Spain's GN Profits Decline, Puerto Rico Damage Confirmed
Spain’s Gas Natural (GN) has reported a downturn in its net profits, in part due to lower earnings from its Spanish generation business. It was not the only firm affected.
GN reported a net profit of €793mn in the first nine months of 2017 was 14.7% lower than in the same 2016 period. Net profit for 3Q was also 14.7% lower at €243mn, it added November 7.
The company noted that its legal base remains at its corporate office in Madrid, having moved from Barcelona, where it retains its headquarters, earlier in October as a result of the “political uncertainty.” Spain’s government has since taken over the functions of Catalonia’s regional government and thrown several of its separatist leaders into jail.
GN said its August 2017 sale of a 20% stake in its Spanish gas distribution business to a consortium of Allianz and CPPIB for €1.5bn is expected to close by 31 January 2018, while its sale of Italian assets to 2i Rete Gas and Edison worth €1.02bn announced October 13 is expected to close this quarter.
Net profit in full year 2017 is expected by GN to be €1.3bn-€1.4bn, subject to completion of Italian disposals, but it cautioned that pre-tax earnings have negatively impacted by weather in Spain, with its hydroelectric output down by 72.4% in 9M2017 versus the very wet 2016.
GN's group Ebitda (pre-tax earnings) were €1bn in 3Q2017, down 13.6% year on year.
Offsetting the negative hydro impact was the extension of the operating lives of the combined cycle gas-fired plants (CCGTs) from 25 to 35 years on 1 January 2017 following technical surveys completed in 1Q2017, in line with the practices adopted by the leading players in the industry
Hurricane Maria crossed the US Caribbean island of Puerto Rico September 20, causing damage to GN’s EcoElectrica gas-fired plant. Although GN said repairs were “well advanced”, it noted that the hurricane also caused extensive damage to the island’s power transmission grid owned by PREPA which must be repaired – the impact of which is still “currently being assessed.” It has been reported in the trade press that EcoElectrica only recently imported its first LNG cargo, following a gap of almost two months.
GN's overall wholesale gas supplies in 3Q2017 were up 8.6% at 77.3 TWh-gas (7.2bn m3), of which down in Spain by 11% to 34.2 TWh, but up by 32% internationally to 43.1 TWh (of which LNG sales increased 66% to 30.3 TWh, but some of this was due to restatement of Italian sales, pending the Italian divestments that are now classed as 'discontinued operations'). The company also declared its intention to expand its small- and mid-scale LNG marketing, in Spain and globally, to include remote industrial clients and bunker sales.
Meanwhile the largest Spanish-owned power generator Iberdrola said November 7 that its net 9M2017 profit reached €2.41bn, up 18.4% year on year, thanks to its international businesses – which compensated for poor results in Spain where its hydroelectric power production was 57.2% below 2016 levels.
Mark Smedley