• EBITDA reached 1.216 billion euros, 3.4% less in adjusted terms, due to the fall in price of raw materials
  • The company expects to see a more favourable environment in the second half of the year.
  • The EBITDA on activities in Spain remains stable, and its relative weight in the consolidated total increased to 56.8%.
  • Regulated and quasi-regulated business, with a 69% contribution to the EBITDA, are confirmed as the main generators of cash flow.
  • Investments in the quarter rose by 6.4% to 266 million euros, focusing on gas and electricity networks in Europe, reflecting the company’s clear commitment to a solid, stable business model.  
  • GAS NATURAL FENOSA reduced its net interest-bearing debt by 8.7% to 15.817 billion euros, reducing its indebtedness ratio and consolidating its financial strength.

GAS NATURAL FENOSA earned a net profit of 329 million euros in the first quarter of 2016, 8.7% lower in adjusted terms, due to factors in the macroeconomic and energy environment. The company expects this environment to improve in the second half of the year..

The EBITDA was 1.216 billion euros, 3.4% lower in adjusted terms than in the same period in 2015. The drop is due to falling prices for raw materials.

Despite the harsh energy and economic environment, the company’s results attest to the soundness of its business model, in which regulated and quasi-regulated activities (including gas transportation, power generation with renewable energies and the activity of GPG) contribute 69% of EBITDA.

Meanwhile, activities in Spain generated a quarterly EBITDA similar to that of 2015 and increased their contribution to the consolidated total to 56.8%, demonstrating their strength compared to international activities, whose EBITDA fell by 20.2% to 43.1% of the total.

Investments in the quarter were 266 million euros, 6.4% higher, focusing especially on the gas and electricity distribution business in Spain. There was also a notable increase of 36.5% in investments in regulated business in Europe, a fact which underlines the Group’s commitment to a solid, stable business model.

GAS NATURAL FENOSA maintained strict financial discipline over the quarter. At 31 March, its net financial debt stood at €15.817 billion, 8.7% lower than the same date in 2015. The indebtedness ratio was 45.9%, below the 47.7% for the same date the year before. 82.7% of its debt matures in or after 2018, with an average life of slightly over five years.

Gas distribution in Spain

EBITDA for gas distribution in Spain grew by 0.5% to 215 million, and net sales were 295 million, an increase of 0.7%. Sales in the regulated gas business in Spain as a whole fell by 2.1% from 2015 to 52,865 GWh, due to the lower demand for gas in the residential market.

The group continued expanding its distribution network and increasing its supply points, despite low activity levels in the new build market. The distribution network grew by 2,122 kilometres (+4.3%) year-on-year, bringing gas to 11 new towns in 2016. The company increased its supply points by 47,000 over the last year, reaching a total of 5,286,000 by the end of March.

Gas distribution in Italy

EBITDA on gas distribution in Italy was 14 million euros, 12.5% lower due to lower payments after the updating of the WACC recognised by the Italian regulator. Sales were 1,681 GWh, with a 12% decrease due to a mild winter.

The company reached nearly 458,000 supply points in Italy, a 0.4% increase, while the distribution network grew by 1% to 7,176 kilometres.

Gas distribution in Latin America

EBITDA on gas distribution in Latin America was 159 million euros, 15% lower. It was particularly affected by the behaviour of currencies in Mexico, Argentina, Chile, Colombia and Brazil. Disregarding exchange rate effects, EBITDA increased by 3.2%.

By country, EBITDA was most notable in Brazil: 47 million euros, or 29.6% of the total. The volume of sales was 24.9% lower, due to the economic crisis and the drop in the industrial market, while the residential and commercial markets together grew by 13.4%.

EBITDA in Mexico was 44 million euros, representing 27.7% of the business as a whole. Excluding the effect of the exchange rate, EBITDA would have increased by 6.7%, with sales up by 4%.

Disregarding the exchange rate, Colombia’s EBITDA rose by 27.9% thanks to higher sales in the secondary industrial market.

The EBITDA of Chile was 31 million euros and represents 19.5%

At the close of the quarter, sales for the gas business in Latin America, including sales of gas and third-party access to the network (TPA), came to 66,442 GWh, 5.4% down from the same period in 2015.

The distribution network in Latin America increased by 2.8% to 80,556 kilometres at the end of the quarter. The expansion of the network in Mexico contributed to this growth, where a further 1.015 kilometres have been added over the last year.

GAS NATURAL FENOSA had over 7.5 million supply points at 31 March, 306,000 more than the previous year. There were notable increases in Mexico, with 109,000 new supply points over the last year, and Colombia, with 107,000 new points.

Electricity distribution in Spain

EBITDA for electricity distribution in Spain came to €152 million euros, a 7% increase over the first quarter of 2015. Turnover was up by 2.9%, to 210 million euros.

The power supplied was 8,227 GWh, 4.1% less than in 2015. At 31 March, the company had 3,688,000 supply points, slightly more than at the end of last year.

Electricity distribution in Moldova

EBITDA on electricity distribution in Moldova was 13 million euros in this period (a 30% increase) due to higher payments from the base tariff after the annual update and the effect of the exchange rate between the local currency and the dollar.

Electricity sales were slightly lower at 705 GWh (-3.6%) and, at the close of the first quarter, there were 869,946 supply points (+1.3%).

Electricity distribution in Latin America

EBITDA on electricity distribution in Latin America, including Colombia, Panama, Argentina and Chile, was 154 million euros in the period, 6.1% less than in 2015. When disregarding the exchange rate effect, the EBITDA would increase by 4.8%.

The electricity distribution business in Colombia contributed 50 million euros to EBITDA during the first quarter, 15.6% more if the exchange rate effect is disregarded. This growth is mainly due to higher revenues from marketing.

In Panama, EBITDA for the business was 28 million euros, 27.1% less without the effect of the exchange rate, as the income of the previous year had been distorted by a change in how variations in tariffs were measured.

The EBITDA for Chile and Argentina (CGE) was 76 million euros, with an increase of 10 million euros without the exchange rate effect. The growth  came from the electricity distribution business in Chile, mainly thanks to an increase in physical sales, greater activity in third-party services and lower operating costs, together with higher power consumption in the sub-transmission sector.

Gas: Infrastructure

The EBITDA for infrastructure activity, which includes the Maghreb–Europe Gas Pipeline operation, maritime transport management, the development of integrated liquefied natural gas (LNG) projects, and hydrocarbon exploration, development, production and storage, was 75 million euros, 5.6% more than in the same period the year before, mainly due to the 3% increase in the international transport tariff for the Maghreb–Europe Gas Pipeline and the positive effect of the dollar exchange rate.

The gas transport business carried out in Morocco through EMPL and Metragaz in the first quarter came to a total volume of 24,163 GWh, 0.4% more than in the previous year. Of this figure, 14,681 GWh (-16.1%) was transported for GAS NATURAL FENOSA through Sagane and 9,482 GWh (+44.2%) for Portugal and Morocco.

Gas: Procurement and sales

EBITDA for worldwide gas procurement and sales was 151 million euros in the first quarter, a 39.8% decrease caused by the magnitude of the adjustment in energy prices during the period: the average Brent for the first quarter fell by 46% from the same period in 2015.

At 31 March, 76,025 GWh of gas had been sold in the Spanish market, an increase of 0.6%.

In 2016, Gas Natural Europe consolidated its position in natural gas sales in Europe, with operations in France, Belgium, Luxembourg, Netherlands and Germany. It is also an active operator in the liquid markets of these countries,enabling it to optimise the position of Gas Natural Fenosa and capture opportunities in the European markets.

Sales in France in the first quarter of 2016 were 12.9 TWh with a diverse client profile, including industrial companies, local authorities and the public sector. In the other European countries where Gas Natural Europe operates, sales were 3.5 TWh for the same period.

In Italy, Gas Natural Fenosa  also operates in the retail market, with sales of 2.5 TWh.

In the retail market, the company has 12.2 million active gas, electricity and service contracts, more than half a million of which are in Italy. Retail sales were down in Spain by 15.2% and rose slightly in Italy by 1.9%.

Electricity in Spain

EBITDA from the electricity business in Spain (generation, wholesale and retail sales, and electricity supply at the last resort tariff) came to €205 million, up 3.8% on the same period in 2015, mainly due to the different behaviour of pool prices.

The weighted average daily market price for the quarter was €31.25/MWh, a decrease of €16.13/MWh from the first quarter of 2015, and 41% less than the previous quarter. In February, the average price fell to €27.70/MWh.

Electricity production was 7,082 GWh, 12.8% less than in 2015. Of this figure, 6,202 GWh corresponded to conventional generation (-17.5%), while renewable generation and cogeneration jointly came to 880 GWh (+45.2%).

Hydroelectricity production was 1,893 GWh for the first quarter, 35.5% more than in 2015. Nuclear power production, meanwhile, fell by 10.6% to 1,092 GWh.

GAS NATURAL FENOSA’s combined cycle production was 2,695 GWh, down 23% on the previous period in 2015.

Coal-fired output reached 522 GWh, compared to 1,399 GWh for the first quarter of 2015.

Electricity sales, including sales in the liberalised market and the Voluntary Price for the Small Consumer (PVPC), were 8,996 GWh, down by 2%. These figures from the electricity sales portfolio are in accordance with GAS NATURAL FENOSA’s position on maximising margins, optimising market share and its desired level of hedging against fluctuations in the market price of electricity.

Gas Natural Fenosa Renovables

Gas Natural Fenosa Renovables ended the first quarter with an installed capacity in operation of 1,145 MW, of which 977 MW came from wind technology, 110 MW from small hydro and 58 MW from cogeneration.

Production in the first three months of the year was 880 GWh, compared to 606 GWh for the same period the year before, mainly due to the incorporation of the production of the Gecalsa wind farms, and also to the higher wind and water power generated during the quarter.

Global Power Generation

Global Power Generation (GPG), created in 2014, encompasses the electricity generation assets and businesses of GAS NATURAL FENOSA outside Europe.

The EBITDA of Global Power Generation in the first quarter of 2016 was 62 million euros, a 15.1% decrease from the same period the year before, mainly due to a lower contribution from the business in Mexico. The result in Mexico (-13.3%) was affected by the different maintenance calendar, the effect of the reference rates of the contracts, and the lower price of gas.

 

Barcelona, 11 May 2016.

Images

President and CEO at Q1 2016 results

President at Q1 2016 Results

Consolidated Income Statement

(€ millions) Q1/2016 Q1/2015
Net sales 5,954 7,167
Other operating revenue 58 56
Supplies -4,059 -5,123
Personnel costs -249 -255
Other operating expenses -488 -496
EBITDA 1,216 1,349
Other profit - -
Depreciation & Amortisation, and impairment losses -435 -441
Provisions -57 -54
OPERATING REVENUE 724 854
Financial results -199 -223
Income from disposal of financial instruments - -
Income from institutions via shareholding -9 -8
PRE-TAX INCOME 516 623
Corporate income tax -121 -152
Income from interrupted operations 5 2
Non-controlling interests -71 -69
PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 329 404

The consolidated profit and loss account corresponding to the financial year 2016 and 2015 has been redrafted to reclassify the liquid petroleum gas business in Chile as discontinued operations in application of IFRS 5.

Consolidated Balance Sheet

(unaudited figures)

(€ millions) 31/03/16 31/03/15
Non-current assets- 38,060 40,760
Intangible assets 10,488 11,064
Fixed assets 23,430 24,954
Investments via shareholdings 1,683 2,105
Non-current financial assets 1,306 1,479
Deferred tax assets 1,153 1,158
Current assets- 9,328 9,773
Non-current assets held for sale 945
Stock 654 815
Trade and other receivables 5,325 6,007
Other current financial assets 342 391
Cash and equivalent liquidity 2,062 2,560
TOTAL ASSETS 47,388 50,533

(unaudited figures)

(€ millions) 31/03/16 31/03/15
Equity- 18,671 19,017
Equity attributed to the parent company 14,542 15,047
Non-controlling interests 4,129 3,970
Non-current liabilities- 20,599 24,254
Deferred income 841 838
Non-current provisions 1,434 1,565
Non-current financial liabilities 14,774 17,846
Deferred tax liabilities 2,627 2,955
Other non-current liabilities 923 1,050
     
Current liabilities- 8,118 7,262
 Liabilities associated with assets held for sale 590 -
 Current provisions 201 143
 Current financial liabilities 3,278 2,138
 Trade and other payables  3,680 4,581
Other current liabilities  369  400
 TOTAL LIABILITIES AND EQUITY 47,388 50,533

 

Physical main aggregates

Distribution Business:

Q1/2016 Q1/2015 %
Gas distribution (GWh) 120,988 126,156 -4.1
Europe: 54,546 55,934 -2.5
TPA* 54,546 55,934 -2.5
Latin America: 66,442 70,222 -5.4
Rate-based gas sales 36,498 41,202 -11.4
TPA 29,944 29,020 3.2
Electricity distribution (GWh): 17,802 17,743 0.3
Europe: 8,932 9,306 -4.0
Rate-regulated electricity sales 705 731 -3.6
TPA 8,227 8,575 -4.1
Latin America: 8,870 8,437 5.1
Rate-regulated electricity sales 8,286 7,968 4.0
TPA 584 469 24.5
Electricity transmission (GWh) 3,929 3,861 1.8
Gas distribution supply points, in thousands (at 31/03): 13,260 12,905 2.8
Europe 5,744 5,695 0.9
Latin America 7,516 7,210 4.2
Electricity distribution supply points, in thousands (at 31/03): 10,694 10,468 2.2
Europe 4,558 4,532 0.6
Latin America 6,136 5,936 3.4
EFOF in Spain (minutes) 17 10 70.0

*TPA services included in secondary transport.

Gas Business:

Q1/2016 Q1/2015 %
Wholesale supply (GWh): 76,025 75,557 0.6
Spain 37,486 40,985 -8.5
Other gas sales 38,539 34,572 11.5
Retail supply (GWh) 13,902 16,073 -13.5
Gas transport – EMPL (GWh) 24,163 24,066 0.4

Electricity Business:

Q1/2016 Q1/2015 %
Electricity generated (GWh): 11,322 12,573 -9.9
Spain: 7,082 8,124 -12.8
Generation: 6,202 7,518 -17.5
Hydropower 1,893
1,397 35.5
Nuclear 1,092 1,222 -10.6
Coal 522 1,399 -62.7
Combined cycles 2,695 3,500 -23.0
Renewable and cogeneration 880 606 45.2
Global Power Generation 4,240 4,449 -4.7
Mexico (CC) 3,621 3,760 -3.7
Mexico (wind power) 261 304 -14.1
Costa Rica (hydraulic) 67 49 36.7
Panama (hydraulic) 13 18 -27.8
Panama (fuel) - - -
Dominican Republic (fuel) 244 289 -15.6
Kenya (fuel) 34 29 17.2
Installed capacity (MW): 15,471 14,803 4.5
Spain: 12,769 12,146 5.1
Generation:  11,624 11,226 3.5
Hydropower 1,954 1,954 -
Nuclear 604 604 -
Coal 2,065 2,065 -
Combined Cycles: 7,001 6,603 6.0
Renewable and cogeneration: 1,145 920 24.5
Global Power Generation 2,702 2,657 1.7
Mexico (CC) 2,035 2,035 -
Mexico (wind power) 234 234 -
Costa Rica (hydraulic) 101 51 98.0
Panama (hydraulic) 22 22 -
Panama (fuel) - 5 -
Dominican Republic (fuel) 198 198 -
Kenya (fuel) 112 112 -