ENGIE has reported the Covid-19 health crisis is having a “significant impact” on some of its customers and operations, and as the impact on the Group’s financial statements remains at this stage unquantifiable and subject to uncertain assumptions regarding the length and profile of this crisis, it is withdrawing its previously stated 2020 guidance.
The diversity of the Group’s businesses is expected to result in a range of Covid-19 impact levels:
- Financially, negative foreign exchange effects are likely to impact accounts, particularly due to the reduced value of Brazilian Real. Operationally, Networks is demonstrating resilience, facing moderate volume timing effects and delays in selected maintenance investments.
- Thermal and Nuclear operations are modestly impacted by price movements on unhedged merchant power sales.
- Renewables operations are also impacted by such merchant price movements as well as selected instances of operational, supply chain and finance partnering constraints on capacity builds and sell-downs. Supply is impacted by lower volumes and a potential increase in bad debts.
- Client Solutions activities are more significantly impacted by client shutdowns, project postponements and constraints related to staff health protection in this labour-intensive business.
These impacts are being partly mitigated by actions to reduce operating expenditures and adjust the timing of planned investments. Given its strong balance sheet, ENGIE says operational excellence and diversified activities supporting the energy transition, mean it is “well positioned to resume growth once the crisis has subsided”.
In light of the ongoing global health crisis, ENGIE has put in place an adaptation plan to ensure:
(i) The health and safety of Group employees, their families, and of those of its service providers.
(ii) Continuity of essential internal and selected client operations.
(iii) Limitation of financial impacts and protection of financial liquidity.
ENGIE says it “is committed to its clients’ operational continuity and is providing essential infrastructure support”. All employees whose roles allow are working from home, while many client-facing staff remain in the field to provide essential energy supply and services. These operations are only maintained subject to comprehensive health and safety protocols.
ENGIE said it “continues to maintain one of the strongest balance sheets in its sector,” with EUR 16.4 billion of liquidity including EUR 8.6 billion of cash, as of end of February. On March 20, the issuance of a triple tranche senior bond for a total of EUR 2.5 billion further improved the Group’s financial position.
ENGIE’s Board of Directors has also decided to cancel the payment of the EUR 0.80 dividend per share for 2019, but adds it “remains fully committed to resume paying dividends in the future”.
Jean-Pierre Clamadieu, Chairman of the Board, commented: “I would like to recognise and thank all of our employees for their continuous commitment throughout this evolving crisis. Our decision to cancel ENGIE’s 2019 dividend payment has been made in light of continuing uncertainties as to the depth and duration of this unprecedented crisis, and will further strengthen Group’s operational flexibility.
“ENGIE has solid liquidity, resilient business model and the strategic intent to resume dividend payments as soon as possible while we continue to invest in our growth strategy. The Board of Directors is confident in ENGIE’s ability to return, at the end of this crisis, to a sustainable growth trajectory.”
ENGIE will provide an updated view on its consequent financial outlook to 2022 in due course.