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ENGIE’s green energy work has largely escaped from COVID-19’s fallout so far, with the utlity's renewables unit recording strong performance and expected to report "low impacts" going forward.
New results out Tuesday show the French group generated in Q1 2020 revenues (€16.5 billion or US$17.8 billion) and EBITDA (€3.1 billion or US$3.3 billion) either largely in line with – or slightly lower than – the figures reported for the same period last year.
ENGIE, the update indicates, remained money-making even if current operating income dipped between Q1 2019 (€2 billion/US$2.16 billion) and Q1 2020 (€1.9 billion/US$2.05 billion). Between January and March 2020, net financial debt grew €2 billion to reach €27.9 billion (US$30 billion).
While most divisions posted year-on-year falls in gross current operating income, ENGIE's renewables unit recorded – when the metric was converted to organic income – a 17.2% jump, a contrast with Client Solutions (45.7% drop in organic terms), Thermal (16.1%) and others.
Renewables’ organic income boost in Q1 2020 was, the firm said, chiefly driven by buoyant hydro power output in France and the commissioning of wind and solar across the globe. Over in the US and Canada, green energy project completion helped offset losses on other fronts.
“Looking ahead, we will continue to prioritize employee safety while restarting previously impacted activities as soon as possible, and at the same time we will further sharpen our strategic focus on key activities and geographies. The world’s recovery from the Covid-19 crisis is a unique opportunity to address the energy transition and climate change challenges with renewed urgency”—Claire Waysand, ENGIE’s interim CEO
Faith in long-term RES prospects after CEO's ousting
ENGIE’s pre-pandemic 2020 guidance – full-year net recurring income of €2.7-2.9 billion (US$2.94-3.16 billion) – was already pulled in April and this week’s update brought no changes. The “unquantifiable” nature of impacts means predictions will need to wait, the firm said.
The COVID-19 outbreak finds ENGIE on the other side of the high-profile ousting of former CEO Isabelle Kocher. Forced out by the board in early February, the executive was replaced by a transition team led by interim CEO Claire Waysand, who continues to hold the title as the search for a replacement continues.
Amid the boardroom controversy, the firm has continued to put stock in the green energy shift initiated by Kocher. In late February, the transition team predicted its renewables unit would be one of its only two to achieve double-digit growth of operating income in 2020, amid claims that the target it set last year to add 9GW of green energy projects by 2021 is now “fully secured”.
How the green energy agenda will be disrupted by COVID-19 beyond Q1 2020 remains unclear. In early April, ENGIE acknowledged impacts on its renewables unit, including “operational, supply chain and finance partnering constraints”. The division, the firm went on to say at the time, could be hit this year by “price movements on unhedged merchant power sales.”
One month later, the French group appeared to change discourse as it said it currently expects “low impact” from the pandemic as ongoing projects, supply chains and facility operations remain “largely unaffected”. The firm added, however: “Uncertainties remain on potential delays of commissioning and sell-downs, foreign exchange and timing of favourable rulings in Brazil.”
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