Engie Sticks to Guidance as Quarterly Profit Beats Estimates

(Bloomberg) -- Engie SA stuck with full-year earnings forecasts as quarterly profit beat estimates, helped by cost cuts, a strong clean-power business and a rebound in energy services.

The French utility expressed confidence it’ll meet 2020 targets, saying its regulated assets in renewables, gas and power have proved resilient and it’s well prepared to ride out the second wave of the coronavirus crisis. The company is also pressing ahead with more divestments, having last month pulled off a $4 billion sale of its stake in water utility Suez SA.

Engie’s current operating income was 583 million euros ($688 million) in the third quarter, 15% down on a year earlier but 2% higher on a like-for-like basis.

“This is the first meaningful results beat for Engie in over one year,” analysts at Barclays Plc said in a note. “Most importantly, Engie’s 2020 guidance was conservatively enough set to withstand the impact of selling the Suez stake and additional lockdowns in Europe.”

The shares jumped as much as 4.7% to 12.48 euros in Paris on Friday, the highest since March 11. They traded up 2.4% as of 2:11 p.m. local time, paring their decline this year to 15%.

Engie said in July it wants to sell at least 8 billion euros of assets in the coming years, using the proceeds to boost growth in renewables and other services tied to the energy transition to fight global warming. The utility plans to offload part of its energy-services division, and said Friday it may sell some or all of its 40% stake in engineering business GazTransport & Technigaz SA to a third party or on the stock market.

“We’re going to start the process now,” Chief Financial Officer Judith Hartmann said on a conference call.

With quarterly earnings growing year-on-year for Renewables, Networks and Client Solutions -- a business on the slate for partial divestment -- and more disposals on the way, Engie maintained its 2020 forecast for net recurring income of 1.7 billion to 1.9 billion euros.

“Most of our businesses are performing well and we are well prepared for the new Covid-19 restrictions introduced in some of our main geographies,” the CFO said in a statement.

The company, based near Paris, said Friday it plans to sell services activities representing as much as 13 billion euros in annual revenue and 450 million euros in operating income.

Engie has “a lot of work ahead” to prepare the carve-out of its services activities, including a formal consultation process with employees in the first half of next year, before it decides on its divestment options, interim Chief Executive Officer Claire Waysand said on the conference call.

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