Engie's full-year profit jumps on higher gas prices

By America Hernandez

PARIS (Reuters) -French energy company Engie reported a sharp increase in its annual profit, helped by higher natural gas and power prices in the wake of Russia's invasion of Ukraine.

The company said its net recurring income for 2022 totalled 5.2 billion euros ($5.55 billion), up from 2.9 billion euros in 2021.

Full-year earnings before tax and interest was 9 billion euros, up from 6.1 billion euros in 2021.

The gains were partly tempered by 900 million euros in windfall profit taxes and 1.1 billion euros in government-mandated revenue limits on nuclear and hydropower earnings in Belgium and France, Engie said, adding that warmer-than-usual weather also reduced demand for gas.

"For 2023 we expect a market in less of a crisis, but an environment which is not adverse," Chief Financial Officer Pierre-François Riolacci said.

The company forecast a net recurring income for 2023 between 3.4 billion euros and 4.0 billion euros, and its board proposed a dividend of 1.40 euros per share, which translates to a payout ratio of 65%.

Engie's fourth-quarter sale of its services unit Equans helped to reduce debt by 7.1 billion euros, completing a cycle of shedding assets worth 11 billion euros to refocus the company on its core business.

The company revalued its 9% stake in Nord Stream AG to 90 billion euros, down from 474 million euros in 2021, citing pipeline damage and a "heightened risk profile" of its sole gas-shipping customer, Russia's Gazprom.

"We've managed to pretty much eliminate our exposure to Russian gas using new suppliers," Engie CEO Catherine MacGregor said. "Gas supply will stay structurally deficient because of the interruption in Russian gas flows until new LNG capacity is commissioned from 2026 onward ... we expect energy prices to remain fairly volatile in the short-to-mid term."

The company said its portfolio of 350 Terawatt-hours of long-term natural gas contracts, together with gas storage, thermal power plants, LNG import terminals and booked pipeline capacity will be key to boost profits as gas prices fluctuate.

($1 = 0.9373 euros)

(Reporting by America Hernandez; Editing by Silvia Aloisi and Shounak Dasgupta)