• The consolidated EBITDA of the first six months grew 10.5% to 2.674 billion, thanks to the contribution of 295 million in EBITDA by Compañía General de Electricidad (CGE) and the increased EBITDA of the gas and electricity distribution businesses in Latin America.
  • The addition of the Chilean CGE to the scope of consolidation helped to offset the impact of the measures in RDL 8/2014 compared to the same period last year (53 million) and the loss of income from the divested telecommunications business (32 million).
  • On a comparable basis (without taking into account the extraordinary income from the sale of the telecommunications business in June 2014), net profit would be up by 1.2%, thanks to an increasingly diversified international presence and financial discipline.
  • In May this year, the Annual General Meeting approved allocating a total of 909 million euros (0.908 euros/share) as dividends, a 1.2% increase, and maintained the payout at 62.1%.
  • GAS NATURAL FENOSA continues its solid financial policy, and at 30 June its level of indebtedness was 47.6%, after the purchase of CGE, with an average maturity of financial debt above 5 years.

GAS NATURAL FENOSA’s net profit was 751 million euros and its consolidated EBITDA grew by 10.5% to 2.674 billion euros in the first six months of 2015.

The contribution of the Compañía General de Electricidad (CGE) to consolidated EBITDA, worth 295 million, and the growth of EBITDA in the Latin American gas and electricity distribution businesses made it possible to offset, on one hand, the 53 million euro impact of the new regulatory measures of RDL 8/2014, which affects regulated gas business in Spain and had no impact on the first half of 2014; and on the other, the 32 million euro contribution of the telecommunications business, divested in June 2014.

The addition of CGE also raised the weight of international activities in the EBITDA to 50.8%, compared to 40.9% last year. By contrast, the EBITDA generated by operations in Spain decreased by 8% and its relative weight in the consolidated total fell to 49.2%.

Although net profit was 19.5% lower than in the same period last year, mainly due to the absence of extraordinary income after the June 2014 divestment of the telecommunications business and its investee companies, on a comparable basis, adjusting the net gain generated in the previous period, net profit rose by 1.2%, thanks to the balanced business profile, with a growing and diversified contribution from the international presence, and the results of a strict financial policy.

The company’s strict financial policy put its level of indebtedness at 47.6%. At 30 June net financial debt was 16.737 billion. 93.2% of the debt matures in or after 2017 and it has an average life of slightly over 5 years.

At the close of the first half GAS NATURAL FENOSA had 9.79 billion of liquidity available, equivalent to all financial obligations for over 24 months.

Maintenance of the payout

In May, the Annual General Meeting approved a dividend from 2014 income representing a total of 909 million euros (0.908€/share), 1.2% more than last year and in line with the improved net profit of 2014. The company continues to be committed to a solid shareholder remuneration policy, in line with recent years and compatible with predicted growth and deleverage targets.

During the first six months, the main focus of investments was the gas distribution business, which rose by 27.5%, accounting for 38.8% of the consolidated total. RDL 8/2014 will not have a significant impact on the predicted expansion of the gas distribution business in Spain, the country receiving more than 53% of the company’s investments in gas distribution in the first half of the year.

Investment in electricity distribution rose by 20.2% internationally, while the investment in CGE represented 18.1% of the total. By geographical area, investments in Spain fell by 26.2% (but would increase by 23% with the exclusion of the investment in the LNG tanker in the first quarter of 2014). Abroad, investments were up by 48.2% due to the incorporation of the Chilean company.

Gas distribution in Spain

EBITDA from the gas distribution business in Spain came to 436 million euros, down by 3.5% from the same period last year.

Regulated gas sales in Spain as a whole rose by 4.4% to 91,084 GWh. The increase is mainly due to warmer weather, despite lower demand in the industrial market in some sectors, such as cogeneration, affected by the new regulations.

At 30 June, the company had 5,251,000 supply points (+1%) and a distribution network of 49,627 kilometres, 2.8% more than at the end of the first half of last year. The company increased its investments in regulated gas distribution in Spain by 17.2%.

Gas distribution in Italy

EBITDA from the gas distribution business in Italy came to 33 million euros, down by 2.9% from the same period last year. Meanwhile, higher sales in the domestic market (2,473 GWh in the first half year) were driven by good weather over the period.

GAS NATURAL FENOSA reached 456,000 supply points in Italy, with a slight increase from the same period last year, while 119 kilometres were added to the distribution network, bringing it to 7,124.

Gas distribution in Latin America

During the first half year, EBITDA from gas distribution in Latin America was 329 million euros, 10% higher, thanks to currency variations, which appreciated in Mexico (+4.9%) and Argentina (+9.5%), partly offsetting devaluations in Colombia (-4%) and Brazil (-5.9%). Without the exchange rate effect, EBITDA would have increased by 10.8%.

By countries, EBITDA for Brazil was a notable 136 million euros and with Mexico, 88 million euros (+30.1%), represented nearly 68% of the total. Net turnover for the gas distribution business in Latin America rose 8.5% to 1.736 billion euros.

At the end of the half, gas sales in Latin America, including sales of gas and third-party access to the network (TPA), rose to 122,367 GWh, a 0.4% increase over the same period in 2014.

The distribution network in Latin America had increased 3.2% by 30 June 2014, to now exceed 71,964 kilometres. The expansion of the network in Mexico contributed to this growth, where a further 795 kilometres were added in the first six months of the year.

GAS NATURAL FENOSA had more than 6.7 million supply points by 30 June, representing a further 285,000 new points. There was a notable increase in Colombia (+111,000 points).

Electricity distribution in Spain

The EBITDA for electricity distribution, 289 million euros, was up slightly by 0.7% compared to the same period last year. The net revenue was 409 million, similar to the previous period, despite the recognition of the investments entering service in 2013, due to the effect of regularising taxes for 2008 and 2009 the year before.

At 30 June, electricity sales were 16.188 GWh, a 0.9% increase, lower growth than the national demand for distribution, which rose by 2%. At the close of the first 6-month period, the company had 3,676,000 supply points, a similar figure to that reported in the same period last year.

Power cuts and downtime improved and were lower than last year, favoured by good weather and no major incidents.

Electricity distribution in Moldova

EBITDA from electricity distribution in Moldova was 18 million euros in the first half, in line with the same period last year. In local currency, EBITDA rose by 5.7% thanks to higher tariff income and lower network losses, among other factors.

Electricity sales were 1,358 GWh (+4.1%) and there were 861,000 supply points (+1.1%) at the end of the 6-month period.

Electricity distribution in Latin America

EBITDA from the electricity distribution business in Latin America, which includes Colombia and Panama, came to €182 million in the first half of 2015, up 20.5%. If we were to ignore the exchange rate effect, EBITDA would be up 16%.

The distribution business in Colombia contributed 125 million euros to EBITDA, a 21% increase without considering the exchange rate effect, and including higher taxes since the tax reform approved in December 2014. There was also a notable contribution to EBITDA of 57 million euros from distributors in Panama.

Electricity distribution in Latin America during the first half year came to 8,758 GWh, 4.6% more than the same period last year, thanks to growth in demand in Colombia (+3.9%) and Panama (+6.7%).

At the close of this 6-month period, the business’ basic operating indicators showed good results from business management and compliance with plans to reduce losses and late payment in both countries.

Gas: Infrastructure

EBITDA from 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, came to 143 million euros in the first half year, up 2.1% despite lower volume transported by the Maghreb-Europe gas pipeline, but favoured by the positive effect of the US dollar exchange rate.

At 30 June, gas transport activity in Morocco through the companies EMPL and Metragaz stood at a total volume of 51,154 GWh, 16.9% less than in the first half of 2014. Of this figure, 34,178 GWh (-22.1%) was transported for GAS NATURAL FENOSA through the company Sagane, and 16,976 GWh (-4%) for Portugal and Morocco.

Gas: Procurement and sales

EBITDA on worldwide gas procurement and sales at the close of the first half year was 455 million euros, 7.9% less than the same period in 2014, largely due to lower performance by the retail segment affected by the debt structure of the TUR. Flexibility in the management of the global contract portfolio should enable margins to improve gradually over the second half of the year.

In a scenario of weak demand, sales by GAS NATURAL FENOSA to end customers in the Spanish gas market recovered for the fourth quarter in a row, reaching 27,393 GWh in the second quarter of 2015, up 0.4% from the same period last year, mainly due to greater consumption of combined cycles.

Gas Natural Europe, the French subsidiary for sales in Europe, has a portfolio of contracts for 24 TWh/year with customers of different types in France, ranging from industrial companies (chemicals, paper manufacturers, etc) to local governments and the public sector. The subsidiary also consolidated its position in Belgium, Luxembourg, the Netherlands and Germany, where it already has a portfolio of 14 TWh/year.

In Italy, Gas Natural Vendita achieved a contracted portfolio in the wholesale market of 6.2 TWh/year at the end of the first half year.

In the Portuguese market, GAS NATURAL FENOSA is consolidated as the second largest operator in the country with a quota of over 15%, and is the leading foreign operator in the country. In the industrial market, where its activities are focused, the share at the close of the half year was above 20%, enabling it to retain its leadership in the Iberian Peninsula in readiness for the creation of a single Iberian market (MIBGAS).

In the retail market, the company had 12.4 million active gas, electricity and service contracts at 30 June. During the first half year, the company gained 1,023,000 new contracts. Meanwhile, the portfolio of maintenance services for small and mid-sized enterprises continues to grow, and at 30 June stood at 12,000 contracts. This performance has grown the portfolio of power and service contracts in the retail segment by 5% on a comparable basis compared to 30 June 2014.

Electricity in Spain

EBITDA for the electricity business in Spain (generation, wholesale and retail sales and supply of electricity under the last resort tariff) came to 357 million euros, 7.8% lower than the first half of 2014. This drop is mainly due to the different behaviour of pool prices in the compared periods.

The average weighted daily market price for the April-June period this year stood at €46.23/MWh, higher than the €41.07/MWh for the same quarter in 2014 and 2.4% lower than the €47.38 /MWh of the previous quarter.

Electricity production was 14,663 GWh, a 6.9% increase. Of this figure, 13,581 GWh corresponded to generation under the traditional regime (+8.6%), while renewable generation and cogeneration stood at 1,082 GWh (-10.4%). The accumulated share of GAS NATURAL FENOSA in electricity generation was 18.1%, higher than the 17% of the first half of 2014.

Hydroelectricity production was 1,824 GWh for the first half, 38.9% lower than in 2014. Nuclear power production, meanwhile, rose by 1.5% to 2,119 GWh.

GAS NATURAL FENOSA’s combined cycle production over the year until 30 June was 6,667 GWh, 12.2% higher than the same period last year.

Thermal coal production was 1,572 GWh from April and June, compared to 1,225 GWh for the same quarter in 2014.

Electricity sales, including sales in the liberalised market and the Voluntary Price for the Small Consumer (PVPC), reached 17,394 GWh by 30 June, up by 3%. These figures from the electricity sales portfolio are in accordance with the position of maximising margins, optimising market share and the level of coverage that GAS NATURAL FENOSA wishes to have in view of electricity-market price variations.

Gas Natural Fenosa Renovables

Gas Natural Fenosa Renovables ended the first six months with a total installed capacity of 919 MW, of which 752 MW came from wind technology, 110 MW from mini-hydroelectric plants and 57 MW from cogeneration.

In cumulative figures at 30 June, total production for the first half year was 10.4% lower than in the same period in 2014, mainly due to lower rates of wind and hydro power in 2015.

On 22 June this year, GAS NATURAL FENOSA reached an agreement to acquire 100% of Gecalsa for 260 million euros. This company has a net installed capacity of 221.7 MW (237.5 MW gross). It also has a portfolio of wind projects under development with a net attributable capacity of more than 400 MW.

Global Power Generation

On 30 March last, Gas Natural Fenosa and the Kuwait Investment Authority (KIA) signed an agreement to undertake a share capital increase of $550 million in Global Power Generation (GPG), which will be wholly underwritten by KIA. After the capital increase, KIA will take 25% of the company.

EBITDA from Global Power Generation in the first half year was 133 million, a 30.4% increase, due to the exchange rate effect and the start of commercial operation of the Bii Hioxo wind farm (Mexico) from October 2014 and the Torito hydroelectric plant (Costa Rica) from May this year.

Compañía General de Electricidad (CGE)

After CGE was acquired in November 2014, the company was fully merged into GAS NATURAL FENOSA from 30 November 2014. CGE contributed 295 million euros to consolidated EBITDA for the first half of 2015.

In the gas distribution business, CGE increased its sales over the period by 4.2% to 22,991 GWh. Meanwhile, the electricity distribution business also grew by 3.3%, mainly due to increased sales to regulated customers (+3.6%).

Transported power rose by 3.6%, corresponding mainly to the subsidiary Transnet (Chile), due to the evolution of physical sales by electricity distributors in Chile, who are part of the Central Interconnected System (SIC).

Wholesale sales of LPG fell by 25.7%, due to reduced activity, while sales to end customers in Chile fell by 3.2%, due to the effect of the temperature.

  

Barcelona, 29 July 2015.

Video

Infographics

Main developments infographic first half of 2015

EBITDA graph first half

Chile graph first half

Financial debt first half 2015

Images

Salvador Gabarró first half