Engie SA reported a jump in 2022 earnings and a planned 65% increase in its dividend thanks to an exceptional surge in the cost of power and gas last year.
(Bloomberg) — Engie SA reported a jump in 2022 earnings and a planned 65% increase in its dividend thanks to an exceptional surge in the cost of power and gas last year.
The French utility is among European energy companies to profit from higher prices in the wake of Russia’s assault on Ukraine. Gas and power markets have since eased, likely curbing results this year, though Engie expects a subsequent bounceback as it capitalizes on investment in renewables.
“Not only have we achieved robust operational and financial results, but we have also progressed on our strategic roadmap, establishing strong foundations for our group to continue the implementation of the energy transition,” Chief Executive Officer Catherine MacGregor said Tuesday.
Net recurring income climbed to €5.2 billion ($5.55 billion) in 2022 from €2.9 billion a year earlier, according to a statement. The shares rose as much as 5.8%, the most in three months, and traded up 3.8% as of 2:37 p.m. in Paris.
The bumper earnings of Engie and other European utilities have coincided with a cost-of-living crisis across the continent, sparking the ire of consumers and politicians. Governments have reacted by slapping taxes on windfall profits to help finance relief measures for households and businesses that are struggling with soaring bills.
Such levies, mainly in Belgium and Italy, had an impact of almost €900 million on Engie’s results last year, while existing government profit-sharing mechanisms in Belgium and France shaved off a further €1.1 billion.
Earnings Outlook
Engie forecast net recurring income of €3.4 billion to €4 billion for this year, in line with analyst estimates. By 2025, the firm sees earnings of as much as €4.7 billion as it reaps gains from renewables investment and its Energy Solutions business, which manages infrastructure such as car-charging networks.
Engie plans to pay a dividend of €1.40 a share for last year, up from €0.85.
The company also released a statement on its energy-transition plans, announcing €22 billion to €25 billion in “growth capex” in 2023-2025, up 50% from the current three-year program. That expansion may include “bolt-on” acquisitions, MacGregor said.
The bulk of the extra spending will be devoted to renewable gases and power as well as battery storage. By the end of the decade, Engie is targeting:
- 10 terawatt-hours of biomethane production capacity in Europe, compared with a previous target of 4 terawatt-hours in France alone
- 10 gigawatts of battery storage installed
- €4 billion investment to build 4 gigawatts of hydrogen production capacity, transportation and storage infrastructure
- 80 gigawatts of gross renewable-power production capacity, up from 38 gigawatts at the end of last year
- Net-zero greenhouse gas emissions in four countries including Brazil
Engie booked €2.8 billion of impairment charges last year, largely related to increased nuclear provisions for future power-plant dismantling, its coal exit program, and a process to divest power stations mainly in Chile and Morocco.
The company has almost completed a €11 billion asset disposal plan, in part thanks to the sale of services unit Equans. Annual divestments will be less than €1 billion in coming years, Chief Financial Officer Pierre-Francois Riolacci said Tuesday.
(Updates with clean-energy targets in bullet points.)
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