Naturgy concludes the first year of its Strategic Plan 2018-2022 fulfilling its commitments
- In the last twelve months, the company has invested approximately € 2 billion, of which 70% in renewables and electricity networks, in line with its ambition to increase the weight of electricity in its business portfolio.
- The performance of the business abroad compensates for the lack of growth in distribution in Spain, the slowdown of liberalized businesses and a mild climate in the period.
- In order to safeguard the interests of all stakeholders, Naturgy is prioritizing, in the short term, the preparation of its allegations to the drafts of the gas and electricity regulatory regime recently published by the CNMC.
- The company continues to focus, as highlighted in the plan presented in June 2018, on the simplification of its businesses, as well as its organizational and management structure.
- The group has accelerated its efficiency plan and expects to reach at least € 150 million in 2019, compared to the initial forecast of € 100 million.
- In the first half of the year, the results of ordinary activities reached an EBITDA of € 2.2 billion, up 8%. Net income reached € 692 million.
- The Board of Directors ratified the cancelation of the € 400 million of treasury stock held as of June 30, as approved by the Annual General Meeting of Shareholders, and authorized a new share buy-back for the same amount to be executed over the next 12 months.
- Furthermore, the first dividend against 2019 results, amounting to € 0.294 per share, has been approved, thus benefiting all shareholders and participants in the company’s capital.
Naturgy has completed the first year of operation since the company launched its new 2018-22 Strategic Plan which laid the foundations for the company’s long-term value creation strategy. The first six months of 2019 have been marked by the progress in the investment in renewables and power grids, the good evolution of the international business, the implementation of its efficiency plan, the corporate and management reorganization, and the sale of non-strategic assets.
Francisco Reynés, Chairman and CEO of Naturgy, stressed that “during these first twelve months of the Strategic Plan we have been able to take the right steps to respond, in an agile and decisive way, to the uncertainties and changes that are taking place economically, politically and in our sector. The world is changing, and our business is doing it at an even faster pace, so the transformation we are carrying out in Naturgy is mandatory and reinforces our global competitiveness.”
Reynés also said that “for this first part of the year I want to highlight the effort we have made to simplify our geographical presence and optimize our management model. We have designed a new commercial policy that has allowed us to improve our margins and reduce our risk. All this together with the efficiency plan and the simplification of all our processes.”
Ordinary EBITDA reached € 2,277 million, an 8% increase, excluding, among other factors, the capture costs of 110 million euros associated with the implementation of the efficiency plan incurred during the first semester. After these non-ordinary effects, EBITDA reached € 2,150 million. On the other hand, the ordinary net profit increased by 30%, to € 692 million, mainly derived from an improvement in activity and lower amortizations.
Investments during the first six months of the year amounted to € 700 million, which have been mainly allocated to renewable projects, always complying the company´s golden rules. Since the beginning of the Strategic Plan 18-22, Naturgy has invested € 2 billion, 70% in renewables and power grids, in line with its ambition for greater electrification.
As of June 30, 2019, net debt reached € 14.8 billion, 3% less than December 31, 2018, thanks to a strong focus on cash flow generation.
CNMC proposal for consultation
On July 5th, the National Commission of Markets and Competition (CNMC) published the first drafts of the regulatory memos for consultation that will establish the remuneration methodology of the regulated activity of electricity and gas distribution from 2020 and 2021 respectively.
The CNMC has opened an allegation process which ends, in principle, on August 9th. Through this process, which is being worked on as a priority, Naturgy seeks to protect the interests of all stakeholders in Nedgia, which has among its reference shareholders two pension funds, one German and one Canadian (Allianz Capital Partners and Canada Pension Plan Investment Board).
Naturgy will try to ensure that the new remuneration framework continues to recognize a reasonable and predictable remuneration in the long term, both for investments already executed as well as for future ones.
Progress on Strategic Plan 2018-2022
During the first half of the year, Naturgy has continued to make steady progress on the development of its value creation strategy, based on 4 key pillars:
- Simplicity and Accountability:
In addition, Naturgy has signed an agreement to sell electricity transmission assets in Chile, while it has also entered into an asset swap in Argentina, improving its competitive position in the region where it operates
However, Naturgy continues to demonstrate its ability to simplify its business positioning and geographical footprint of the Group, with a view to allocate its capital and resources to those businesses which maximize long term value creation for its stakeholders.
- Capital Discipline
- Shareholder remuneration
Furthermore, the company has completed the first €400m tranche of its share buyback program. The Board of Directors has approved the cancelation of the shares acquired under this program, expected to take place during the month of August and authorized the launch of the new € 400 million tranche until the end of June 2020, in the absence of any inorganic opportunities which meet the company’s profitability criteria.
Results by business unit
By business units, Gas & Power registered an ordinary EBITDA of € 695 million, thanks to a strong performance of the gas, power and services sales, as well as the international power generation. On the contrary, international LNG and Europe power generation were negatively affected by lower sales and margins during the period.
The EMEA Infrastructure business increased its regular EBITDA to € 970 million, as a result of a good performance across all businesses and efficiencies..
Infrastructure South LatAm (Chile, Argentina and Brazil, mainly) grew significantly, with an ordinary EBITDA of € 449 million, driven by the efficiencies achieved and the tariff updates, and despite the negative FX evolution (-46 million).
In the case of Infrastructure North LatAm (Mexico and Panama), the ordinary EBITDA was € 190 million on the back of positive regulatory impacts, higher demand, and efficiency improvements.
|Net debt (at 30/06)||14.826||15.3092||-||-|
1. Including €380m related to two LNG tankers in tome-charter regime incorporated durign 1H18 (non-cash investments).
2. As of 31/12/2018. IFRS16 adjusted.
Contribution to EBITDA by activities
|Gas & Power||640||595||695||693|
|Infrastructure LatAm South||448||362||449||400|
|Infrastructure LatAm North||189||123||190||121|