Engie: new issue of €2.75 billion green bonds – 01/06/2023, 08:53

(AOF) – Engie announced on January 4 that it has issued green bonds in three tranches for a total amount of 2.75 billion euros. The average coupon for the transaction is 3.93% for an average term of 12.4 years, the energy supplier said in a press release. In detail, Engie issued €1 billion 7-year bonds with a 3.625% coupon, a 12-year €1 billion tranche with a 4.00% coupon and a €750 million tranche with a 20-year term. coupon 4.25%.

“This issue pre-funds a significant portion of the group’s financial needs for 2023 and strengthens its liquidity,” the group said.

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Key points

– The group created by the merger of GDF-Suez in 2008, the world leader in energy transition, the world’s leading producer of non-nuclear electricity, the leading supplier of energy efficiency services, the second supplier of environmental services;

– EUR 57.9 billion activity with strong positions in Europe, with 64% of revenues, including France’s 36%, ahead of the Americas (16%);

– Business model based on value chain control and focusing on 5 businesses: renewable resources, infrastructure, energy solutions, energy production and supply, energy and nuclear management;

– In addition to the Caisse des dépôts (4.59%), 23.64% state-owned capital and 3.2% employees, Jean-Pierre Clamadieu, Chairman of the Board of Directors, and Catherine MacGregor, who provide general management;

– A financial structure with a leverage effect of 3.6 and controlled by a net debt of 25.2 billion euros

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Challenges

– Annual growth strategy for renewables increased to 4 GW between 2022-25 and 6 GW between 2026-30:

– Simplification of the group with 4 Business Units compared to 25 and reduction of international presence to 30 countries compared to 53,

– deployment of “BRIGHT” specializing in multi-technical services,

– at least 11 billion euros of write-offs and 15-16 billion euros of incremental investments;

– and leads to an increase in profits (3.2-3.4 billion euros in 2023 and 3.3-3.5 billion euros in 2025) and the debt leverage effect is less than 4;

– Innovation strategy organized in transversal roadmaps: Horizons: 1 / process efficiency, 2 / diffusion of new technologies, 3 / monitoring and research for future growth / Ecosystems: 23 thematic laboratories, Engie Factories, internal platforms (DigiPlace, General Information, Hub, Internal Source);

– Environmental strategy aiming for carbon neutrality by 2045: 2 2030 goals: 70% reduction of CO2 emissions compared to 2016 and renewable energy in electricity production to 58% by the end of 2021 against 34% promotion,

Complete phase-out of coal in Europe by 2025 and elsewhere by 2027 / articulated between growth of sustainable activities and risk management in production / financed by green credits;

– A leading position in Brazil, the main market for the group, a strong increase in profitability thanks to the CCGT fleet (the largest in Europe), renewable energy sources and long-term cooperation with gas producers such as Gazprom.

Challenges

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– Compensating for the closure of Belgian nuclear power plants in 2025, increasing profitability through investments in renewable energy sources, the performance of Energy Solutions and the contribution of infrastructures;

– Recovery of EVBox, the leader in charging solutions, crippled by component shortages and inflation;

– Achieving long-term ambitions: 50 GW of installed capacity in renewables by 2025 and 80 GW by 2030, 1.5% annual growth in infrastructure by 2024 and a €14 billion pipeline for Energy Solutions ;

– 2022 goals: recurring net income between 3.3 and 3.5 billion;

– 65-75% payout ratio until 2023 and €0.85 dividend until 2021.

Learn more about the utilities sector

Larger differences between utilities

The World Energy Markets Observatory highlights the wide disparity in retail energy prices in Europe. Players’ profitability is under pressure, suffering both from the impact of wholesale price hikes and high volatility in selling prices to end consumers. Although Europe’s sixteen largest energy suppliers benefited from a significant increase in turnover (+47% compared to 2020) last year, their gross operating margin (Ebitda margin) deteriorated from 20.2% to 19.6%. Those forced to purchase electricity in the market had to pay for these additional volumes at a much higher price than the already established selling price level and therefore saw their margins deteriorate.

Faced with low availability of its nuclear fleet, EDF, re-nationalised, should make annual losses of €29 billion in 2022. Engie is doing better because it managed to reduce Russian gas imports in the first half while benefiting from higher electricity prices. and greater exposure to renewable resources.