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Engie's shares gain as guidance upgrade offsets price caps

Logo of Engie

By Juliette Portala

(Reuters) -French power company Engie on Thursday raised its full-year net income guidance, sending its shares higher, as the impact of an energy price surge driven by the Ukraine war offset government efforts to cap the amount consumers pay.

Other energy providers throughout Europe have reported high or record profits after supply disruption caused by Russia's invasion of Ukraine drove gas and power prices to record levels in August. They have since retreated but remain higher than a year ago.

Shares in Engie rose as much as 6.1% in early trade and were up 3.6% at 1122 GMT, topping France's blue-chip CAC 40 index.

The gas and electricity provider forecast its full-year net recurring share of group income would be between 4.9 billion and 5.5 billion euros.

The group said it expected earnings before interest, taxes, depreciation and amortisation (EBITDA) in the range of 13.2 billion and 14.2 billion euros and earnings before deducting interest and taxes (EBIT) from 8.5 billion to 9.5 billion.

Its EBIT for the nine months to Sept. 30 were 7.3 billion euros ($7.32 billion), up 79.3% organically from a year earlier.

As consumers struggle with the impact of rising utility bills, governments in Europe have been debating ways to cap prices.

"Importantly, Engie flagged that this guidance includes its 'best estimation of a potential impact of proposed EU emergency measures, mainly in France and Belgium'," J.P.Morgan analysts wrote in a note to clients.

Finance chief Pierre-Francois Riolacci pointed to a few hundred million euros in costs relating to a European revenue cap to help consumers.

Belgium's federal government last month reached a deal on the annual national budget, including a tax on profits of energy companies such as Engie and TotalEnergies.

Engie also said it would award its employees worldwide an exceptional bonus of 1,500 euros each.

($1 = 0.9971 euros)

(Reporting by Juliette Portala, editing by Shri Navaratnam, Jane Merriman and Barbara Lewis)