Engie ((ENGIY)) has held its Q4 earnings call. Read on for the main highlights of the call.
Engie’s recent earnings call painted a picture of optimism and strategic growth, despite some challenges. The company reported record net income, significant advancements in renewables and battery storage, and a successful nuclear deal. However, there were concerns about EBIT declines, market normalization, and energy management. Overall, the sentiment was positive, with a clear focus on future growth plans.
Record Net Income Achieved
Engie celebrated a third consecutive year of net income surpassing €5 billion, marking a record high for 2024. This achievement places the company at the upper end of its guidance range, showcasing its robust financial performance.
Significant Growth in Renewables
The company made substantial strides in renewable energy, commissioning 4.2 gigawatts of new capacity in 2024. This brings Engie’s total renewable capacity to 46 gigawatts, with an ambitious target of reaching 95 gigawatts by 2030.
Expansion in Battery Storage
Engie doubled its battery storage capacity to 2.6 gigawatts in operation, with another 2.6 gigawatts under construction. This expansion follows the acquisition of Broad Reach Power, highlighting Engie’s commitment to energy storage solutions.
Approval of Belgian Nuclear Deal
The EU Commission’s approval of the Belgian nuclear agreement was a significant milestone for Engie, reducing nuclear waste storage liability. The transaction is expected to close by March 14, further strengthening Engie’s nuclear strategy.
Strong Performance in GEMS
Engie’s Global Energy Management and Sales (GEMS) division reported an EBIT of €2.4 billion, bolstered by a non-recurring reversal of market reserves totaling €1 billion. This performance underscores the division’s resilience amid market changes.
Improved Dividend and Cash Flow
Engie proposed a dividend increase to €1.48 per share, up from €1.43, supported by a strong cash flow from operations that matched 2023’s record figure of €13.1 billion.
Significant EBIT Contribution from New Segments
New segments such as batteries, power networks, solar, and B2B contributed €1.7 billion to EBIT in 2024. Engie expects this contribution to rise to between €2.2 billion and €2.8 billion by 2027.
Challenges in Energy Management
Energy management faced challenges due to price normalization and volatility, with future EBIT projected to range between €500 million and €900 million, depending on market conditions.
Hydro Volumes and Price Volatility
While hydro volumes were significantly above average in 2024, a decline is expected, potentially impacting future EBIT by €300 million to €500 million due to price volatility.
Exposure to Market Conditions
Engie’s exposure to outright power prices in Europe is expected to decrease from 20% to less than 5% by 2027, with earnings increasingly reliant on market volatility.
Normalization of Energy Markets
The normalization of energy markets and the phase-out of high-margin contracts are anticipated to lead to a decline in supply and energy management EBIT by 2027.
Forward-Looking Guidance
Engie’s guidance for 2024 highlighted a record net income exceeding €5 billion, despite a 6% year-on-year decline in EBIT excluding nuclear. The company reported a 3% growth in net recurring income group share to €5.5 billion, with cash flow from operations matching 2023’s record of €13.1 billion. The proposed dividend increase to €1.48 per share and a decrease in greenhouse gas emissions to 48 million tonnes were notable achievements. Engie’s strategic focus on renewables and power networks is expected to drive continued growth and investment through 2025-2027.
In summary, Engie’s earnings call reflected a positive outlook with strategic growth initiatives in place. The company achieved record net income and made significant progress in renewables and battery storage. Despite challenges in energy management and market normalization, Engie’s forward-looking guidance suggests a focus on sustainable growth and investment in key areas.