Revenues as of September 30, 2017 are EUR 46.8 billion euros, up +1.3% on a gross basis and +2.9% on an organic basis compared to end of September 2016. This organic increase is in particular attributable to the impacts of new assets commissioned, of price rises in Latin America and of the 2016 price revisions in the infrastructures business in France. Considering adverse weather effects, these positive developments are partially offset by reduced B2B sales of natural gas in France and by a decrease in renewable energy generation in France, mainly coming from hydro.
EBITDA amounted to EUR 6.6 billion, down -3.6% on a gross basis, mainly because of the scope effects linked to disposals, and up +3.8% on an organic basis compared to end of September 2016. This increase confirms the very good performance of the growth engines, i.e. renewable and thermal contracted, infrastructures and customer solutions activities, which show a gross growth of +4.6% over the period, partly offset by adverse volume impacts (hydraulic and nuclear power production).
EBITDA for the first nine months was driven by the positive impacts of the sustained performance of the Group’s growth engines, driven by the results of the “Lean 2018” performance program and by assets commissioning in Latin America. These positive elements are partially offset by the climate effects lowering the renewable energy generation in France. Besides, the merchant activities benefit from a very good performance of thermal power generation in Europe and in Australia, partially compensated by the price effects on outright power production and by the shutdown of the Tihange 1 nuclear power plant in Belgium (from September 2016 to May 2017 and since September 12, 2017).
The difference between reported and organic evolution is due to negative scope effects, mainly linked to the disposals of merchant power generation assets in the United States in June 2016 and in February 2017 and of the Paiton power plant in Indonesia end of 2016, coupled with the recognition in EBITDA of the nuclear contribution in Belgium, partially offset by a favorable foreign exchange effect mainly attributable to the Brazilian real. The temperature effect in France is slightly positive over the period but unfavorable compared to end of September 2016.
Current Operating Income amounts to EUR 3.6 billion, down -10.5% on a gross basis and up +1.8% on an organic basis compared to end of September 2016, driven by the growth engines up +4.0% over the period. The organic growth recorded at EBITDA level is partly offset by higher depreciation and amortization charges than those of the previous year following the three-yearly review of dismantling obligations related to Belgian nuclear power plants at the end of 2016.
As of September 30, 2017, net debt reaches EUR 23.3 billion, down EUR -1.5 billion from year-end 2016, mainly thanks to the effects of the portfolio rotation program and to a favorable forex impact.
Cash Flow From Operations (CFFO) amounts to EUR 4.9 billion for the first nine months, down EUR 1.9 billion versus September 30, 2016. This evolution reflects mainly an adverse evolution in working capital variation of EUR -1.2 billion (mainly due to a favorable price effect in 2016 in gas inventories), restructuring costs and scope effects (notably the disposal of power generation assets in the United States). However, the intrinsic operational cash flow generation remains robust.
At the end of September 2017, the net debt (excluding E&P internal debt) to EBITDA ratio comes out at 2.35x, in line with the target of a ratio less than or equal to 2.5x. The average cost of gross debt declines compared to end 2016 at 2.6%.
The Group confirms its 2017 financial targets(2), without any change in the E&P accounting treatment (7):
From January 1 to September 30, 2017:
Since October 1, 2017:
From January 1 to September 30, 2017:
Since October 1, 2017:
Since October 1, 2017:
Revenues are up +1.3% on a gross basis with EUR -649 million scope effects (EUR -1 042 million scope out mainly linked to the disposal of hydro and thermal power generation assets in the United States in June 2016 and in February 2017, to the sale of power production assets in Poland and EUR +393 million scope in mainly linked to the acquisition of Keepmoat Regeneration in the United Kingdom in April 2017) and EUR -44 million exchange rate effect, resulting from a negative impact on the British pound, partly offset by a positive impact on the Brazilian real. On an organic basis, revenues are up +2.9%.
Internationally, revenues of the North America segment showed a negative gross variation, due primarily to divestments in the merchant generation fleet. On an organic basis, revenues are slightly down driven by lower results from the Retail business and the impact of less favorable contracts renewals in the retained Generation business. This is partly mitigated by higher revenues in the Services businesses. Revenues of the Latin America segment are up on a gross basis, impacted notably by the appreciation of the Brazilian real, and on an organic basis, due to tariff reviews in Mexico and in Argentina and to commissioning (Panuco in October 2016 in Mexico, Nodo Energetico in October 2016 and Chilca+ in May 2016 in Peru) which have offset lower volumes in Chili and a weaker demand in Peru. In Brazil, revenues increased thanks to higher prices partly driven by the poor hydrology. Revenues for the Africa / Asia segment are up organically due to the very good performance of power production and sales in Australia linked to the increase of power prices and to the successful close of Fadhili power plant contract in Saudi Arabia, partly offset by a lower availability of assets in Thailand and Turkey.
In Europe, revenues for the Benelux segment decreased because of the lower commodities prices for power production and sales activities and of the diminution of the nuclear power production and of the power sales. Services activities, supported by a good level of activity in Belgium and in the Netherlands, registered higher revenues. In France, revenues went sharply down on a gross basis because of the internal reclassification of gas and power B2B commercialization activities (Entreprises et Collectivités “E&C”) into the segment Other. The organic decrease is due to a lower wind and hydro renewable power generation, partly offset by a revenues increase in the services activities. Europe excluding France & Benelux revenues are up, mainly due to positive price effects on sales activities (power and gas) and to higher power prices and production volumes (First Hydro) in the United Kingdom as well as to the positive effect of weather conditions for gas distribution activities in Romania.
Revenues for Infrastructures Europe increased, reflecting mainly the developments of distribution and transport activities for third parties, notably in Germany for transport.
Revenues for the segment Global Energy Management and Global GNL are up mainly driven by higher volumes for mid-stream commodities sales in Europe and in Asia for the GNL business.
Revenues for the segment Other increased sharply due to the internal reclassification of gas and power B2B commercialization activities (Entreprises et Collectivités “E&C”) since January 1st, 2017, partly offset by the sale of power production assets in Poland. The organic decrease is due to lower B2B gas sales in France because of customers losses, to the impact of the closure of the Rugeley plant in the United Kingdom, partly compensated by a better performance of the gas thermal fleet and by higher captured prices.
The September 30, 2017 financial information used during the investor conference call is available to download from the Group’s website :
(1) Gross variation from growth engines, i.e. renewable and thermal contracted, infrastructure and customer solutions activities.
(2) Assuming average temperatures in France, full pass through of supply costs in French regulated gas tariffs, unchanged current Group accounting principles for supply and logistic gas contracts, no significant regulatory and macro-economic changes, commodity price assumptions based on market conditions as of December 31, 2016 for the non-hedged part of the production, and average foreign exchange rates as follows for 2017: €/$: 1.07; €/BRL: 3.54. These financial objectives include the impact of the Belgian nuclear contribution on EBITDA and do not consider significant impacts on disposals not yet accounted as at March 2, 2017 (date of annual results publication).
(3) Belgian nuclear contribution now included in EBITDA.
(4) Excluding forex and scope.
(5) Including share in net income of associates.
(6) Cash Flow From Operations (CFFO) = Free Cash Flow before maintenance Capex.
(7) Without taking into consideration the IFRS 5 treatment of E&P.
(8) The Board of Directors has decided the payment of an interim dividend of EUR 0.35 per share for 2017, which has been paid on October 13.
The figures presented here are those customarily used and communicated to the markets by ENGIE. This message includes forward-looking information and statements. Such statements include financial projections and estimates, the assumptions on which they are based, as well as statements about projects, objectives and expectations regarding future operations, profits, or services, or future performance. Although ENGIE management believes that these forward-looking statements are reasonable, investors and ENGIE shareholders should be aware that such forward-looking information and statements are subject to many risks and uncertainties that are generally difficult to predict and beyond the control of ENGIE, and may cause results and developments to differ significantly from those expressed, implied or predicted in the forward-looking statements or information. Such risks include those explained or identified in the public documents filed by ENGIE with the French Financial Markets Authority (AMF), including those listed in the “Risk Factors” section of the ENGIE (ex GDF SUEZ) reference document filed with the AMF on March 23, 2017 (under number D.17-0220). Investors and ENGIE shareholders should note that if some or all of these risks are realized they may have a significant unfavorable impact on ENGIE.
ENGIE is committed to taking on the major challenges of the energy revolution, towards a world more decarbonised, decentralised and digitalised. The Group aims to become the leader of this new energy world by focusing on three key activities for the future: low carbon generation in particular from natural gas and renewable energy, energy infrastructure and efficient solutions adapted to all its customers (individuals, businesses, territories, etc.). Innovation, digital solutions and customer satisfaction are the guiding principles of ENGIE’s development. ENGIE is active in around 70 countries, employs 150,000 people worldwide and achieved revenues of €66.6 billion in 2016. The Group is listed on the Paris and Brussels stock exchanges (ENGI) and is represented in the main financial indices (CAC 40, BEL 20, DJ Euro Stoxx 50, Euronext 100, FTSE Eurotop 100, MSCI Europe) and non-financial indices (DJSI World, DJSI Europe and Euronext Vigeo Eiris – World 120, Eurozone 120, Europe 120, France 20, CAC 40 Governance).