Naturgy's first-quarter profit rises 5% on higher power generation and network growth
First Quarter 2025 Financial and Operational Highlights
Profit Growth Driven by Market Conditions
MADRID, April 29 (Reuters) - Spanish power company Naturgy on Wednesday reported a 5% rise in first-quarter profit to 530 million euros ($620 million) on higher power generation and network growth as energy prices were driven higher by the Iran war.
The conflict has restricted oil and liquefied natural gas flows through the Strait of Hormuz and energy facilities have been closed or damaged by strikes, driving fuel prices higher.
The surge in gas prices boosted Naturgy's core earnings without negative impact as it has no procurement contracts linked to the region, the company said.
Expansion in Networks and Renewables
Growth in Network Business and Power Generation
Its network business grew and its thermal generation and installed renewables capacity increased in Spain compared to the first quarter of last year, in addition to higher wind and hydropower output.
Investment and Capacity Expansion
Naturgy invested 339 million euros in the first quarter of this year, mostly in distribution networks and renewable projects. Total renewable installed capacity reached 8.1 gigawatts, with a further 1.2 GW currently under construction and expected to become operational during the year.
Acquisition Strategy
Stephen Fernandez, Naturgy's global head of financial markets and corporate development, said in a results briefing that the company was looking at acquiring smaller companies, specifically in the renewables sector.
Financial Performance and Shareholder Returns
Revenue and Earnings
Naturgy's overall revenue fell 6.9% to 5.10 billion euros, but was well above analysts' forecast of 4.51 billion. Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 6.5% to over 1.36 billion euros, largely in line with the market consensus of 1.35 billion.
Dividend Payout
It paid its final dividend of 0.57 euros per share in cash on March 31, bringing the total dividend for 2025 to 1.77 euros per share - a 10.6% increase compared to 2024.
Shares were down 2.7% at 26.92 euros as of 1051 GMT.
Outlook and Regulatory Environment
Long-term LNG Contracts and EU Sanctions
Naturgy has a long-term contract with Yamal LNG to import liquefied natural gas from Russia, but such imports are expected to be banned by the EU from 2027 under a sanctions package.
Potential Impact of Sanctions
"If these sanctions are confirmed, we would not be able to divert these volumes to other destinations," said Rita Ruiz de Alda, Naturgy's global head of financial controlling, energy planning and risk management, noting that the European Commission is expected to review its latest sanctions package in July.
Additional Information
($1 = 0.8548 euros)
(Reporting by Madrid Bureau, Javi West in Gdansk and Sergio Goncalves in Lisbon; writing by Nina Chestney; Editing by Andrei Khalip and Sonia Cheema, Kirsten Donovan)
