French energy giant Engie (which operates Belgium’s nuclear reactors) recorded strong growth last year, boosted by soaring gas and energy prices. But a large rise in expenses meant the company recorded almost zero net profits.
Record energy prices saw the company's turnover skyrocket in 2022 as gas and electricity prices hit historic highs. Engie’s energy markets division brought in an additional €2 billion last year as a result. The company also made massive turnover from its gas-powered plants (+49.4%) and renewable energies (+36.6%).
“In 2022, Engie achieved solid financial and operational performance with Earnings Before Interest and Taxes (EBIT) up 43% to €9 billion,” CEO Catherine MacGregor said at a press conference. The company’s turnover jumped 62.2% compared to 2021, finishing last year at €93.9 billion.
Moreover, Engie share prices rose 4.96% to €14.27 upon the release of the yearly results at the start of trading.
Spreading risk
As seen by energy companies around the world (many of whom posted “outrageous” profits in the words of President Biden), Engie reaped the benefits of high gas prices as Russia closed gas pipelines to Europe.
According to the International Energy Agency, gas cost an average of €120 per megawatt hour (MWh) in 2022 – eight times more than in 2016-2020. On the back of this, the company’s net profit totalled €5.2 billion, up from €2.9 billion in 2021.
But despite the enormous rise in revenue, little of this will translate into net profits. Various expenses saw the group's net profit fall 95% (just €200 million compared to the previous year's €3.7 billion). This was largely down to risk management, as the company diversified to protect against volatile interest rates and currency fluctuations.
Furthermore, the company had to absorb an additional €2.8 billion in losses from dismantling nuclear power plants in Belgium. It also lost billions in credit on the Nord Stream 2 gas pipeline, which is now largely destroyed. The company also paid €900 million in windfall taxes and €1.1 billion through profit-sharing mechanisms.
Diversifying supply
With pipeline gas from Russia all but a thing of the past, Engie has invested heavily to diversify its fuel supply, notably by spending big on liquified petroleum gas (LNG).
“We have played a crucial role in the security of supply in France and Europe by diversifying our gas contracts to cut exposure to Russia,” MacGregor said. Engie is now the third-largest LNG terminal operator in Europe.
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With regard to renewables, Engie has sold stakes in several companies to free up capital for sustainable investments. Last year, it sold its technical services company Equans to French industrial group Bouygues. In 2022, Engie commissioned 4 gigawatts (GW) of new renewable energy. The company is now one of the leading producers of green energy in Europe, aiming to reach 80 GW of worldwide generation in 2030.
On the back of this strong performance, the company awarded shareholders a dividend of €1.40 per share, up 65% from the previous year. It also redistributed €600 million towards its global employees through bonuses and profit sharing.
