09 Jun 2020
Posted in Coronavirus
ENGIE to withdraw 2020 guidance despite strong financials to prepare for COVID-19 market uncertainty, says GlobalData
While ENGIE maintained a strong balance sheet in the first quarter of 2020, it has expectedly pulled down its financial guidance due to the decline in Q1 revenues this year compared to last year. The company has made stern decisions focussing on its profitable businesses. It is likely that this will bring some modifications to its 2022 guidance as well.
Somik Das, Senior Power Analyst at GlobalData, comments: “ENGIE decided to withdraw operations from 25 countries and also sell off the ENDEL unit. All these decisions allow the company to keep the primary focus on its profitable business activities which is expected to help ENGIE sail through the crisis.”
With the company having €16.4bn ($18bn) of liquidity, including €8.6bn ($9.4bn) of cash, at the end of February – alongside an additional issuance of a triple tranche senior bond in March – ENGIE seemed to maintain a strong financial position. However, due to the impact of COVID-19 and uncertain market conditions the company had to pull down its 2020 guidance and cancel dividend payment for 2019 to its shareholders.
Das continues: “Although ENGIE had a strong balance sheet, its quarterly revenues declined by 3% in Q1 2020 in comparison to Q1 2019. The reduction in Q1 revenues was majorly due to some key business units like the company’s client solutions unit, getting impacted the most. The outbreak of the COVID-19 caused sales to decline by March 2020 as lockdowns were enforced across Europe. With more clients shutting down, projects getting postponed, and constraints related to staff health protection, the client solutions activities got significantly impacted.”