Gas Natural Fenosa posts net profit of 1.347 billion euros and EBITDA of 4.970 billion euros in 2016

  • The multinational energy company’s results from 2016 corresponded to those predicted in the 2016-2020 Strategic Vision despite a challenging macroeconomic and energy climate.
  • EBITDA on activities in Spain remained stable and accounted for 55.5% of the consolidated total.
  • Net investments climbed to 2.225 billion euros, an increase of 56.5%, primarily due to the incorporation of two new LNG tankers and the acquisition of propane gas distribution assets.
  • On 14 November, the Superintendency of Domiciliary Public Utilities of Colombia ordered the seizure of the goods, assets and businesses of Electricaribe. As a consequence, GAS NATURAL FENOSA stopped including this company in its balance sheet on 31 December and has proceeded to decommission its assets, liabilities and non-controlling interests at the net amount of 475 million euros.
  • GAS NATURAL FENOSA supplies energy to 21.7 million natural gas and electricity supply points around the world.
  • The company will pay a total dividend of one euro per share from the 2016 results, which will amount to a payment of 1.001 billion euros and a pay out of 74.3%. The interim dividend, paid in September, was valued at 0.33 euros per share.

GAS NATURAL FENOSA reached a net profit of 1.347 billion euros in 2016, which is 10.3% lower than the figure for 2015. The result is in line with the set forth in the 2016-2020 Strategic Vision that the multinational presented in May, predicting a net profit of between 1.3 and 1.4 billion euros in 2016 and 2017.

EBITDA reached 4.970 billion euros, with a decrease of 5.6% when compared to 2015, after liquefied petroleum gas business in Chile was discontinued. EBITDA was influenced by a very demanding macroeconomic and energetic climate, which directly affected the business’s contribution to gas marketing.

In addition, the depreciation of Latin American currencies against the euro had an impact on EBITDA with 112 million euros.

Despite this difficult scenario, GAS NATURAL FENOSA’s results reflect a sound business model. The gas distribution businesses contributed 34.8% of EBITDA; electricity distribution contributed 26.8%; electricity generation and marketing contributed 19.6%; and gas supply and marketing contributed 17%. The rest of the activities accounted for the remaining 1.8%, and include the sale of four buildings in Madrid for a total of 206 million euros, with gains of 35 millions euros.

EBITDA on activities in Spain remained stable during the financial year, accounting for 55.5% of the total. The remaining 44.5% corresponded to international activities.

Increase of 56.5% in net investments

Net investments reached 2.225 billion euros, an increase of 56.5% when compared to 2015. The increase was primarily due to the acquisition, in the financial regime, of two new LNG tankers in September and December of 2016, at a cost of 425 million euros. These LNG tankers will improve the competitive position of GAS NAUTRAL FENOSA in the LNG international market. In addition, the company closed the last financial year with the acquisition of GLP supply points from Repsol, which was agreed upon in 2015.

With respect to financial investments, the additional acquisition of 37.88% of Gas Natural Chile (306 million euros) and of various subsidiary companies, like the Irish marketing company Vayu are of particular note.

The main focal point for the company’s investments in 2016 were gas distribution activities, which accounted for 40.8% of the consolidated total. In the geographic scope, investments in Spain rose by 73.1%, accounting for 66.4% of the total, due to the addition of aforementioned tankers. Foreign investments remained stable in 2016, representing 33.6% of the total.

The company continued to optimise its activities portfolio as described in the 2016-2020 Strategic Plan, making sales worth 756 million euros last year, with gains of 111 million euros.

Electricaribe Interference

On 14 November, the Superintendency of Domiciliary Public Utilities of the Republic of Colombia ordered the seizure of the goods, assets and businesses of Electricaribe, the country’s electricity distribution subsidiary of GAS NAUTRAL FENOSA.

As a result, the company has no significant control or power of influence over Electricaribe, which means that, according to the applicable accounting regulations, NIIF 10, at 31 December, the company no longer figured into the balance sheet of GAS NATURAL FENOSA. Consequentially, its assets, liabilities and non-controlling interests have been decommissioned to the net amount of 475 million euros.

Under the heading, Available financial assets for sale, the investment into Electricaribe has been documented, in accordance with NIC 39, for its fair value (475 million euros), similar to the net book value.

Despite the deconsolidation of Electricaribe in the multinational’s scope, the profit estimate for 2017 and 2018 remains the same.

Debt reduction of 1.4%

The strict financial policy of the company put its level of indebtedness at 44.8% for the end of 2016, one percentage point below that of the same date in 2015. The net interest-bearing debt, of 15.423 billion euros, decreased 1.4% 94.6% of the debt is subject to long-term maturities and it has an average life of 5.2 years.

At the close of the year, GAS NATURAL FENOSA had 10.061 billion euros of liquidity available, equivalent to all financial obligations in over 24 months.

Pay out del 74,3%

The proposed distribution of earnings from the 2016 financial year that the Board of Directors will submit to the Shareholders’ Meeting for approval involves allocating 1.001 billion euros to dividends, a figure similar to that of the previous year. That is to say, a total dividend of one euro per share, which represents a pay out of 74.3%.

Last 27 September, the interim dividend of the 2016 financial year was paid in full and in cash, which corresponded to 0.330 euros per share.

Gas distribution in Spain

EBITDA for gas distribution activity in Spain reached 889 million euros, 1.9% more than the previous financial year. This increase is associated with piped liquefied petroleum gas activity after the purchase of supply ports in the last quarter of 2016.

Regulated gas sales in Spain rose by 4.1% compared to 2015, to 184,619 GWh. Residential demand increased by 3% (+1,432 GWh), due to increased consumption in the last quarter, colder temperatures than 2015. The industrial demand lower than 60 bars increased by 3% (+2,939 GWh) and transport and industrial demand greater than 60 bars increased by 6% (+2,857 GWh).

At 31 December, the company had 5,313,000 supply points (+0.9%) and a distribution network of 51,956 kilometres, up by 1.8% on the figure reported at the close of 2015.

GAS NATURAL FENOSA acquired around 230,000 supply points in the last quarter of 2016. They are located in areas of influence in current distribution zones, by virtue of the agreement signed in 2015 with Repsol Butano. These assets, which will be connected to the natural gas distribution network, will be leverage for growth and expansion of the regulated natural gas business of GAS NATURAL FENOSA in the coming years.

Gas distribution in Italy

EBITDA on gas distribution in Italy was 62 million euros, 6.1% less than in 2015, due to fundamentally lower revenue from updating the WACC, recognised by the Italian regulator as a consequence of the lower risk-free rate.

Gas distribution activity stood at 3,578 GWh, a reduction of 6.4% on 2015 due to unfavourable weather conditions. The distribution network reached 7,265 kilometres on 31 December, with an increase of 98 kilometres in the last 12 months. At the end of the year, the company had 459,713 supply points in Italy, up slightly from the previous year.

Gas distribution in Latin America

EBITDA from gas distribution in Latin America stood at 779 million euros, a decrease of 4.2% compared to 2015, due to the performance of Latin American currencies vis-à-vis the Euro in Argentina (-37.2%), Mexico (-14.1%), Colombia (-10.2%) Brazil (-4%) and Chile (-2.6%). Without the exchange rate effect, EBITDA would have increased by 4.8%.

By country, EBITDA recorded in Brazil is worth particular mention: 240 million euros, or 30.8% of the total. Chile, with 174 million euros, representing 22.3% of the total business; Mexico, with 162 million euros, represents 20.8%; and Colombia with 162 million euros, represents 20.8% of EBITDA.

Sales from gas activity in Latin America stood at 270,068 GWh and the distribution network in Latin America grew by 2,930 kilometres in the last 12 months to a total of 82,966 kilometres at the close of 2016.

GAS NATURAL FENOSA has 7,772,830 supply points in Latin America, following the addition of 325,000 new points in the last year. Noteworthy increases were seen in this regard in Colombia (118,000 points) and Mexico (114,000 points).

Electricity distribution in Spain

EBITDA for electricity distribution activity totalled 603 million euros in 2016, an decrease of 0.7% compared to 2015. At 31 December, supplied energy stood at 32,025 GWh – up 0.1% from 2015. At the end of the financial year the company had 3,702,000 supply points, representing a growth of 0.5% in the last year.

The Interruption Time Equivalent to Installed Capacity (TIEPI) stood at 43 minutes, slightly lower than in 2015 despite the effects of adverse weather conditions at the start of the year.

Electricity distribution in Moldova

EBITDA for electricity distribution activity in Moldova totalled 42 million euros in 2016 – up 10.5% compared to 2015. This increase is due to higher payments from the base tariff after the annual update, reduced network losses and the effect of the exchange rate.

Sales from electricity activity stood at 2,672 GWh (-0.4%) and the number of supply points stood at 878,491 (+1.3%) at the end of the financial year.

Electricity distribution in Latin America

EBITDA on electricity distribution in Latin America, including Argentina, Chile, Colombia (until 31 December 2016), and Panama, along with electricity transmission in Chile reached 689 million euros at the end of 2016 – 1.7% less than in 2015. When disregarding the exchange rate effect, EBITDA increases by 3%.

Distribution business in Colombia contributed with an EBITDA of 253 million euros, and that of Panama with 118 million euros, (+7.8% and -1.7%, respectively, when disregarding the exchange rate effect). The EBITDA for Chile and Argentina (CGE) was 318 million euros, registering a growth of 3 million euros, also when disregarding the exchange rate effect. This growth came from the electricity distribution business in Chile, mainly thanks to an increase in physical sales, greater activity in third-party services and lower operating costs, due to efficiency schemes. Higher power consumption in the transmission sector must also be taken into account.

Sales from electricity distribution activity in Latin America decreased by 1.5% to 33,561 GWh, due to a decrease in demand in Colombia. All together, the supply points reached 3,622,000, excluding data from Colombia.

Gas: Infrastructure

EBITDA from the infrastructure business, which includes operation of the gas pipeline between Maghreb and Europe, the development of integrated liquefied natural gas (LNG) projects and hydrocarbon exploration, development, production and storage, rose to 298 million euros in 2016, up 1.7%, due largely to the 3% increase in the international transport tariff on the Maghreb–Europe gas pipeline.

At 31 December, the gas transport activity carried out in Morocco through the companies EMPL and Metragaz achieved a total volume of 111,720 GWh, 1% less than in 2015. Of that figure, 70,425 GWh were transported by GAS NATURAL FENOSA through the company Sagane and 41,295 GWh for Portugal and Morocco.

Gas: Procurement and sales

EBITDA from global gas supply and marketing activity wholesale amounted to 547 million euros, a reduction of 30.6%, and in line with the energy price adjustment trend seen in the period.

Between January and December, GAS NATURAL FENOSA’s wholesale supply reached 295,297 GWh – 3.4% more than in 2015. Growth is primarily due to the increase in international business (12.7%), which reached 143,434 GWh, thanks to the boost in marketing to the end customer in the rest of Europe.

Gas Natural Europe, subsidiary of marketing in Europe, consolidated its gas marketing standing in France, Belgium, Luxembourg, the Netherlands and Germany in 2016. During the previous financial year, Gas Natural Europe posted sales in France during the period amounting to 49.2 TWh, with customers in various sectors that range from companies in the industry sector to local authorities and the public sector. Sales in Belgium, Luxembourg, the Netherlands and Germany stood at 11.9 TWh in the same period.

In Italy, GAS NATURAL FENOSA reached sales of 6.8 TWh and in Ireland, through Vaya (acquired in July 2016), sales were at 0.6 TWh.

In the Portuguese market, GAS NATURAL FENOSA remains the second-largest operator in the country in 2016, and the largest overseas operator, with a market share of over 15% and a sales volume of 5.6 TWh. In the industrial market, where its business is focused, this market share stands above 17%.

Within the retail market, the company had 12.3 million active gas, electricity and maintenance service contracts by 31 December, of which 11.7 million correspond to Spain and 575,000 to Italy. GAS NATURAL FENOSA, a pioneer in the integration of joint gas and electricity supply, now has over 1.5 million households in Spain with contracts for both energies. Furthermore, a large proportion of these households also receive the maintenance service.

Electricity in Spain

EBITDA for electricity activities in Spain (generation, wholesale and retail supply and PVPC supplies) stood at 715 million euros – 3.5% lower than the previous financial year.

Electricity demand, with temperature and work days taken into account, posted no growth. Meanwhile, net national generation shrank by 2.3%. The average weighted daily market price in 2016 was 40.88 euros MWh, significantly lower than the 51.74 euros MWh of 2015.

GAS NATURAL FENOSA generated 28,504 GWh in 2016, down 9.7%. Of this figure, 26,046 GWh corresponded to generation under the traditional regime, down 11.6%, while renewable generation and cogeneration stood at 2,458 GWh, up 17%. The company’s accumulated quota in power generation stood at 17%.

By technology, hydropower production stood at 3,933 GWh in 2016, 60.1% higher than in 2015. Nuclear production stood at 4,463 GWh (-1.8%), combined cycles generated 11,963 GWh (-17.5%) and coal-powered thermal plants produced 5,687 (-28.7%). Electricity sales, including sales in the liberalised market and the Voluntary Price for the Small Consumer (PVPC), stood at 36,384 GWh in 2016, up 3.2%.

Gas Natural Fenosa Renovables ended 2016 with a total installed capacity of 1,104 MW: of which 979 MW came from wind technology, 110 MW from mini-hydroelectric plants and 15 MW from cogeneration and photovoltaics.

Global Power Generation (GPG)

EBITDA for Global Power Generation reached 257 million in 2016, down 1.5%, mainly due to the lower EBITDA in Mexico (-3.6%) and the Dominican Republic (-31.4%), compensated partially with lower operational costs in CPG Holding. The electricity generated in all assets increased by 0.4% to 18,048 GWh.

At the end of 2016, the company had an installed capacity of 2,702 MW and boasts guaranteed projects in Australia, Chile and Brazil, where it will construct an additional 471 MW between 2017 and 2020.

(euros millions)20162015
Net sales23.18426.015
Gross margin7.7648.018
Other operating revenue359321
Staff costs-1.013-973
Other operating expenses-1.657-1.618
Other revenue1225
Depreciation & Amortisation, and impairment losses-1.759-1.750
Allocation to provisions-327-258
Financial results-825-894
Income from disposal of financial instruments
Income from institutions via shareholding-98-4
Corporate income tax-416-573
Income from interrupted operations4434
Non-controlling interests-364-322

Consolidated balance sheet

(euros millions)31/12/1631/12/15
Non-current assets38.90138.405
Intangible assets10.92010.525
Fixed assets23.62723.693
Investments via shareholdings1.5751.730
Non-current financial assets1.9071.387
Deferred tax assets8721.070
Current assets8.2139.727
Non-current assets held for sale955
Trade and other receivables4.9995.191
Other current financial assets389365
Cash and equivalent liquidity2.0672.390
TOTAL ASSETS47.11448.132


(euros millions)31/12/1631/12/15
Equity attributed to the parent company15.22514.367
Non-controlling interests3.7804.151
Non-current liabilities20.93321.481
Deferred income842853
Non-current provisions1.2481.488
Non-current financial liabilities15.00315.653
Deferred tax liabilities2.5092.543
Other non-current liabilities1.331944
Current liabilities7.1768.133
Liabilities linked to non-current assets held for sale585
Current provisions158193
Current financial liabilities2.5992.595
Trade and other payables4.0724.008
Other current liabilities347752

Main aggregates

Distribution business

Gas distribution (GWh)458.265473.831-3,3
Latin America270.068292.619.7,7
Rate-based gas sales158.608174.378-9,0
Electricity distribution (GWh)68.25868.731-0,7
Rate-regulated electricity sales2.6722.684-0,4
Latin America*33.56134.055-1,5
Rate-regulated electricity sales31.44132.131-2,1
Electricity transmission (GWh)14.48414.497-0,1
Latin America14.48414.497-0,1
Gas distribution supply points, in thousands (on 31/12):13.54613.1722,8
Latin America7.7737.4484,4
Electricity distribution supply points, in thousands (on 31/12):8.20210.622-22,8
Latin America3.6226.072-40,3
EFOF in Spain (minutes)***4344-2,3

*Colombia data up until 30/11/2016 due to unavailability of data for the month of December, following lack of authorisation given to Special agent for reporting such data.

Gas Business
Wholesale supply (GWh)295.297285.5003,4
Rest of Europe74.863158.193-4,0
LNG International69.33275.630-8,3
Retail supply (GWh)30.08730.768-2,2
Gas transport – EMPL (GWh)111.720112.861-1,0

** Third-Party Access to the network (distributed power). TPA services included in secondary transport.
*** Interruption Time Equivalent to Installed Capacity.

Electricity Business
Electricity generated (GWh)46.55249.548-6,0
Combined cycles11.96314.494-17,0
Renewable and cogeneration2.4582.10017,0
Global Power Generation18.04817.9800,4
Mexico (CC)15.64815.5190.8
Mexico (wind power)793850-6,7
Costa Rica (hydraulic)398408-2,5
Panama (hydraulic)987334,5
Dominican Republic (fuel)9201.012-9,1
Kenya (fuel)19111861,9
Installed capacity (MW)15.41815.471-0,3
Combined Cycles7.0017.001
Renewable and cogeneration1.1471.1450,2
Global Power Generation2.7022.702
Mexico (CC)2.0352.035
Mexico (wind power)234234
Costa Rica (hydraulic)101101
Panama (hydraulic)2222
Dominican Republic (fuel)198198
Kenya (fuel)112112