ENGIE - Impact and mitigation of Covid-19
Actions taken in response to the current health and economic crisis:
- Adaptation plan to protect employees and sustain ENGIE’s essential services
- Strengthened liquidity position, reinforced by recent bond placement
- 2020 guidance withdrawn given continuing business uncertainties
- AGM schedule maintained; 2019 dividend cancelled
- Solid liquidity, operational strength and strategic intent to resume dividends in future
In light of the ongoing global health crisis, ENGIE has put in place an adaptation plan to ensure: (i) the health and safety of Group employees, their families, and of those of our service providers, (ii) continuity of essential internal and selected client operations, and (iii) limitation of financial impacts and protection of financial liquidity.
ENGIE is committed to its clients’ operational continuity and is providing essential infrastructure support. All employees whose roles allow are working from home, while many client-facing staff remain in the field to provide essential energy supply and services. These operations are only maintained subject to comprehensive health and safety protocols.
ENGIE continues to maintain one of the strongest balance sheets in its sector, with EUR 16.4 billion of liquidity (net cash + undrawn credit facilities – outstanding commerciale papers) including EUR 8.6 billion of cash, as of end of February. On March 20, the issuance of a triple tranche senior bond for a total of EUR 2.5 billion further improved ENGIE’s financial position.
ENGIE’s executive leadership team – Claire Waysand, Judith Hartmann and Paulo Almirante – collectively commented:
“From the beginning of this unprecedented crisis, we have implemented a comprehensive crisis management framework. We are taking the required operational and financial initiatives to ensure our continuation of essential services across our markets, while ensuring the safety of our employees, and maintaining strong liquidity and a sound balance sheet. The impact of the crisis on global supply chains, client operations and demand has been progressive, exceeding previous expectations, while the magnitude of impact varies by business line and is most pronounced in labor-intensive client solutions areas. Looking ahead, we are confident that we will together overcome this crisis and deliver for all our stakeholders in the years to come.”
2020 and 2022 guidance
The Covid-19 health crisis is having a significant impact on some of ENGIE’s customers and operations. As the impact on the Group’s financial statements remains at this stage unquantifiable and subject to uncertain assumptions regarding the length and profile of this crisis, ENGIE is withdrawing its previously stated 2020 guidance and will provide an updated view on its consequent financial outlook to 2022 in due course.
The diversity of the Group’s businesses is expected to result in a range of Covid-19 impact levels. Financially, negative foreign exchange effects are likely to impact accounts, particularly due to the reduced value of Brazilian Real. Operationally, Networks is demonstrating resilience, facing moderate volume timing effects and delays in selected maintenance investments. Thermal and Nuclear operations are modestly impacted by price movements on unhedged merchant power sales. Renewables operations are also impacted by such merchant price movements as well as selected instances of operational, supply chain and finance partnering constraints on capacity builds and sell-downs. Supply is impacted by lower volumes and a potential increase in bad debts. Client Solutions activities are more significantly impacted by client shutdowns, project postponements and constraints related to staff health protection in this labour-intensive business.
These impacts are being partly mitigated by actions to reduce operating expenditures and adjust the timing of planned investments. Given its strong balance sheet, operational excellence and diversified activities supporting the energy transition, ENGIE is well positioned to resume growth once the crisis has subsided.
2020 Annual General Meeting and 2019 dividend
ENGIE’s Board of Directors decided today to cancel the payment of the EUR 0.80 dividend per share for 2019. ENGIE remains fully committed to resume paying dividends in the future.
Jean-Pierre Clamadieu, Chairman of the Board, commented:
“I would like to recognize and thank all of our employees for their continuous commitment throughout this evolving crisis. Our decision to cancel ENGIE’s 2019 dividend payment has been made in light of continuing uncertainties as to the depth and duration of this unprecedented crisis, and will further strengthen Group’s operational flexibility. ENGIE has solid liquidity, resilient business model and the strategic intent to resume dividend payments as soon as possible while we continue to invest in our growth strategy. The Board of Directors is confident in ENGIE’s ability to return, at the end of this crisis, to a sustainable growth trajectory.”
The Shareholders’ General Meeting will be held as planned on May 14, 2020, in a remote format without physical attendance, to be announced shortly.