Solid half-year activity for Engie but a net loss and a "retreat" on the horizon

The incumbent gas operator in France announced on Thursday a net half-year 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 in 2036.

The terms of this extension were agreed in an agreement concluded in June with the Belgian government, after a long standoff. It provides for the cost of processing the waste produced by the entire Belgian nuclear fleet to be capped, as Engie wanted. The addition amounts to 15 billion euros for Engie and will be added the cost of dismantling its seven power stations in the country (8 billion).

This agreement "brings us clarity of visibility by eliminating uncertainties, in particular those concerning the evolution of provisions linked to the treatment of nuclear waste", explained the group's chief executive, Catherine MacGregor, during a conference with journalists.

Excluding this nuclear activity, the Engie group, in full diversification, multiplied the performance in most of its businesses, achieving a turnover of 47 billion euros, up 8,9% compared to the same half-year. in 2022.

The operating result (Ebit) shows an even stronger progression, 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. Ms. MacGregor praised "a very good financial performance", boosted in particular by renewable energies.

A strategic priority for the group, these activities saw their operating income increase by 43% under the effect of higher volumes and favorable prices for hydroelectric power from dams.

Weak second half

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, said Ms. MacGregor.

Engie, the leading wind and solar energy operator in France and fourth in Europe, has strengthened its position in South Africa in particular, by acquiring the activities of BTE Renewables, which will double its renewable production capacities in this country with an unstable current, which focus on solar and wind power.

The biggest contributor to Engie's margin remains its GEMS (Global Energy Management & Sales) division dedicated to companies and large energy consumers (gas, electricity, etc.). Engie supplies them with energy and helps them manage their supply risks. In this area, the group continues to benefit from the contracts concluded in the midst of price euphoria, at the heart of the energy crisis in 2022 and from the income derived from risk management for its customers.

In view of these half-yearly 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 in the first half of the year, a slowdown in Engie's performance in the coming months is to be expected.

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 finance.

"We expect a decline in the second half compared to last year," he added. 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.