Soon the end of the price euphoria? French energy giant Engie had a six-month increase in its core gas and renewables business, but lost money on a Belgian nuclear deal, and already warns to expect a slowdown by the end of the year. The incumbent gas operator in France announced on Thursday a net loss of 800 million euros, largely due to provisions of more than 4 billion euros for the extension of two of its nuclear power plants in Belgium until 2036. After lengthy negotiations, Engie made a commitment in June to the Belgian government to finance part of the cost of processing nuclear waste (for a total of 15 billion), to which will be added the cost of dismantling its seven power stations in the country (8 billion).
But, in full diversification, Engie multiplied the performance in most of its businesses, generating a turnover of 47 billion euros, an increase of 8.9% compared to the first half of 2022. (Ebit) shows an even stronger increase, of 32.3% over one year to 6.9 billion euros. Excluding exceptional items, Engie’s recurring net profit this semester is 4 billion euros, after 5.2 billion for the whole of 2022. “In the first half Engie achieved a very good financial performance, driven by the development of our renewable activities and the results of our energy management activities in a context still characterized by high volatility in energy prices”, said the group’s chief executive Catherine MacGregor, quoted in the communicated.
A strategic priority for the group, renewable energy activities saw their operating income increase by 43% under the effect of higher volumes and favorable prices for hydroelectric power from dams.
On the project side, the group continues to accelerate in renewables with 6.6 gigawatts (GW) of projects under construction at the end of June, representing a total of 68 projects. “We are therefore still very confident in our ability to achieve our annual objective of adding 4 GW of renewable capacity on average”, until 2025, before 6 GW over 2026-2030, declared Catherine MacGregor in a call to journalists. . The energy company, the leading wind and solar energy operator in France and fourth in Europe, has notably strengthened its position in South Africa, by acquiring the activities of BTE Renewables, which will double its renewable production capacities in this country, to the current unstable and betting on solar and wind power.
The largest contributor to Engie’s margin remains its GEMS (Global Energy Management
In view of these half-year performances (excluding nuclear), the group confirmed its annual objectives for 2023, i.e. a net recurring profit of between 4.7 and 5.3 billion euros (compared to 3.4 to 4 billion previously), as announced June 30. And since the essentials have already been done over the half-year, this means that a slowdown in Engie’s performance in the coming months is to be expected. The management admitted this on Thursday, saying that “the forecasts show a second half which is obviously much weaker”, according to Pierre-François Riolacci, deputy general manager of finance. “We expect a decline in the second half compared to last year,” he added in a conference with journalists. This decline is mainly expected in the GEMS division, in a context of “market normalization”, with less volatility, but also in renewables, due to lower prices.