ENGQF - Engie: Performance To Normalize On Reducing Volatility In Energy Markets

2024-02-23 14:06:41 ET

Summary

• Engie is transforming into a provider of clean energy by streamlining its business and selling assets in non-key markets.
• While disposals funded Engie's transition into renewables over the last few years, cash flow needs to cover future capex.
• Cash flow was strong last year, but several risk factors exist which could potentially lead to a lower cash flow.
• Moreover, the current dividend of €1.43 per share will most likely reduce to about €1.12 based on the guidance of the management team.
• With markets at or near all-time highs, a dividend that will be reduced, and high capex requirements, the downside potential warrants caution.

Engie (ENGIY) has been on a mission to transform the company from a traditional utility to a provider of clean energy. Essentially, management is streamlining the business selling assets in geographies which are not considered key markets. During this process shareholders have not been forgotten, but in all likelihood future dividends will be reduced....

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