Gas Natural Fenosa posted a net profit of 298 million euros and an EBITDA of 1.104 billion euros in the first quarter
- Despite a very demanding and complicated macroeconomic and energy environment, the company fulfils its objectives for 2017 set out in its 2016-2018 Strategic Plan.
- Net profit, without considering the results of Electricaribe in 2016, reached 298 million euros, 8.3% lower than the same period in the previous year.
- EBITDA fell to 1.104 billion euros due to the performance of the electricity business in Spain, resulting from meteorological factors and the cost of raw materials. The regulated network business was solid with good growth, especially in Latin America, without considering the deconsolidation of Electricaribe.
- The company is on track for complying with the objectives set out in its efficiency plan and is currently preparing a new plan.
- Net investments were 24.9% higher at 321 million euros and mainly directed towards regulated network activity, especially in Latin America, and to Global Power Generation (GPG), albeit to a lesser extent.
- In the first quarter the company issued bonds of 1 billion euros with a coupon of 1.375%. In April it issued another 1 billion euros and, in tandem, an offer to repurchase company bonds which, after the issue, were exchanged for the repurchased bonds.
- On 20 April, the Shareholders’ Meeting approved shareholder remuneration of one euro per share held in 2016, representing a payout of 1.001 billion, 74.3%, and a dividend yield of 5.6% based on the listed price at 31 December 2016.
GAS NATURAL FENOSA obtained a net profit of 298 million euros in the first quarter of 2017, 9.4% lower than the same period last year. The result would be 8.3% lower on like-for-like terms as the results of Electricaribe were not consolidated in the first three months of the year due to their falling outside the scope of consolidation at the end of 2016.
EBITDA reached 1.104 billion euros, a decrease of 5.3% when excluding Electricaribe. EBITDA was conditioned by the evolution of the electricity business in Spain, in turn conditioned by climatological factors which caused a contraction in hydraulic production of more than 70%.
The gas distribution business made up 37.3% of EBITDA; electricity distribution, 24.5%; gas activity, 21.0%; and electric activity, 17.8%.
EBITDA from the company’s international activities grew 3.6% and represented 50.1% of the total at 31 March compared to 43.9% from the same period in the previous year. The remaining 49.9% corresponded to the activity in Spain.
Increase of 24.9% in net investments
Net investments reached 321 million euros, an increase of 24.9% when compared to the same period of 2016.
The main focal point for the company’s investments in the first three months were electricity distribution activities, which accounted for 40.3% of the consolidated total. For its part, gas distribution represented 35.6% of the total thanks to investments in all countries, both in maintenance and network growth; and in the electricity activity, which was 19.4% of the total. Investments increased 200% in Global Power Generation (GPG) due to the development of new photovoltaic projects in Brazil.
By geographical area, foreign investments represented 62.8% of the total whilst in Spain it reduced to 37.2%.
Debt reduction continues
At 31 March, net interest-bearing debt reached 15.464 billion euros with the indebtedness ratio at 44.4% compared to 45.9% and 15.817 billion euros at the end of the first quarter the previous year.
90.8% of the debt is subject to long-term maturities and it has an average life of 5.5 years.
At 31 March, GAS NATURAL FENOSA had 10.619 billion euros of liquidity available, equivalent to all financial obligations over 24 months.
Continuity of shareholder remuneration with a payout of 74.3%
The shareholder remuneration proposal, approved by the Shareholders’ General Meeting on 20 April, meant allocating the same amount as last year to dividends, 1.001 billion euros. The proposal involves the payment of one euro per share as well as a payout of 74.3% and a dividend yield of 5.6% when taking the listed price of 17.91 euros per share on 31 December 2016 as the reference.
Last September, the company paid the 2016 interim dividend of 0.33 euros per share wholly in cash.
Gas distribution in Spain
EBITDA from the gas distribution business in Spain came to 225 million euros, up by 4.7% from the same period last year. This increase is associated with piped liquefied petroleum gas activity after the purchase of supply ports in the last quarter of 2016.
Sales from the regulated gas activity in Spain rose by 7.2% compared to the first quarter in 2016 to 56,658 GWh. Residential demand increased 2% (+278 GWh), in line with the comparable period. The growth in demand occurred in the industrial market with an increase of 10% (+2,232 GWh) in the sector of lower than 60 bars and an increase of 11% (+1,283 GWh) in the industry of more than 60 bars.
At 31 March, the company had 5,318,000 supply points (+0.2%) and a distribution network of 52,828 kilometres (+2.7%).
Gas distribution in Latin America
EBITDA from gas distribution in Latin America stood at 173 million euros, an increase of 8.8% due to the performance of some Latin American currencies against the Euro especially in Colombia (+13.3%) Brazil (+22.2%) and Chile (+9.7). Without considering the exchange rate effect, EBITDA would have decreased by 1.9%.
By country, EBITDA recorded in Brazil is worth particular mention: 57 million euros, representing 32.9% of the total. Mexico, with 48 million, accounted for 27.7% of the total whilst Colombia and Chile contributed 38 and 37 million euros to EBITDA, respectively.
Sales from gas activity in Latin America stood at 62,269 GWh and the distribution network in Latin America grew by 2,586 kilometres in the last 12 months to a total of 83,142 kilometres at the end of the first quarter this year.
GAS NATURAL FENOSA has 7,842,000 supply points in Latin America, following the addition of 326,000 new points in the last year. Noteworthy increases were seen in this regard in Colombia (118,000 points) and Mexico (116,000 points).
Gas distribution in Italy
The EBITDA of the gas distribution activity in Italy was in line with the first quarter results of 2016 at 14 million euros due to the remuneration held in the first months of 2017 after the WACC update, as recognised by the Italian regulator in 2016.
Gas distribution activity stood at 1,888 GWh, an increase of 12.3% due to favourable weather conditions. The distribution network reached 7,276 kilometres at 31 March, with an increase of 100 kilometres in the last 12 months. At the close of the quarter, the company had 459,905 supply points in Italy, slightly above that of the same period from the previous year.
Electricity distribution in Spain
EBITDA from electricity distribution activity reached 143 million in the first three months of the year, 5.9% less than in the same period last year as a result of implementing efficiency measures into the business, with positive impacts in subsequent periods.
At 31 March, supplied energy stood at 8,195 GWh, 0.4% less than in the same period of 2016. At the end of the first quarter, the company had 3,707,000 supply points, a net annual increase of 5,259 points. At the end of the first quarter, 86.2% of the meters installed were already smart and 82% of billing was done remotely.
The Interruption Time Equivalent to Installed Capacity (TIEPI) was 57 minutes, higher than that registered at the end of the first quarter of 2016, due to the meteorological conditions, especially severe storms which occurred in Galicia in early February. This autonomous community contributes 93% of this indicator.
Electricity distribution in Latin America
EBITDA from the electricity distribution activity in Latin America, which includes Argentina, Chile, Panama, and electricity transmission in Chile came to 115 million euros in the first quarter of this year, down 25.3%. Excluding Colombia’s contribution to EBITDA in the first quarter of 2016, EBITDA would increase by 10.6%, due in part to the appreciation of the Chilean peso.
Regarding the electricity distribution business in Colombia, on 31 December 2016 the company ceased to consolidate Electricaribe and, in accordance with accounting standards to apply IFRS 10, it derecognised its assets, liabilities and non-controlling companies for a net accounting amount of 475 million euros. Last March, the Superintendency of Residential Public Services of Colombia announced the decision to liquidate Electricaribe and days later GAS NATURAL FENOSA submitted the necessary documentation to initiate judicial proceeds before the Court of the United Nations Commission on International Trade Law (UNCITRAL).
The distribution business in Argentina and Chile (CGE) contributed 87 million euros to EBITDA, with an increase of 4 million euros, disregarding the exchange rate effect. For its part, Panama recorded an EBITDA of 28 million euros (-3.4%).
Sales from electricity distribution activity in Latin America decreased by 36% to 5,680 GWh, essentially due to the derecognition of Electricaribe. Without this effect, sales of the activity would have increased by 1.7%. Overall, supply points at the end of the first quarter totalled 3,650,000.
Electricity distribution in Moldova
EBITDA from electricity distribution in Moldova reached 12 million euros at 31 March, down 7.7% due to the adjustment applied by the regulator to the distribution toll approved last March, and which includes the differential between the investments made and the minimum required according to the tariff methodology in force.
Sales from electricity activity stood at 733 GWh (+4.0%) and the number of supply points stood at 881,000 (+1.3%) at the end of the financial year.
EBITDA of infrastructure activity, which includes the operation of the Maghreb-Europe gas pipeline and the exploration, production, storage and regasification of gas, increased by 8% to 81 million euros. This was mainly due to the 3% increase in the international transport tariff of the Maghreb-Europe gas pipeline and the positive effect of the USD exchange rate.
At 31 March, the gas transport activity carried out in Morocco through the companies EMPL and Metragaz represented a volume of 28,731, 18.8% more. Of this figure, 18,340 (+24.9%) were transported by GAS NATURAL FENOSA through the company Sagane and 10,373 GWh for Portugal and Morocco.
EBITDA from the global gas procurement and wholesale and retail supply business came to 151 million euros, the same amount as in the same period last year.
Between January and March, wholesale supply of GAS NATURAL FENOSA reached 84,367 GWh, an increase of 11%, mainly due to the contribution of international business (+14%), which reached 43,931 GWh, highlighting the momentum of international LNG supply. Supply into the Spanish gas market to final customers reached 40,436 GWh, a 7.9% increase over the first quarter of 2016.
Gas Natural Europe, the company’s European sales subsidiary, held its consolidated position as a natural gas marketing company in France, Belgium, Luxembourg, the Netherlands and Germany. In the first quarter, Gas Natural Europe posted sales in France during the period amounting to 9.9 TWh, with customers in various sectors that range from companies in the industry sector to local authorities and the public sector. Sales in Belgium, the Netherlands and Germany stood at 5.1 TWh in the same period.
The company also operates in the wholesale market in Italy and Ireland where it sold a volume of 3.3 TWh and 0.4 TWh, respectively, during the first quarter of 2017.
In the Portuguese market, GAS NATURAL FENOSA remains the second-largest operator in the country , and the largest overseas operator, with a market share of over 15% and a sales volume of 1.7 TWh between January and March. In the industrial market, where its business is mainly focused, its market share stands above 17%.
Within the retail market, sales reached 14,140 GWh (+1.7%) with 12.3 million active gas, electricity and maintenance service contracts at 31 March, of which 578,000 are in Italy. GAS NATURAL FENOSA’s combined supply of electricity and gas already reaches more than 1.5 million households in Spain.
Unión Fenosa Gas
Gas supplied in Spain by Unión Fenosa Gas (figures at 100%) in the first quarter reached a volume of 11,455 GWh, compared to the 8,747 registered in the first quarter of 2016. In international markets, it managed a gas volume of 8,603 GWh, compared to 5,791 GWh in 2016.
Electricity in Spain
EBITDA for the electricity activity in Spain (generation, wholesale and retail supply and voluntary price for the small consumer) came to 126 million euros, below the 205 million euros recorded in the same period of 2016. The evolution of EBITDA has been conditioned by climatological factors, with a contraction in hydraulic production for the company of 75.2%, as well as by an increase in taxes due to high market prices.
Electricity demand was in line with that registered in the same period of the previous year, with a 0.1% increase to 63,900 GWh, thus continuing the positive growth trend of the last three quarters. The weighted average price in the first quarter was €57.89/MWh, above the one set in the same period of the previous year and practically the same as the €57.85/MWh of the previous quarter.
GAS NATURAL FENOSA generated 7,275 GWh between January and March, 2.7% more. Of this figure, 6,544 GWh corresponded to generation under the traditional regime (+5.5%), while renewable generation and cogeneration stood at 731 GWh. The company’s accumulated market share in power generation stood at 17.2%.
By technology, and between January and March, conventional hydraulic production stood at 465 GWh (-75.4%) due to weather conditions; nuclear production was 1,225 GWh (+12.2%); combined cycles was 3,185 GWh (+18.2%) and coal thermal plants totalled 1,669 GWh, compared to 522 GWh in the same period of the previous year.
Electricity sales in the first quarter reached 9,024 GWh, including supply in the liberalised and last resort market (voluntary price for the small consumer), an increase of 0.3% over the same period of the previous year.
Gas Natural Fenosa Renovables ended the quarter with a consolidated total installed capacity of 1,147 MW, of which 979 MW came from windpower, 110 MW from mini-hydroelectric production and 58 MW from cogeneration and photovoltaic plants.
Global Power Generation (GPG)
EBITDA on Global Power Generation reached 71 million euros in the first quarter, 14.5% more, mainly due to a higher EBITDA in Mexico (+21.2%) and lower corporate expenses. The electricity generated in all assets increased by 1.1% in the period to 4,286 GWh.
At 31 March, the company had an installed capacity of 2,702 MW and boasts guaranteed projects in Australia, Chile and Brazil, where it will construct an additional 471 MW before 2020.
Consolidated balance account
|Other operating revenue||65||58|
|Other operating expenses||-379||-364|
|Depreciation & Amortisation, and impairment losses||-423||-435|
|Allocation to provisions||-30||-57|
|Income from disposal of financial instruments||-||-|
|Income from institutions via shareholding||-||-9|
|EARNINGS BEFORE TAX||478||516|
|Corporate income tax||-112||-121|
|Income from interrupted operations||-||5|
|PROFIT ATRIBUTABLE TO EQUITY HOLDERS OF THE PARENT||298||329|
Consolidated balance sheet
|Investments via shareholdings||1.547||1.683|
|Non-current financial assets||1.866||1.306|
|Deferred tax assets||928||1.153|
|Non-current assets held for sale||-||945|
|Trade and other receivables||5.371||5.325|
|Other current financial assets||337||342|
|Cash and equivalent liquidity||2.653||2.062|
|Equity attributed to the parent company||15.511||14.542|
|Non-current financial liabilities||14.362||14.774|
|Deferred tax liabilities||2.518||2.627|
|Other non-current liabilities||1.307||923|
|Liabilities linked to non-current assets held for sale||-||590|
|Current financial liabilities||3.853||3.278|
|Trade and other payables||3.876||3.680|
|Other current liabilities||400||369|
|TOTAL LIABILITIES AND EQUITY||47.908||47.388|
|Gas distribution (GWh)||120.815||120.988||-0,1|
|Third-party access to the network*||58.546||58.546||7,3|
|Rate-based gas sales||35.047||36.498||-4,0|
|Third-party access to the network||27.222||29.944||-9,1|
|Electricity distribution (GWh)||14.608||17.802||-17,9|
|Rate-regulated electricity sales||733||705||4,0|
|Third-party access to the network||8.195||8.227||-0,4|
|Rate-regulated electricity sales||5.302||8.286||-36,0|
|Third-party access to the network||378||584||-35,3|
|Electricity transmission (GWh)||3.875||3.929||-1,4|
|Gas distribution supply points, in thousands (on 31/03):||13.620||13.260||2,7|
|Electricity distribution supply points, in thousands (on 31/03:||8.238||10.694||-23,0|
|EFOF in Spain (minutes)***||57||17||-|
* Third-Party Access to the network (distributed power). TPA services included in secondary transport.
** 1Q16 includes the contribution of Electricaribe in the consolidated amounts.
*** Interruption Time Equivalent to Installed Capacity.
|Wholesale supply (GWh)||84.367||76.025||11,0|
|Rest of Europe||20.441||20.395||0,2|
|Retail supply (GWh)||14.140||13.902||1,7|
|Gas transport – EMPL (GWh)*||28.713||24.163||18,8|
* Maghreb-Europe Gas Pipeline
|Electricity generated (GWh)||11.561||11.322||2,1|
|Combined cycles (CC)||3.185||2.695||-18,2|
|Renewable and cogeneration||731||880||-16,9|
|Global Power Generation||4.286||4.240||1,1|
|Mexico (wind power)||223||261||-14,6|
|Costa Rica (hydraulic)||79||67||17,9|
|Dominican Republic (fuel)||212||244||-13,1|
|Installed capacity (MW)||15.418||15.471||0,3|
|Renewable and cogeneration||1.147||1.145||0,2|
|Global Power Generation||2.702||2.702||-|
|Mexico (wind power)||234||234||-|
|Costa Rica (hydraulic)||101||101||-|
|Dominican Republic (fuel)||198||198||-|
Scope and subject: Corporate Financial
Barcelona, 12 May 2017