Naturgy presented its new strategic plan on Wednesday, which includes an investment of 14,000 million euros until 2025 to accelerate its decarbonisation and a cut in its dividends in the period. The plan, with a focus on renewables, foresees to distribute some 5,900 million in dividends in the period, with a cut in the ‘pay out’ (percentage of the profit that is distributed to shareholders) to 85%, compared to 120% of the previous plan, to finance those investments and maintain your credit rating.
The plan, initially planned for the end of 2020, was postponed until February 2021 and, after the pandemic, it had been waiting until now. As explained at a press conference by the president of Naturgy, Francisco Reynés, he has presented himself when there is “sufficient visibility” in the market and once the restructuring of the group has been concluded, without waiting for the takeover bid to be resolved (opa ) partial presented by the Australian fund IFM, on which the Government must comment in the coming weeks.
According to Reynés, who has hoped to recover the pre-covid business level by the end of 2022, “a company needs a plan” and without it an investment of 14,000 million cannot be undertaken when “the motivation of thousands of employees” depends on it. . “We cannot be pending on resolutions that are external to us,” said the executive, regarding a “totally unsolicited” takeover bid.
The second plan of the Reynés era, named in 2018, contemplates allocating 8,700 million of investment to renewables and 4,100 million to networks, with the installation in that five-year period of 9.4 gigawatts (GW) of clean energy, of which 5, 2 GW will be in Europe, 2.2 GW in Australia and 1.2 GW, in the United States. The goal will be to reach 14 GW of non-emitting technologies by 2025. 45% will be photovoltaic (compared to 9% in 2020), 36% will be wind, and 16% will be hydraulic. 3% will be storage.
Renewables must provide an ebitda (gross operating profit) close to 1,000 million euros at the end of the period. The group foresees an annual increase in ebitda of 15% and the obtaining of a cash-flow of 16,700 million to support investments, which does not take into account the “additional investment opportunities” linked to European funds: 13,800 million of which some 3,000 million would be linked to renewable gas projects.
The expected remuneration for the shareholder will be 1.2 euros per title per year. Reynés has been willing to review it in 2023 depending on the evolution of the business and the execution of the plan. The group has approved the first interim dividend for 2021, amounting to 0.30 euros per share, payable in cash on August 4.
This amount must be discounted from the amount offered by IFM, which aims to acquire at least 17% of the group. It offers 22.37 euros, below the current price of Naturgy, which has exceeded that level after the purchases announced by CriteriaCaixa to stay close to 30%. “The one who has to comment on whether the price is adequate or not is the opante one,” said Reynés, when asked about it.
The new strategic plan, “adapted to current times” to make compatible the growth of the company and its transformation to the energy transition, which has been “accelerated” after the pandemic, contemplates a 24% reduction in CO2 emissions by 2025 and have more than 40% women in managerial positions. It also links 10% of the variable remuneration of senior managers to sustainability objectives, compared to 3% in 2020.
Reynés has said that the group does not plan to take any division public and has been “willing to analyze” divestments, although asset sales “are not part of the core of the plan”, unlike the previous one, which planned to divest assets for about 3,000 million.
Nor has he closed the door to shopping. The objective is to grow in a “mostly organic” way, but “we will study any opportunity” that may be “interesting” and always respecting financial discipline and in countries with a “stable” legal framework.
In the first semester, Naturgy obtained a net profit of 484 million, 45% more, thanks in large part to the closing in March of the agreement to settle the dispute that affected Unión Fenosa Gas (UFG) since 2012, obtaining a cash payment of about $ 600 million, as well as most of the assets outside Egypt – excluding UFG’s commercial activities in Spain – which had a non-ordinary positive impact of $ 103 million.
The group’s ordinary net profit reached 557 million, 17% more, but 20% less compared to the first half of 2019. Investments were cut by 20.5%, to 439 million.