• Consolidated EBITDA for the first quarter stood at €1,369 million, up 11.8%, thanks to the contribution of the Chilean energy company and the good performance of businesses outside Spain.
• CGE, whose take-over was closed last November, contributed €125 million to EBITDA in the first quarter of the year.
• GAS NATURAL FENOSA continued to bring its debt ratio (47.7%) down to more normal levels, the average life of its financial debt being in excess of 5 years.
The company invested mainly in the gas distribution business, which rose by 23.2%, accounting for 37.5% of the consolidated total. Investments in electricity distribution rose by 22.7%, accounting for 20.1% of the overall figure, thanks to growth in Spain.
• The company is still committed to its solid policy of cash dividends to shareholders, and allocated €909 million of its 2014 income to dividends, a payout of 62.1%.
GAS NATURAL FENOSA obtained a net profit of €404 million in the first quarter of 2015, a 0.5% increase over the same period last year. This growth, which has been achieved despite the existing macroeconomic, energy and regulatory environment, is based on three cornerstones: a well-balanced profile of business interests, the company’s growing international presence and its strict financial discipline.
In this scenario, consolidated EBITDA for the first quarter reached €1,369 million, up 11.8% from the same period in 2014. This increase was largely due to Compañía General de Electricidad (CGE) joining the group last November, which contributed EBIDTA totalling €125 million in its first full quarter. The quarterly EBITDA figure was also positively affected by the appreciation of the dollar against the euro, accounting for €35 million.
CGE’s joining the multinational group enabled GAS NATURAL FENOSA to offset the impact of Royal Decree Law 8/2014, which last July cut the remuneration of regulated gas activities in Spain, as well as the effect of its divestment from the telecommunications business.
The company has a well-balanced business profile and this is reflected in the diversification of its EBITDA: 52% comes from businesses associated with natural gas, 39% from electricity-related activities, and 9% comes from the contribution made by CGE.
In joining the group, CGE contributed to raising the weight of international activities in the EBITDA, which went from 39.2% to 49.5%. EBITDA from operations in Spain, on the other hand, fell by 7% to account for 50.5% of the total.
The third cornerstone of the growth reported in the Q1 earnings figures, is the strict financial discipline exercised at GAS NATURAL FENOSA. At 31 March, its net financial debt stood at €17,331 million, 2.3% above that reported at year-end 2014. It had a debt ratio of 47.7%, down from 48.5% at the close of the 2014 financial year. 96.5% of its debt matures in or after 2016 and it has an average life of slightly over 5 years.
The company has some €10,322 million available to it in liquid assets, equivalent to all its financial obligations for over 24 months.
Maintaining the payout
The distribution of 2014 income that the Board of Directors will propose to the Annual General Shareholders’ Meeting for approval allocates €909 million to dividends (€0.908/share), which is 1.2% more than the previous year, in line with the increased net profit attained in 2014. The company remains committed to a solid cash dividend policy and foresees maintaining payout levels at 62%, in line with recent years, compatible with the forecast growth and deleveraging targets.
GAS NATURAL FENOSA investments for the quarter totalled €313 million, which represents a 14.7% decrease over the same period in 2014. This fall is due to lower investment in capital goods, because a new LNG tanker was included in March 2014 under a financial lease arrangement, for a sum of €177 million. If we correct for this effect, total investments for the quarter were up 64.7%, due largely to the acquisition of CGE.
The company invested mainly in the gas distribution business, which rose by 23.2%, accounting for 37.5% of the consolidated total. Investments in electricity distribution rose by 22.7% to account for 20.1% of the total.
By geographical region, investments in Spain rose by 32.6%, excluding the LNG tanker operation. Investments overseas were up 68.4% on the previous year, due to the acquisition of CGE.
Gas distribution in Spain
EBITDA for gas distribution in Spain reached €214 million, 5.7% less than the previous year, due to the remuneration adjustments in the regulated gas business established by RDL 8/2014, in force from 5 July 2014. These adjustments translated into a remuneration decrease of almost €26 million for the quarter, compared to the same period in 2014, when the regulations had not yet been adjusted.
Sales in the regulated gas business in Spain as a whole were up by 5.1% compared to 2014, to stand at 54,024 GWh.
The group continued expanding its distribution network and increasing its supply points, despite low activity levels in the new build market. Hence the distribution network increased by 1,361 kilometres (+2.8%) in year-on-year terms and by 396 kilometres in the first quarter, which enabled piped gas to reach two new municipalities in the period. The company has increased its supply points by 55,000 in the last year, reaching a total of 5,239,000 by the end of the period.
Gas distribution in Italy
EBITDA for gas distribution in Italy stood at €16 million, in line with the figures for 2014. Sales in the gas business came to 1,910 GWh, an increase of 21.3% due to more favourable weather conditions.
GAS NATURAL FENOSA reached a figure of 456,000 supply points in Italy, up 0.2%, while the distribution network was grew by 2% compared to the year before, to 7,106 kilometres.
Gas distribution in Latin America
EBITDA from gas distribution in Latin America reached €155 million, which represents a 5.4% increase over the same period in 2014, particularly favoured by exchange rate fluctuations, with currencies appreciating in Mexico and Argentina, and offset in part by currency devaluations in Colombia and Brazil. Without the exchange rate effect, EBITDA would have increased by 3.6%.
By country, worthy of mention was the EBITDA reported in Brazil (€69 million), which accounted for 44.5% of the total, and a sales volume up 15.1% over the same period last year, due largely to gas sales to the generation market.
EBITDA from Mexico came to €48 million, thus accounting for 31% of the overall figure for the business. This represents growth of 29.7% over the previous year.
Colombia contributed 25.8% of the EBITDA, with a 10.3% increase in its sales turnover, largely coming from growth in the industrial market.
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 60,036 GWh, 5.6% up on the same period in 2014.
The distribution network in Latin America increased by 3.1% to 71,551 kilometres at the end of the quarter. The expansion of the network in Mexico contributed to this growth, where a further 809 kilometres have been added over the last year.
GAS NATURAL FENOSA had over 6.6 million supply points at 31 March, 283,000 more than the previous year. There were notable increases in Mexico, with 68,270 new supply points over the quarter, and Colombia, with 26,176 new points.
Electricity distribution in Spain
EBITDA for electricity distribution came to €142 million, a 0.7% increase over the first quarter 2014. Turnover was also up by 1.5% due to accounting recognition of investments put into operation in 2013. The change in turnover was offset by increases in operating expenses.
Electricity sales totalled 8,575 GWh, 2.2% higher than in 2014. At 31 March, the company had 3,673,000 supply points, a similar figure to that reported at the end of last year.
Electricity distribution in Moldova
EBITDA from electricity distribution in Moldova for the period came to €10 million. This represents a decrease due to tariff amortisation of fixed assets existing prior to privatisation concluding in 2014, among other reasons, although offset by better results in the indicators of losses, improvements in efficiency and spending constraints.
Electricity sales came to 731 GWh (+2.8%) and, at the close of the first quarter, there were 859,000 supply points (+1.2%).
Electricity distribution in Latin America
EBITDA for electricity distribution in Latin America, including Colombia and Panama, reached €91 million in the period, up by 15.2%.
The electricity distribution business in Colombia contributed €53 million in EBITDA during the first quarter, down 4.2%, without taking the exchange rate effect into consideration, and due to increased taxation via the Wealth Tax passed last year, without which the movement would have been +3.3%, fruit of growth in demand and the higher distribution charge.
Sales by the electricity distribution business in Latin America rose by 3.5% to 4,217 GWh. There was a notable rise in demand in both Colombia and Panama and customer numbers increased in both countries, with joint growth of 4.1% at the end of the quarter.
The EBITDA from infrastructure activity, which includes the Maghreb-Europe gas pipeline operation, maritime transport management, the development of integrated liquified natural gas (LNG) projects and hydrocarbon exploration, development, production and storage, came to €71 million, in line with the same period the previous year, despite lower volumes being carried along the Maghreb-Europe gas pipeline, but favoured by the positive effect of the dollar exchange rate.
The gas transport business undertaken in Morocco through the subsidiaries EMPL and Metragaz, during the first quarter jointly totalled a volume of 24,066 GWh, a 27.7% decrease, due particularly to optimisation of the company’s procurement portfolio. Of this figure, 17,490 GWh (-25,5%) was transported for GAS NATURAL FENOSA through the company Sagane, and 6,576 GWh (-33%) for Portugal and Morocco.
Gas: Procurement and sales
EBITDA from the world gas procurement and sales business came to €251 million in the first quarter, in line with the same period last year, despite a weaker performance by the retail sector due to the deficit incurred through the TUR (last resort tariff).
At 31 March, 76,578 GWh of gas had been sold in the Spanish market, an increase of 5.3%.
Gas Natural Europe, the company’s European sales subsidiary, currently has a portfolio of 21.9 TWh a year in France with customers from various sectors. This subsidiary is consolidating its position in Belgium, Luxembourg, the Netherlands and Germany with a portfolio of 11.8 TWh/year.
In Italy, Gas Natural Vendita had a contract portfolio of 5.3 TWh/year in the wholesale market at the close of the quarter.
In the retail market, the company has 12.2 million active gas, electricity and service contracts, 527.000 of which are in Italy. Retail sales were up both in Spain (+19.7%) and in Italy (+26.4%), largely due to colder weather conditions as compared to the first quarter 2014.
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 €213 million, up 3.9% on the same period in 2014, mainly due to better performance by pool prices.
The average weighted price of the daily market this quarter stood at €47.38/MWh, a €22.50/MWh increase on the 2014 first quarter price of €24.88/MWh, although down 7% on the previous quarter.
Electricity production stood at 8,124 GWh, 12.9% up from 2014. Of this figure, 7,518 GWh corresponded to conventional generation (+16.6%), while renewable generation and cogeneration jointly came to 606 GWh (-19.2%).
Hydroelectricity production was 1,397 GWh for the first quarter, 36.6% lower than in 2014. Nuclear power production, meanwhile, rose by 5% to 1,222 GWh.
GAS NATURAL FENOSA’s combined cycle production came to 3,500 GWh, down 24.6% on the same period in 2014.
Coal-fired output reached 1.399 GWh, as against 271 GWh for the first quarter in 2014.
Electricity sales at 31 March, including sales in the liberalised market and the Voluntary Price for the Small Consumer (PVPC), reached 9,178 GWh, up by 5%. These figures from the electricity sales portfolio are in accordance with GAS NATURAL FENOSA’s position of 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 of 2015 with installed capacity in operation of 920 MW, of which 752 MW came from wind technology, 111 MW from small hydro and 57 MW from cogeneration.
Production in the first three months of the year came to 606 GWh compared to 750 GWh in the same period last year, due largely to decreased production from wind technology because of lower winds.
Global Power Generation
On 1 October last, GAS NATURAL FENOSA created Global Power Generation (GPG), a company that brings together its electricity generation assets and businesses outside Europe. The new company is aimed at driving GAS NATURAL FENOSA’s overseas generation business within the framework set out in its current Strategic Plan, which contemplates growth on the international market by undertaking generation projects, particularly in Latin America and Asia.
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 quarter of 2015 came to €73 million, an increase of 46.0% over the same period the previous year, due largely to the exchange rate effect and Bii Hioxo coming into commercial operation in October 2014.
Compañía General de Electricidad (CGE)
Last November, GAS NATURAL FENOSA successfully concluded its take-over of the Chilean company, CGE, in which it is now the majority shareholder with a 96.7% stake. Over the first quarter 2015, the company has taken a further 0.6% holding.
After it was acquired, the company was fully merged into GAS NATURAL FENOSA from 30 November 2014. CGE contributed €125 million to consolidated EBITDA for the first quarter 2015.
In the gas distribution business, CGE increased its sales over the period by 5.7% to 10,947 GWh. Meanwhile, sales in its electricity distribution business also grew by 4.9%, mainly due to increased sales to regulated customers.
Transported power rose by 4.9%, 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).
The LPG procurement business reached a figure of 1,420 GWh, down 8.5%, due to decreases in activity both for group companies and third parties. The change in sales to end customers in Chile is basically due to a 6.6% decrease in bulk sales, particularly to industrial clients, offset in part by a 3% increase in bottled gas sales. In Colombia, the increase was due to the rises in bulk sales, up 18.3%, and in bottled gas sales, up 4.8%.
Barcelona, 6 May 2015.
Consolidated Income Statement
|Other operating income||57||48|
|Other operating expenses||-512||-437|
|Depreciation and impairment losses||-451||-387|
|Allocation to provisions||-54||-57|
|Income from disposal of financial instruments||-||-|
|Income from institutions via shareholding||-8||-1|
|Tax on profits||-154||-144|
|INCOME ATTRIBUTABLE TO THE GROUP||404||402|
Consolidated Balance Sheet
|Tangible fixed assets||24.954||20.282|
|Investments via shareholdings||2.105||2.415|
|Non-current financial assets||1.479||1.437|
|Deferred tax assets||1.158||1.057|
|Trade and other receivables||6.007||5.183|
|Other current financial assets||391||294|
|Cash and equivalent liquidity||2.560||4.483|
|Net equity attributed to the parent company||15.047||13.827|
|Non-current financial liabilities||17.846||14.332|
|Deferred tax liabilities||2.955||1982|
|Other non-current liabilities||1.050||862|
|Current financial liabilities||2.138||4.329|
|Trade creditors and other payable accounts||4.581||4.039|
|Other current liabilities||400||454|
|TOTAL LIABILITIES AND NET WORTH||50.533||43.876|
Physical key figures
|Gas distribution (GWh)||115.970||109.832||5,6|
|Rate-regulated gas sales||38.087||34.723||9,7|
|Electricity distribution (GWh):||13.523||13.179||2,6|
|Rate-regulated electricity sales||731||711||2,8|
|Rate-regulated electricity sales||3.960||3.819||3,7|
|Gas distribution supply points, in thousands (at 31/03)||12.357||12.018||2,8|
|Electricity distribution supply points, in thousands (at 31/03)||7.593||7.457||1,8|
|TIEPI in Spain (minutes)||10||19||-47,4|
|Wholesale sales (GWh):||76.578||72.756||5,3|
|Other gas sales||34.572||30.154||14,7|
|Retail sales (GWh)||16.073||13.357||20,3|
|Gas transportation – EMPL (GWh)||24.066||33.287||-27,7|
*TPA services included in secondary transport.
|Electricity produced (GWh):||12.573||11.355||10,7|
|Renewable and cogeneration||606||750||-19,2|
|Global Power Generation||4.449||4.157||7,0|
|Costa Rica (hydraulic)||49||26||88,5|
|Dominican Republic (oil)||289||130||-|
|Electricity generation capacity (MW):||14.803||14.519||2,0|
|Renewable and cogeneration:||920||902||2,0|
|Global Power Generation||2.657||2.429||9,4|
|Costa Rica (hydraulic)||51||51||-|
|Dominican Republic (oil)||198||198||-|
Compañia General de Electricidad
|Gas business sales (GWh)||10.947||-||-|
|Supply points, in thousands (at 31/03)||602||-||-|
|Electricity business sales (GWh)||4.219||-||-|
|Supply points, in thousands (at 31/03)||2.875||-||-|
|Electricity transmitted (GWh)||3.861||-||-|
|Wholesale sales (GWh)||1.428||-||-|
|Sales to end customers (GWh)||1.152||-||-|