Engie pulls 2020 guidance, scraps dividend as COVID-19 takes hold

The Live Oak wind farm in Texas. Source: Engie SA

April 3 (Renewables Now) - French utility Engie SA (EPA:ENGI) has withdrawn its 2020 guidance and scrapped dividend payment against 2019 earnings after calculating that the COVID-19 pandemic will take a heavy toll on its operations.

In late February, Engie said its 2020 net recurring income would range between EUR 2.7 billion (USD 2.91bn) and EUR 2.9 billion. It posted EUR 2.7 billion in 2019.

On Wednesday, the company said the global health crisis is having a “significant impact” on some of its customers and operations, although the real extent is still unquantifiable.

On the renewables front, Engie singled out merchant price movements and “operational, supply chain and finance partnering constraints on capacity builds and sell-downs” as a weight on its operations.

In the finance department, it is bracing for negative foreign exchange rates to hit its accounts, particularly depreciation of the Brazilian real. Its unit Engie Brasil Energia SA (BVMF:EGIE3) owns 1,116.8 MW of wind, solar, small hydro and biomass-based plants, as well as 6,391.7 MW of large hydro capacity.

The company is working to partly mitigate the impact across the board by cutting operating expenditure and adjusting the timing of planned investments.

“The impact of the crisis on global supply chains, client operations and demand has been progressive, exceeding previous expectations, while the magnitude of impact varies by business line and is most pronounced in labor-intensive client solutions areas,” Engie’s executive leadership team, Claire Waysand, Judith Hartmann and Paulo Almirante, said in a joint statement.

An updated financial outlook to 2022 will be provided in due course. In the meantime, Engie is counting on its balance sheet, with EUR 16.4 billion of liquidity including EUR 8.6 billion of cash, to cushion the blow.

(EUR 1.0 = USD 1.08)

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Sladjana has significant experience as a Spain-focused business news reporter and is now diving deeper into the global renewable energy industry. She is the person to seek if you need information about Latin American renewables and the Spanish market.

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