Engie mulls German power plant sale amid positive results

Engie is considering the sale of its power plant portfolio in Germany and, in separate news, announced a positive end of year performance.

The French energy group owns or holds stakes in three hard coal-fired power plants in Germany. It is the sole owner of the 472 MW Zolling site near Munich and the 351 MW Farge plant, and has a 52 percent stake in the 731 MW site in Wilhelmshaven.

Insiders told Reuters the sale could also include their 800 MW Centrale Rotterdam plant in the Netherlands.

Engie’s Wilhelmshaven plant in Germany is one of the most modern in Europe, with an efficiency level of 46 percent. Switzerland’s BKW Energie has a 33 per cent stake and municipal utility WSW Energie & Wasser owns 15 per cent.
Isabelle Kocher of Engie
In addition to coal-fired capacity, Engie’s Zolling plant has two 25 MW gas turbines that can be switched on in times of high demand or undersupply to balance out demand swings. Engie also operates a 20 MW biomass plant there.

Possible buyers for the assets could include Czech energy group EPH and German utility RWE, which have both snapped up conventional power plants in the past or have announced plans to do so, the people said.

The move would be in line with Engie’s strategy of reducing exposure to coal, reinvesting proceeds from sales of fossil-fuel assets in renewables and grids as the sector shifts away from conventional power source.

Sources said this week the group was looking at big acquisitions that would generate cash, in a strategy switch following the sale of $18.6bn of assets that have shrunk its earnings base.

Meanwhile the group surprised the market with a higher-than-expected dividend as it said a three-year transformation plan was completed earlier than expected, and the utility also swung back into profit after two years of losses.

“We have completed our three-year transformation plan faster than expected, therefore we will boost our dividend,” Engie chief executive Isabelle Kocher said on an earnings call.

Engie’s 2017 revenue came in at $80.6bn, up 0.3 per cent on a reported basis and up 1.7 percent on an organic basis, although revenue nevertheless stood at its the lowest level in a decade.

Kocher said that the shift had turned Engie into a less risky, cleaner and more profitable company, with 89 per cent of core earnings contracted or regulated, rather than exposed to commodity prices, and 90 percent from low-carbon activities.

The company swung into a net profit of EUR1.4bn reversing a EUR400m loss in 2016 and a EUR4.6bn loss in 2015.à‚ 

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