Naturgy loses 347 million after reducing the value of its plants

Naturgy has closed the 2020 financial year with losses of 347 million euros, mainly motivated by the adjustment in the valuation of part of its assets, which has had an impact of 1,363 million, of which 1,145 million affect conventional generation plants in Spain, and another 198 million to the gas activities it has in Argentina.

The ordinary operating result (Ebitda) in the period was 3,714 million, 14.6% lower than the previous year, after discounting the sale of the Chilean CGE, which is scheduled to materialize this year. And the ordinary net profit, without taking into account the exceptional adjustments made by the firm, reached 872 million. Naturgy shares are losing 1.2% on the stock market at this time.

The coronavirus crisis has left its impact on the annual accounts of the energy company in a year in which the demand for electricity and gas in Spain decreased in 2020 on average 5.5% and 6.2% respectively, compared to the last year. Furthermore, demand for electricity and gas in the Latin American regions in which Naturgy operates experienced an average decline of 2.8% and 8.3%, respectively.

The president of the company, Francisco Reynés, pointed out “the adaptability that Naturgy has shown in this difficult context and how the company has stood out on the international energy scene compared to other competitors, thanks to its growth in clean technologies and its commitment to new businesses, such as renewable gas, promoting digitization and innovation in all areas of the group.

In addition, the company will propose to the shareholders’ meeting the payment of a final dividend against 2020 of 0.63 euros per share to be paid during the first quarter of this year. In this way, and if the shareholders approve it, this payment will be added to the first two interim dividends for 2020, of 0.31 euros and 0.50 euros, respectively; which will raise the total dividend to 1.44 euros per share.

Naturgy’s results come just two weeks after Australian fund IFM launched a partial takeover bid for more than 22% of the company. The operation is still in its infancy and must overcome several obstacles, although the intention of the fund is to share ownership with the other three major shareholders of the corporation: CriteriaCaixa (24.8%), GIP (20.6%) and Rioja Acquisition (20.7%). These last two firms have already anticipated that they will not attend the tender offer.

The success of the operation also depends on the Government, since the Council of Ministers has the last word on this authorization as it is a takeover bid that exceeds 10% of a “strategic” Spanish firm. The anti-takeover decree approved in March by the Executive to prevent the landing of foreign companies over national ones that are key to the economy enables it to be able to paralyze this operation.

Achievement of objectives

The company has made progress in achieving its commitments and is focused on a new stage of transformation, something that has been demonstrated once again after the recent acquisition of renewable projects in the United States with the purchase of Hamel Renewables, which has a portfolio of projects of 8 GW in solar energy and 5 GW in storage.

Also noteworthy is the positive result achieved in the auction held in Spain, where it was awarded a total of 235 MW (38 MW wind and 197 MW photovoltaic) distributed between wind and solar photovoltaic technologies, putting in value the portfolio of renewable projects in the that he has been working for in recent years, and that has allowed him to configure a truly competitive and optimized portfolio. The award in this auction is aligned with the company’s growth objectives and joins the more than 300 MW that the company approved at the end of the previous year and that are currently in the construction start phase.

During the past financial year, Naturgy made important progress in Australia, a country that has become a key element for the company since, thanks to the latest agreements reached, it will increase its renewable capacity in this country to 700 MW. Specifically, the group has the ‘Ryan Corner’ and ‘Berrybank’ wind farms in Australia, which total about 328 MW, in addition to the ‘Crookwell 2’ wind farm (96 MW), currently in operation. In addition, it finalizes the authorization of several renewable projects in Australia, which could involve the development of more than 400 MW of additional capacity, which would make it one of the most important independent producers of wind energy in the country.

The company made significant progress in renewables in Chile, where it has more than 300 MW of wind and solar capacity. In Brazil, the company has 80 megawatts of photovoltaic energy in operation and installed its first photovoltaic plants outside of Spain. These are the Sobral (30 MW) and Sertao (30 MW) projects in Piauí, and Guimarania I and II (80 MW), in Minas Gerais.

Also noteworthy is the agreement reached with ENI and the Government of Egypt in relation to the Damietta liquefaction plant, owned by the Unión Fenosa Gas (UFG) joint venture. The parties involved continue to work to complete the transaction during the first part of this year, once the stipulated conditions are met. Thanks to this agreement, a complex situation that has lasted since 2012 is resolved, which has meant a significant consumption of resources for the company.

In the year, the company’s net debt stood at 13,612 million, almost 11% less, without yet reflecting the income before taxes of 2,570 million expected at the close of the sale of CGE Chile. In 2020, the average cost of gross debt improved to 2.5% compared to 3.2% in 2019. At the end of the year, the group’s total liquidity amounted to 9,475 million.


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