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Research Tree provides access to ongoing research coverage, media content and regulatory news on ENGIE. We currently have 7 research reports from 1 professional analysts.
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Reduction in commodity exposure on track, but still hurts the group’s earnings
10 Nov 16
Engie has published its 9M trading update with revenue falling 11.1% yoy and 10.3% in organic terms ro reach €47.5bn, with EBITDA falling 5.4% yoy and -2% organically to €7.7bn. Nevertheless, operating cash flows decreased by 8.3% yoy to €6.8bn. Net debt fell by €1.9bn (-6.8% ytd), but the net debt/EBITDA ratio improved (2.38x). The results were negatively affected by commodity prices and compensated by higher infrastructure tariffs. The group confirmed its 2016 financial targets: adjusted net income group at the low end of the range of €2.4-2.7bn and EBITDA of €10.8-11.4bn.
Gas and LNG continue to hurt
29 Jul 16
The difficult half year of the group has been confirmed, mainly at the top-line level as it misses expectations with revenues decreasing 11.9% yoy to €33.5bn. However, the impact has been reduced due to an optimisation of the cost base with EBITDA reaching €5,651m (-7.8% yoy), mainly affected by lower commodity prices (with achieved prices), and a reduction in gas margins. Lower depreciation expenses and a reduction in impairment charges were achieved so that the operating profit increased 5.2% yoy to €3.38bn, pushing upwards in its path net income to an 11.3% yoy increase to €1,237m. On an adjusted basis, operating profit fell by 3.5% yoy to €3.5bn, providing a 1.9% organic growth, while net income decreased by 7% yoy to €1.5bn, which is in line with expectations. A €0.5/share interim dividend in cash will be paid. On the cash flow side, on top of lower earnings, the group had a negative one-off of €1.1bn of margin calls and derivatives which plunged the operating cash flow towards a 32% yoy decrease to €4.79bn. The decrease, added to the 9.6% yoy increase in capex and besides the €1.45bn from disposals and the repayment of €1.43bn of outstanding debt, made free cash flow finish in negative territory at -€657m. Despite the difficult results, the group has confirmed the full-year results with EBITDA at €10.8–11.4bn and adjusted net income in the €2.4-2.7bn range. Following the new strategy of the company, Engie has a new segment reporting in line with the new organisational structure.
Profit resists revenue fall; Electrabel IPO in sight
29 Apr 16
Engie has provided mixed results as revenues reached €18.9bn, which is a 14.3% yoy decrease and falls short of expectations by 12%. However, given the conditions, EBITDA was strong as it fell by 1.7% yoy to €3.5bn, although on an adjusted basis it grew 2.3% where the positive results were supported by the restart of 3 reactors in Belgium and cost-cutting measures, which is in line with consensus. Moreover, operating income increased 0.4% yoy to €2.4bn and +5.9% on an adjusted basis, beating forecasts by 2%. On the other hand, operating cash flows decreased by 55% yoy, but this was mainly driven by WC movements due to the use of derivatives to cover the fall in commodity prices, and higher gas inventories. It is expected that the negative WC movements will be reversed over the year. Net debt decreased by €0.7bn due to cash generation and the first effects of the disposal programme. Following this publication, the group confirmed all its FY16 guidance: EBITDA between €10.8bn and €11.4bn, adjusted net income between €2.4bn and €2.7bn, a 2.5x net debt/EBITDA ratio and an A credit rating and a €1/share dividend to be paid in cash. The group has confirmed its intention to issue an IPO on Electrabel in 2017 (the Belgian subsidiary). The process has been started as the separation of the management of the subsidiary has already been achieved and the group is currently in legally creating an independent and separate entity.
Accelerated transformation to counter commodity exposure
25 Feb 16
Weak top-line performance as both revenues and EBITDA miss estimates. Revenues decreased 6.4% yoy to €69.88bn, 4% short of the forecast, with EBITDA having a similar decrease as sales (-6.6% yoy), missing forecasts by 1.2%. Adjusted operating income decreased by 11.6% yoy to €6.32bn, but the 4% fall is less dramatic than expected; however, on a reported basis it finished in negative territory due to impairments (-€8.7bn) and restructuring costs (-€870m), pushing the reported EBIT into negative territory to -€3.24bn. Due to this, the company had a reported net loss of -€4.62bn but, on an adjusted basis, net income reached €2.6bn, representing a €17% yoy decrease, 1% above estimates. Cash flows remained strong despite the decrease in EBITDA, as operating cash flows increased by 18.6% yoy helped by a substantial improvement in working capital (+€1.16bn). The improvement allowed Engie to cover a 58% increase in net capex and its dividend payments. A €1/share dividend has been proposed, to be paid in cash with a similar one expected for 2016, while dividends have been cut for 2017 and 2018 to €0.7/share to provide investors with visibility during the transition process. A radical transformation process has been put in place with €15bn of asset disposals, an increase in investment objectives, in addition to a move towards a lighter capital-intensive model with a more decentralised approach. On 2016 guidance, the group expects to achieve EBITDA between €10.8bn and €11.4bn with net income between €2.4bn and €2.7bn. An A credit rating is targeted with a 2.5x net debt/EBITDA ratio.
Gas and nuclear hurt revenues, while cash flow remains strong
05 Nov 15
The Q3 trading update has confirmed that 2015 is a difficult year for the group. Sales fell by 1.5% ytd to €53.5bn and -4.6% on an organic basis. Gas and LNG revenues decreased by 38% ytd and Europe by 2.1% ytd, offset by strong performances in International (+10.4%), Infrastructure (+7.7%) and Energy services (4.1%). EBITDA reached €8.1bn, a 7.5% ytd decrease, mainly due to lower power and commodity prices and the effects on E&P and LNG activities, in addition to the unavailability of Belgium nuclear plants. Despite this, operating cash flow remains strong at €7.4bn, 8% above the previous year's levels, being able to withstand the capex increase. Nevertheless, investment has been adjusted to growth opportunities, as there has been a further reduction of €200m in E&P (an additional 10% decrease). Impairments are expected on the FY results due to worsening market conditions, with a downward adjustment of the carrying values of certain assets, although the amount has not been stated. However, it is important to remember the group has a robust balance sheet, one of the strongest in the sector. The group maintains its full-year guidance: EBITDA between €11.5bn and €12bn and adjusted net income €2.75-3.05bn, although it now expects the latter towards the lower end of the range. The dividend policy is maintained, with no objective to change it as cash flow generation remains strong.
Decreasing trend continues, driven by lower commodity and electricity prices
29 Jul 15
Less dramatic than expected H1 results, as the group continues to feel the downward pressure from both electricity and commodity markets. Revenues decreased 2% yoy to €38.52bn, which is in line with expectations. EBITDA decreased by 4.79% yoy to €6.12bn, although the decrease is less than expected. The operating profit of the group decreased by 13% yoy to €3.61bn, but is still 4% above consensus. But the best results are provided on the bottom line, as adjusted net income reached €1.8bn, which was a 28.2% yoy decrease, but still 20.2% above consensus. The reported net income nonetheless reached €1.11bn due to the €700m impairment on gas assets. Net debt decreased by €700m ytd to reach €26.8bn, which is 3.18% better than consensus (net of hybrids), with a decrease in the effective interest rate to 3.0% from 3.14% in December 2014. The group will pay an interim dividend of €0.5 per share and confirmed its FY 2015 guidance: adjusted net income of between €2.85bn and €3.15bn and a dividend payout of 65-75% of the adjusted net income with a minimum payment of €1 per share. Furthermore, an agreement has been reached with the Belgian government confirming the extension life of two nuclear reactors (Doel 1 and 2). Furthermore, concerning the nuclear contribution settlements in dispute for overpaid nuclear taxes, the group has also achieved an agreement concerning the nuclear tax payments: €200m for 2015, €130m for 2016 and a 40% margin from 2017 onwards.
Panmure Morning Note 02-12-16
02 Dec 16
Today James Halstead will be holding its 101st AGM. Trading during the first part of FY17 has been mixed, with some notable challenges. However, movements in FX (i.e. weak sterling) is boosting reported earnings, offsetting UK volume trends and pricing pressures. Whilst earnings are likely to be second half weighted, the picture is in-line with expectations and we are leaving our FY17 PBT estimates unchanged (£47.4m in FY17 vs £45.4m FY16).
06 Dec 16
600 Group* (SIXH): Interim results: order book showing signs of improvement (CORP) | Real Good Food* (RGD): Commodity volatility impacts numbers (CORP) | Minds + Machines* (MMX): .vip goes live in China (CORP | Imaginatik* (IMTK): Interims (CORP) | iomart* (IOM): Quality business as usual (CORP) | Fulcrum (FCRM): Upgrades continue (BUY)
02 Dec 16
On 30 September 2016, when the company announced its full year results, it reported that the UK business had seen a slow start to the year, with particular weakness in repair and renewal spending by the NHS as well as “reticence” in the education sector. However, with the UK only representing about a third of the business, this weakness was expected to be more than offset by the positive effect of a weakened sterling on its overseas business, given the benefits for competitiveness and margins.
Exceptional trading continues
08 Nov 16
Keywords has announced that the strong trading in localisation and audio services has continued into H216. In particular, the Synthesis business acquired in April continues to benefit from exceptionally strong trading. Full-year results are now expected to be materially ahead of consensus and we upgrade our FY16e EPS by 13%. Erring on the side of caution, we have not changed our FY17 estimates significantly. Nevertheless, we believe the company does have a platform to sustain double-digit earnings growth, and hence medium-/long-term prospects for further share appreciation remain good.
06 Dec 16
Acal’s H117 results reflected the weaker demand that was previously flagged combined with positive FX trends. Design & Manufacturing (D&M) continues to grow as a proportion of total revenues and profits and management has raised its targets for this part of the business. The company continues to consider further acquisitions, recently increasing its debt facility to support its growth strategy. The outlook for FY17 is unchanged – based on H117 order inflow, H217 is expected to be stronger and we leave our earnings forecasts substantially unchanged.