ENGIE H1 2024 results

Press release

2  August 2024

ENGIE H1 2024 results

Good financial results in a “back-to-normal” market environment                    

   FY 2024 Guidance upgraded

Key financial figures at 30 June 2024

Catherine MacGregor, CEO, said: « In the face of a market returning to normal conditions, ENGIE has once more delivered very strong H1 results, enabling us to raise our full year 2024 guidance. This financial performance demonstrates the power of our integrated model and showcases our operational capabilities. The first half was marked by the completion of 800MW of new battery capacity in the US thanks to the successful integration of Broad Reach Power. In renewables we have moved forward at pace with another 1GW of additional capacity during the first half plus almost 7GW of projects ongoing at the end of June. More than ever, ENGIE reiterates its commitment of an energy transition affordable to all.»

N.B. Footnotes are on page 8

FY 2024 Guidance upgraded

Due to the strong financial performance in H1 2024 and lower than expected recurring net financial costs for the full-year, ENGIE upgrades its 2024 Net Recurring Income group share (NRIgs) guidance which is now expected to be in the range of €5.0 to €5.6 billion, compared to the previously announced range of  €4.2 to €4.8 billion. EBIT excluding Nuclear is now expected to be in the indicative range of €8.2 to €9.2 billion (versus €7.5 to €8.5 billion previously).  

ENGIE is committed to a strong investment grade credit rating and continues to target a ratio below or equal to 4.0x economic net debt to EBITDA over the long-term. The Group reaffirms its dividend policy, with a 65% to 75% payout ratio based on NRIgs, and a floor of €0.65 per share for the 2024 to 2026 period.

Detailed guidance key assumptions can be found in appendix 4.

Strong operational progress 

Renewables 

ENGIE added over 1GW of renewable capacity in H1 2024, the bulk in Brazil (0.7GW) and France (0.2GW). As of 30 June 2024, ENGIE had 6.9GW of capacity under construction from 63 projects. The group also signed

1.5GW of PPAs (Power Purchase Agreements) the large majority of which with at least 5 years’ duration. Of special note was the signing with Google of a series of new PPAs by which ENGIE will supply more than 118MW of renewable energy to Google’s digital infrastructure facilities in Belgium.

The Group remains confident of achieving its annual target of 4GW on average of additional renewables capacity up to 2025, with the support of a pipeline of 95GW at end-June 2024 (up by 3GW from the end of 2023). 

Through its JV Ocean Winds, ENGIE installed the first turbines of the 882MW Moray West offshore wind farm, as well as delivering the facility’s first power on to the UK’s electric grid. Ocean Winds also inaugurated  the sub-station of the offshore Yeu-Noirmoutier wind farm. Finally, Ocean Winds was awarded exclusive development rights for a 1.3GW offshore wind project in Australia. 

Networks 

As expected, the increase in gas storage, transmission and distribution tariffs, set by the French Energy Regulatory Commission (CRE) for the period 2024-27, took place on 1 January, 1 April and 1 July 2024 respectively.

Renewable gas  

Biomethane continues to develop in France with a yearly production capacity of up to 11.6TWh connected to

ENGIE’s networks in France, an increase of 1.9TWh compared to the end of June 2023. The decree obliging gas producers to support the development of biomethane production through Biogas Production Certificates (CPB), which had previously been announced in the Climate and Resilience law, was published. 

In June 2024, ENGIE’s gas transport subsidiary GRTgaz, together with Enagás et Teréga, signed an agreement for the joint development (JDA) of the BarMar hydrogen project, which will link Spain and France via a sea-based pipeline. The agreement defines the conditions under which the partners commit to collaborate for the project’s development phase: subject to FID, Enagás will have a 50% share, GRTgaz 33.3% and Teréga 16.7%. 

Battery Energy Storage Systems (BESS)

In H1 2024, ENGIE completed 800MW of new capacity of which 775 MW in Texas. Those capacities are part of the portfolio pipeline of Broad Reach Power, which ENGIE acquired in H2 2023. The integration of BRP is progressing with success, with some 90% of former BRP personnel retained by ENGIE and BRP’s platform now used for ENGIE’s entire US battery portfolio. Around 50% of the cash flows of these Texas-based batteries are covered for 5 years on average. 

Energy Solutions

Energy Solutions had a strong H1, achieving more than €2.8bn of additional order intake in DHC networks.  In France, the share of renewable energy in the networks that were won is close to 90%, whilst all expiring concessions have been renewed with additional extension programmes of 62% of GWh sold on average.

Production of decarbonized energy on industrial sites is also developing well in France and overseas including supply of low-energy cooling for CapitaLand Investment Ltd in Singapore.

In energy performance and management, ENGIE benefited from its know-how by winning some flagship contracts notably in Lille (330  buildings) and Rome (1,100 buildings).

Disciplined capital allocation 

In H1 2024, gross Capex amounted to €5.2bn of which €4.1bn towards growth. 86% of the latter was dedicated to Renewables, Energy Solutions, and Flex Gen, in line with ENGIE’s strategic roadmap.

Performance plan delivery 

ENGIE continued its efforts towards operational excellence, with a €87m contribution from the performance plan in H1 2024.

Progress on key ESG targets 

During H1 2024, greenhouse gas emissions from energy production were reduced to 23mt vs. 26mt in H1 2023, mainly due to a lower load factor on thermal generation facilities on the back of mild temperatures and market normalisation. 

The share of renewables in ENGIE’s power generation portfolio was 41% at end-June 2024, unchanged versus the end of 2023. 

In Chile, where ENGIE targets a full exit from coal in 2025, the regulator approved the conversion of one of the group’s three coal-fired plants to gas; the remaining two coal-fired units will be closed. 

Successful employee share ownership

In June 2024, ENGIE successfully implemented its Link 2024 employee share ownership plan with nearly  30,000 employee subscribers in 18 countries. In total, 35% of employees worldwide have subscribed to the operation during the booking period. This is part of the Group's regular employee share ownership policy and will bring the employee share ownership rate to 3.5%.

Update on nuclear in Belgium

On 18 April 2024, the Belgian parliament voted a law adopting the final agreement that had been signed by ENGIE and the Belgian government in December 2023 related to the 10 year extension of the Tihange 3 and Doel 4 nuclear reactors as well as to all liabilities concerning nuclear waste.

Following the vote of this law, the European Union opened a formal “investigation procedure”, as expected. This is the normal procedure to obtain the validation of the project under State aid rules in cases involving a contract-for-difference mechanism in the nuclear sector.  Closing of the operation is still expected by the end of the year.

H1 2024 financial review

Revenue at €37.5bn was down 20.2% on a gross basis and down 20.4% on an organic basis. 

EBITDA (ex. nuclear) at €7.8bn, was down 11.2% on a gross basis and down 11.7% on an organic basis.  EBIT (ex. nuclear) at €5.6bn was down 16.2% on a gross basis and down 16.3% on an organic basis.

–     Forex: a net effect of €9m driven by the appreciation of UK pound sterling and the Mexican peso partly offset by the depreciation of the Brazilian real. 

–     Scope: a net effect of €-16m, the sale of a portion of the stake in TAG and the disposal of Pampa Sul partly offset by full consolidation of Kathu (South Africa).

–     Temperatures in France: compared to average, the H1 2024 temperature effect was a negative €104m, generating a year-on-year negative variation of €-69m across the Networks, Retail and GEMS businesses. 

EBIT contribution by activity: decline due to GEMS largely offset by growth in Renewables, Energy Solutions and Flex Gen

Renewables : strong growth mainly on the back of favourable hydro conditions and new capacity 

Renewables reported 5.7% organic EBIT growth, driven by excellent hydro conditions in France and Portugal as well as new capacity in Latin America, the US, and Europe, partially offset by lower prices in Europe.

Networks: lower distributed volumes in France, lower transit revenues between France and Germany, and normalization of market conditions in the UK and Germany 

Networks EBIT was down 12.7% on an organic basis mainly due to lower revenues from capacity subscribed for gas transit between France and Germany (down from especially high levels in 2023), and from lower distributed volumes in France due to mild weather and weaker gas demand. In addition, market conditions for gas storage normalised after particularly favourable conditions in Germany and the UK in 2023. These negatives were partially balanced by higher tariffs in Romania from 1 April 2023 and good performance from Latin American power and gas assets.  

Energy Solutions: higher results and margin due to non-recurrence of negative H1 2023 one-off in the US, partially offset by price and climate effects

Energy Solutions EBIT doubled year-on-year to €266m in H1 2024 due to a favourable basis for comparison, the group having set aside a provision of €150m in H1 2023 caused by cost overruns in construction of two cogeneration units in the US. Excluding this one-off, Energy Solutions EBIT, despite improving EBIT margin from 5.1% to 5.4%, registered a slight organic decline in H1 2024 owing to very mild temperatures, and to lower gas prices and spark spreads. Those factors offset a better performance driven by an improved contribution from Local Energy Networks in France and energy performance management activities. 

Flex Gen: strong increase due to positive one-offs, higher spreads captured in Europe, and favourable market conditions in Chile 

EBIT in Flex Gen increased organically by 31.9% due to higher spreads captured in Europe thanks to the Group’s hedging strategy and its ability to capture the value of flexibility and volatility, as well as higher margins in Chile due to abundant hydro and consequent lower purchase costs. EBIT was also boosted by higher CRM income in Mexico, positive net one-offs in Q1 2024 resulting from the outcome of a litigation process and the non-recurrence of the negative impact of the downgrade of the sovereign credit rating in Pakistan in Q1 2023. These factors more than offset the impact of the infra-marginal tax in France and lower load factors for CCGTs in Europe due to normalizing market conditions. 

Retail: decline in EBIT due to negative volume effect 

EBIT in Retail amounted to €304m, equating to an organic decline of 37.5%, due mainly to lower volumes caused by mild temperatures and continued sobriety effect, with a long position that achieved lower selling prices in 2024. 

Others: major contribution from GEMS albeit down year-on-year 

GEMS EBIT at €1,946m was 38.1% down on the particularly high level of H1 2023.

Underlying EBIT of GEMS was slightly above €1.0bn in H1 2024, underpinned by good activity at the Client Risk Management & Supply and by the contribution from contracts signed and locked in the past when conditions were favourable, which materialize only at delivery date. This level, down compared to H1 2023 but still strong, reflects the normalisation of market conditions and the lower resulting volatility. 

In H1 2024, EBIT was furthermore boosted by several non-recurring and timing elements: 

-  Reversals of market reserves, to a lesser extent than H1 2023 and in line with the accelerated normalisation of market conditions; 

-  Positive timing effects which should reverse in the second half of this year.

The Group continues to expect underlying EBIT (ie, excluding the impact of reversal of market reserves) of close to €2bn for GEMS in 2024.

Nuclear : strongly up due to ending of inframarginal tax in Belgium

Nuclear reported €770m of EBIT compared to €239m in H1 2023, a sharp rise due to the absence of inframarginal tax in Belgium, which ended in June 2023 and far outweighing the negative impacts of slightly lower availability due to maintenance outages (albeit still at a high level of 88.0%), the closure of the Tihange 2 reactor in February 2023 and slightly lower captured prices. 

Net recurring income Group share of €3.8bn 

Net income Group share of €1.9bn

Net recurring income group share amounted to €3.8bn compared to €4.0bn in H1 2023.  

Net income Group share amounted to €1.9bn, an improvement of €2.8bn versus H1 2023, mainly the result of the non-recurrence of a negative cost related to nuclear provisions following the agreement signed with the Belgian government in 2023.

The negative €2.2bn mark-to-market commodity contracts is linked to the decline in gas and electricity prices.

Strong balance sheet and liquidity

Cash Flow From Operations amounted to €8.9bn, down €0.6bn compared to the especially high level of H1 2023. 

Working Capital Requirements was positive at €1.8bn, with a negative year-on-year variation of €0.6bn, the positive impact on client receivables (€4.4bn) and margin calls (€0.5bn) offset mainly by gas stocks and other inventories (-€2.3bn), tariff shields (-€2.1bn) and nuclear (-€0.7bn) negative impacts.

The Group maintained a strong level of liquidity at €26.6bn as at 30 June 2024, including €18.1bn of cash⁵.

Net financial debt stood at €30.2bn up €0.7bn compared to 31 December 2023. This increase was mainly driven by:

-                capital expenditure over the period of €5.2bn,

-                dividends paid to ENGIE SA shareholders and to non-controlling interests of €3.6bn,

-                Belgian nuclear phase-out funding and expenses of €1.5bn. These elements were partly offset by: 

-                Cash Flow From Operations of €8.9bn, 

-                other elements of €0.7bn. 

Economic net debt stood at €45.8bn, down €0.8bn compared to 31 December 2023.

The Economic net debt to EBITDA ratio stood at 3.1x, unchanged compared to 31 December 2023, and in line with the target ratio below or equal to 4.0x  

S&P : BBB+ / A-2, Stable outlook

Moody’s : Baa1 / P-2, Stable outlook

Fitch : BBB+ / F1, Stable outlook

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The presentation of the Group’s H1 2024 financial results used during the investor conference is available to download from ENGIE’s website:Financial results2024 (engie.com)

UPCOMING EVENTS

7 November 2024         Publication of 9M 2024 financial information 

27 February 2025         Publication of FY 2024 financial results 

Footnotes

¹  Cash Flow From Operations: Free Cash Flow before maintenance Capex and nuclear provisions funding

²  Net Recurring Income Group share

³  Net of sell down, US tax equity proceeds, including net debt acquired ⁴ Before hydro tax on CNR

⁵ Cash and cash equivalents plus liquid debt instruments held for cash investment purposes minus bank overdrafts

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Important notice 

The figures presented here are those customarily used and communicated to the markets by ENGIE. This message includes forward-looking information and statements. Such statements include financial projections and estimates, the assumptions on which they are based, as well as statements about projects, objectives and expectations regarding future operations, profits, or services, or future performance. Although ENGIE management believes that these forward-looking statements are reasonable, investors and ENGIE shareholders should be aware that such forward-looking information and statements are subject to many risks and uncertainties that are generally difficult to predict and beyond the control of ENGIE, and may cause results and developments to differ significantly from those expressed, implied, or predicted in the forward-looking statements or information. Such risks include those explained or identified in the public documents filed by ENGIE with the French Financial Markets Authority (AMF), including those listed in the “Risk Factors” section of the ENGIE (ex GDF SUEZ) Universal Registration Document filed with the AMF on 7 March 2024 (under number D.24-0085.  Investors and ENGIE shareholders should note that if some or all of these risks are realised they may have a significant unfavourable impact on ENGIE. 

About ENGIE 

Our group is a global reference in low-carbon energy and services. Together with our 96,000 employees, our customers, partners and stakeholders, we are committed to accelerate the transition towards a carbon-neutral world, through reduced energy consumption and more environmentally-friendly solutions. Inspired by our purpose (“raison d’être”), we reconcile economic performance with a positive impact on people and the planet, building on our key businesses (gas, renewable energy, services) to offer competitive solutions to our customers.

Turnover in 2023: €82.6bn. The Group is listed on the Paris and Brussels stock exchanges (ENGI) and is represented in the main financial indices (CAC 40, Euronext 100, FTSE Euro 100, MSCI Europe) and non-financial indices (DJSI World, Euronext Vigeo Eiris - Europe 120/ France 20, MSCI EMU ESG screened, MSCI EUROPE ESG Universal Select, Stoxx Europe 600 ESG-X)

ENGIE HQ Press contact:                                         Investor relations contact:

Tel. France: +33 (0)1 44 22 24 35                                Tel.: +33 (0)1 44 22 66 29

Email: engiepress@engie.com                                    Email: ir@engie.com

     ENGIEpress

N.B. Footnotes are on page 8

APPENDIX 1: CONSOLIDATED FINANCIAL STATEMENT 

Statement of financial position

ASSETS

In millions of euros                                                                                                                                                                                         June 30, 2024         Dec. 31, 2023

TOTAL ASSETS                                                                                                                                    197,319                 194,640

LIABILITIES

In millions of euros                                                                                                                                                                                    June 30, 2024          Dec. 31, 2023

Non-current liabilities

Provisions

Long-term borrowings

Derivative instruments

Other financial liabilities

Liabilities from contracts with customers

Other non-current liabilities

Deferred tax liabilities

TOTAL NON-CURRENT LIABILITIES

Current liabilities

Provisions

Short-term borrowings

Derivative instruments

Trade and other payables

Liabilities from contracts with customers

Other current liabilities

Liabilities directly associated with assets classified as held for sale

TOTAL CURRENT LIABILITIES

Income statement

In millions of euros                                                                                                                                                                                                      June 30, 2024       June 30, 2023

REVENUES                                                                                                                                                    37,525                  47,028

Purchases and operating derivatives 

Personnel costs

Depreciation, amortization and provisions

Taxes

Other operating income

Current operating income including operating MtM 

Share in net income of equity method entities 

Current operating income including operating MtM and share in net income of equity method entities 

Impairment losses

Restructuring costs

Changes in scope of consolidation

Other non-recurring items

NET INCOME/(LOSS) FROM OPERATING ACTIVITIES

Financial expenses

Financial income

NET FINANCIAL INCOME/(LOSS)

Income tax benefit/(expense)

NET INCOME/(LOSS) 

Statement of cash flows

In millions of euros

NET INCOME/(LOSS)

- Share in net income/(loss) of equity method entities

+ Dividends received from equity method entities

- Net depreciation, amortization, impairment and provisions

- Impact of changes in scope of consolidation and other non-recurring items

- Mark-to-market on commodity contracts other than trading instruments

- Other items with no cash impact

- Income tax expense

- Net financial income/(loss)

Cash generated from operations before income tax and working capital requirements

+ Tax paid

Change in working capital requirements

CASH FLOW FROM OPERATING ACTIVITIES

Acquisitions of property, plant and equipment and intangible assets

Acquisitions of controlling interests in entities, net of cash and cash equivalents acquired

Acquisitions of investments in equity method entities and joint operations

Acquisitions of equity and debt instruments

Disposals of property, plant and equipment, and intangible assets

Loss of controlling interests in entities, net of cash and cash equivalents sold

Disposals of investments in equity method entities and joint operations

Disposals of equity and debt instruments

Interest received on financial assets

Dividends received on equity instruments

Change in loans and receivables originated by the Group and other CASH FLOW FROM (USED IN) INVESTING ACTIVITIES

June 30, 2024         June 30, 2023

(217)

(540)

321

6,900

97

435

(61)

871

1,327

9,132

(1,026)

1,418

                   9,524

(3,078)

88

(73)

(1,123)

72

(2)

53

3

(27)

1

(78)

           (5,418)                   (4,164)

2: CONTRIBUTIVE REVENUE BY ACTIVITY

Revenues at €37.5bn were down 20.2% on a gross basis and 20.4% on an organic basis. 

Contributive revenue, after elimination of intercompany operations, by activity:

3: EBIT MATRIX

4: 2024 GUIDANCE – KEY ASSUMPTIONS AND INDICATIONS 

•       Guidance and indications based on continuing operations 

•       No change in accounting policies 

•       No major regulatory or macro-economic changes 

•       Inframarginal rent caps based on current legal texts and additional contingencies

•       Taking into account 2024-27 French regulatory review (gas networks)

•       Full pass through of supply costs in French B2C retail tariffs 

•       Average temperature in France 

•       Average hydro, wind, and solar production 

•       Average forex: 

•       €/USD: 1.08

•       €/BRL: 5.64 

•       Belgian nuclear availability in H2 2024: 90% based on availability published 1 January 2024 on REMIT, excluding LTO

•       Contingencies on Belgian nuclear operations of €0.1bn in 2024 

•       Market commodity prices as at 30 June 2024 

•       Recurring net financial costs of €1.9-2.2bn in 2024 

•       Recurring effective tax rate: 26-28% in 2024-26