ENGQF - Engie SA (ENGIY) Q4 2024 Earnings Call Transcript

2025-02-27 23:04:07 ET

Engie SA (ENGIY)

Q4 2024 Earnings Conference Call

February 27, 2025, 09:00 AM ET

Company Participants

Delphine Deshayes - Investor Relations

Catherine MacGregor - Chief Executive Officer

Pierre-François Riolacci - Executive Vice President, Finance, ESG and Procurement

Paulo Almirante - Senior Executive Vice President, GBU Renewable & Flex Power

Conference Call Participants

Harry Wyburd - Exane

Ajay Patel - Goldman Sachs

Louis Bourjard - ODDO

Meike Becker - HSBC

Bartlomiej Kubicki - Bernstein

Juan Rodriguez - Kepler

James Brown - Deutsche Bank

Presentation

Delphine Deshayes

Good afternoon, everyone. It's a great pleasure to welcome you to Engie's 2024 full year results and Market Update presentation. So we have three speakers today. Catherine MacGregor, Pierre François Riolacci and Paulo Almirante. A quick view of the agenda for this afternoon. In the first part, Catherine and Pierre François will review our results and the main events of 2024, followed by a short QA session. In the second part, Catherine will lead us through the market updates. She will be joined by Paulo, Senior EVP in charge of Renewables and Flex Power. Then we'll have a short break and Pierre François will present the Capital Allocation Strategy and our 2025-2027 financial outlook before some concluding remarks from Catherine. Finally, there will be a longer Q&A session. We'll take questions from the floor and online.

With that, over to Catherine

Catherine MacGregor

Sure, Delphine, and welcome everyone to what I hope will be an informative event. We hope that in a couple of hours' time you will go out feeling better about Engie's strategy, why we are doing it, how we are going to be implementing it and how we will achieve our ambition to be the best energy transition utility.

But to start with, some brief reflection on what we have done in 2024. We extended our track record of delivery a third consecutive year of net income above €5 billion, despite a normalizing market environment. In fact in 2024 it was a year of record net income, and so at the upper end of our guidance range.

Talking of records, the rollout of our growth strategy accelerated with record commissioning of renewables and battery capacity to add to wins in power transmission projects. And this was accompanied again by a stellar level of execution.

And we continued to become greener, in line with the commitment to net zero by 2045. And then last week the EU Commission has given us the final approval to the Belgian nuclear agreement, which as you know addresses a long standing source of risk from our Group in the form of nuclear waste storage liability, among other things.

So adding some color to these results, EBIT excluding nuclear at €8.9 billion was down 6% year-on-year. That is to be compared with a very high 2023 with renewables networks, retail all up, FlexGen and energy solutions virtually stable and GEMS significantly down on these nominalizing market volatility.

We had increased nuclear EBIT and it's stronger financial results. So our net recurring income group share grew by 3% to €5.5 billion. And the cash flow from operations matched 2023 record figures at €13.1 billion. Which means that we will be proposing a €1.48 dividend, up from €1.43 the previous year, which will be paid at the end of April.

Moving to the next slide, greenhouse gas emissions from energy production in 2024 were 48 million tonnes, down from 52 million tonnes the prior year, down by more than a quarter in three years, which brings us ahead of our 2030 targets with tailwinds in Europe, for example, for very low CCGT load factors. And in particular, I think it's noteworthy that we have addressed our two remaining position of significance in core with only a residual stake in the Safi plant in Morocco and a roadmap to a full exit in Chile by 2027.

The share of renewables in total power generation capacity rose to 43% at the end of 2024 from 41% a year earlier. And the percentage of women in Group management continued to steady rise at 32%.

As I mentioned, 2024 was a record year for Engie with 4.2 gigawatts of newly commissioned renewable capacity. At the end of the year we had 46 gigawatts of which 27 gigawatts in wind and solar. But growth is only good if we execute well, which is what I really want to emphasize. The business, this business, your business, Paulo, has become a real machine of efficiency and constancy.

It is the third time that we are opening about four gigawatt on average is being achieved with outstanding quality of execution, both virtually on time and slightly below budget on average. And at the end of the year we had 75 projects ongoing with over six gigawatt of capacity under construction.

In terms of PPAs, where we rank among the global leaders, we signed 4.3 gigawatts in 2024. Again, that was a record, the large majority of which with a duration above five years and some stretching actually to more than 20 years. We'll be saying a bit more on this later in the presentation.

Turning to this next slide, 2024 was really the year where we attained a position of true scale in batteries following a 2023 breakthrough when we acquired Broad Reach Power in the United States. Because we doubled our capacity in operation to 2.6 gigawatts and now we have a further 2.6 gigawatt under construction.

We have actually a presence not just in the U.S. but a global presence encompassing all types of market, from the shorter duration ancillary based in Texas to the longer duration storage in Latin America. We have a few highlights on the slide, now with strong delivery by BRP of their project that were under construction when we acquired them. We had the startup of Coya, that is a co-located storage system and then the construction of 200 megawatts of Vilvoorde project, one of the largest in Europe with four hours storage duration and that is in Belgium....

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