Engie to Cut Dividend from 2017 as Energy Price Drop Saps Profit

A French energy company that was formerly called GDF Suez SA, Engie SA, says that it will cut dividends from 2017. The firm is looking to slash its costs and sell up to &16;.5 billion (15 billion Euros) of assets by the year 2018. This move came after the company agreed that their earnings are being dented by the falling prices.

The energy company will reduce payouts to its shareholders on earnings for the fiscal years 2017 and 2010, according to a statement it released on Thursday. The net recurring income recorded a drop of 5% last year, reaching 2.6 billion.

Mestrallet aims at reducing the exposure of Engie to unregulated power and gas markets in Europe and the U.S. as well as other regions in order to protect it from the price slump that’s being caused by government subsidies and surplus supply for clean energy. However, as dividend cuts are expected to be done, the company plans on increasing its investment in energy-efficiency services, including solar and wind power.

In its report, Engie stated that it has a net loss of about 4.6 million Euros for a full year, compared to the 2.4 billion Euros profit it reported in 2014. The company declared 8.7 billion Euros worth of assets in businesses, which include merchant power generation, production and exploration. It will pay just 1 euro per share as dividend this year, before reducing the amount to 70 euro cents.

Engie also aims at deepening cost cuts in order to increase its savings. This will have an impact on the cumulative net on earnings before depreciation, taxes and interest. The move to cut dividend paid to share holders in 2017 was expected because of the loss the company incurred in 2015. It will start with paring a euro this year reduce it further with time.

About the author