on-year, helped by strong Latin American growth. Net profits for 4Q2017 though were more cheering for GN, up 36% at €567mn.
Its pre-tax (Ebitda) earnings for full year 2017 were €3.915bn, down 16.1% versus to 2016, with international and Spanish activities representing 48.5% and 51.5% respectively. Total net investments were €1.78bn, down 29%.
A strong performance in Latin American countries helped GN reach its annual profit target after weak 3Q results, with three countries, Brazil, Chile and Mexico generating the most growth in the region.
GN ended a mixed year with 2017 and a turbulent 3Q. Lower earnings from Spanish power generation - including a 71% decline in its 2017 hydro-electric production -- saw a downturn in net profits, while Hurricane Maria in September caused damage in GN’s gas-fired plant in Puerto Rico. Political uncertainty in Spain’s autonomous region of Catalonia forced GN to move its legal HQ from Barcelona to Madrid, and it continues to contest Colombia’s 2017 confiscation of GN's debt-laden local business there, Electricaribe.
GN’s gas distribution earnings (Ebitda) in Spain reached €906mn, up 1.9% compared to 2016. Regulated gas sales showed a 5.9% year-on-year increase reaching 195.6 terawatt hours of gas (18.2bn m3). Industrial demand grew by 3.8%, while residential demand grew 1.8% versus to 2016. Its Spanish gas distribution system (since rebranded Nedgia) grew by 1413 km, reaching 53,369 km.
Earnings (Ebitda) from Latin American distribution increased by 14.7% mainly in Brazil, Chile and Mexico, while gas sales in the region were 264.4 TWh (24.6bn m3), up 9.3% compared to 2016. Volumes were up in Brazil, but also Mexico where the gas distribution network grew by 888 km. GN also obtained new gas distribution permissions until 2021 in Mexico, with an expected investment of €247mn, and in Chile with €52mn of investment for the 2017-2019 period.
Earnings (Ebitda) from electricity distribution in Latin America hit €434mn in 2017: Chile and Argentina contributed a combined €328mn, while the remaining €106mn came from Panama.
Pre-tax earnings from infrastructure activities (operation of the Magreb-Europe gas pipeline, E&P, storage and regasification) were €296mn in 2017, while earnings from wholesale gas marketing were €470mn. In 2017, GN’s wholesale gas marketing reached 334.65 TWh (31.1bn m3), up 12.1% boosted by the growing international LNG market. Its largest European gas market outside Spain was France (37.6 TWh). Sales in Portugal of 5.5 TWh made it No.2 supplier with a 12% market share.
GN's incoming executive chairman Francisco Reynes (Photo credit: Abertis)