Press releases

Revenues: EUR 57.9 billion - EBITDA: EUR 10.1 billion - Net debt: reduced by EUR 1.1 billion

3^rd quarter 2009

Revenues¹ : EUR 57.9 billion
EBITDA¹: EUR 10.1 billion
Net debt: reduced by EUR 1.1 billion²

 

Total revenue as at September 30, 2009 amounted to EUR 57.9 billion, reflecting a fall in gross term of
–1.2%. Reflecting the seasonality of certain Group activities, and given that commodities prices peaked in the summer of 2008, this result reflects a solid performance in line with Group’s objectives for the year.

The results of the first nine months are mainly due to:

• the EUR 1.2 billion net contribution to revenues from recent industrial acquisitions (VPP in Italy, Senoko in Singapore, FirstLight in the United States, NAM in the Netherlands), as at September 30, 2009;
• the increase of Infrastructures activities and the good performance in Energy Services and Environment activities; 
• the impact of declining oil prices on Exploration & Production activities following the summer 2008 price peak; and
• the contraction in natural gas and electricity sales volumes in Europe and an unfavorable price effect in certain markets.

On the occasion of the 3rd quarter revenues announcement, Gérard Mestrallet, Chairman and CEO, commented: “The Group’s activity during the first nine months of the year confirms the strength of our business model. Despite the lower level of activity we announced for the third quarter, we confirm our objectives for the year. In a difficult economic environment, GDF SUEZ pursues its industrial development while reducing debt, which will enable the Group to benefit quickly from a turnaround in its major markets.”

EBITDA for the period came to EUR 10.1 billion, for a total change of –2.7% compared with the September 30, 2008 figure.
The main factors behind this change were:

• the expected decline in the contribution of Global Gas & LNG Business Line’s to revenues, resulting mainly from the impact of lower commodities prices on Exploration & Production activity,
• the negative impact of the 1st quarter tariff shortfall in France (-EUR 284 million as at September 30, 2009).

Nevertheless, these factors were partially offset by:

• good performance by the Energy Europe and International Business Line, sustained by the same elements as during the first half, mainly the good level of availability of nuclear power plants,
• continued momentum in the Infrastructures Business Line, led by investments,
• the resilience of the Energy Services and Environment activities.

The Group confirms its target for higher EBITDA in 2009 than in 2008.

Net debt stood at EUR 27.8 billion at the end of September 2009, stable in relation to June 2009, and down EUR 1.1 billion compared with the end of 2008.
The September 30, 2009 debt level comes after taking into account the Group’s substantial investment program, dividend payment, first-half disposals, and favorable seasonal adjustments to working capital needs.

Significant events since publication of 2009 half-year results

Nuclear:

• A global agreement with the Belgian Government was conducted for the period 2010 - 2025, confirming a shared commitment to enabling the Group to expand its activities in a stable, long-term framework in Belgium and authorizing an extension of the operational lifetime of the three nuclear units through to 2025;
• A major advance was secured in the United Kingdom with the acquisition, together with Iberdrola and Scottish and Southern Energy Plc, of an option to purchase land at Sellafield to build a new nuclear power station (maximum capacity of 3.6 GW);
• A nuclear cooperation agreement was signed in Brazil with Eletrobrás and Eletronuclear.

Electricity production:

• In partnership with the Abu Dhabi Water and Electricity Authority and the Marubeni Corporation, over USD 2 billion was secured in financing for the IWPP (Independent Water and Power Producer) Shuweihat S2 project in the United Arab Emirates. At the end of October, the Marafiq IWPP in Saudi Arabia, the world’s largest power and desalination project, entered its startup phase; 
• The Group’s leadership position in Chile was strengthened with the signing of a USD 3 billion contract for the supply of electricity derived from regasified LNG at the Mejillones terminal and inauguration of the country’s biggest wind farm (Monte Redondo);
• In France, one of the countries largest photovoltaic power stations was completed at Saulce-sur-Rhône (Drôme).

Exploration-production:

• A 45% stake in the Muara Bakau offshore production sharing contract in Indonesia was acquired  from ENI;
• An agreement to acquire a half interest in the 50% stake of KazMunaïGas (KMG) in the Khvalinskoye field offshore exploration license in the Caspian Sea, was signed.

Energy Services:

• In China, the Group entered a partnership with the municipality of Chongqing creating a 40/60 joint venture to promote energy and environmental efficiency;
• Cofely Italia brand was launched, creating Italy’s nº 1 energy services player.

¹  Reported GDF SUEZ unaudited revenues and EBITDA as at September 30, 2009 were reviewed by the Board of Directors on
November 10, 2009. Revenues and EBITDA for 2008 are  established on a pro forma basis. Their reconciliation with previously reported data is provided at the end of this release.
²  Compared with net debt at 12/31/2008.
 

REVENUE BREAKDOWN BY BUSINESS LINE

The total change in revenues was –EUR 683 million:

• organic growth (-EUR 1,633 million);
• changes in Group structure (+EUR 1,206 million), of which:
  • first-time consolidations (+EUR 1,736 million) primarily:
    • Energy Europe & International (+EUR 1,067 million): acquisitions of VPP in Italy, Senoko in Singapore, Izgaz in Turkey, FirstLight in the United States, the electricity trading company Elettrogreen in Italy, Teesside in the United Kingdom;
    • Global Gas & LNG (+EUR 241 million): acquisition of NAM at the end of 2008 and change in consolidation method for Gaselys;
    • SUEZ ENVIRONNEMENT (+EUR 266 million)
    • Energy Services (+EUR 106 million).
  • disposals (-EUR 530 million) primarily:
    • Energy Europe & International (-EUR 433 million): sales of ORES to mixed intermunicipal companies in Belgium, 250 MW to SPE in Belgium, and Chehalis in the United States,
    • SUEZ ENVIRONNEMENT (-EUR 36 million),
    • Energy Services (-EUR 50 million).
• exchange rate fluctuations (-EUR 255 million of which +EUR 531 million on the USD, -EUR 373 million on the GBP, -EUR 100 million on the BRL, -EUR 94 million on the Romanian leu and -EUR 92 million on the Hungarian forint), particularly within SUEZ ENVIRONNEMENT (-EUR 118 million), Energy Europe & International (-EUR 66 million) and Energy Services (-EUR 56 million).
   

As at September 30, 2009, the Energy France Business Line generated EUR 9,785 million in revenues, increasing a total of +5.2% as compared to September 30, 2008 and +4.7% on an organic growth basis (changes in Group structure were related to the acquisition of Eco-confort companies during the 2nd half of 2008).

Growth in sales revenue based on average climate conditions over the period reached to +1.9%.

The increase in Energy France revenues is explained by the full impact in 2009 of tariff increases carried over from 2008. The April 1, 2009 price adjustment finally enabled the Group to cover its costs, something that natural gas price levels had not permitted in 2008 or during first-quarter 2009. Nevertheless, revenues and margins during the first nine months of 2009 were still adversely impacted (-EUR 284 million) as regulated tariffs in France during the first quarter did not entirely cover all costs (supply and other non-materials costs).

Natural gas sales volumes came to 185 TWh, down slightly from the same period the year before (-2% or -3 TWh). This change essentially reflects a slight decline in consumption (energy savings, impact of the economic downturn), partially offset by relatively more favorable weather conditions (as at the end of September 2009, weather was close to average, while as at the end of September 2008 the weather was warmer, with a correction of 6.2 TWh). GDF SUEZ market share for residential customers as at the end of September 2009 was 91% while for business customers it was 77%.
 
Electricity sales volumes reached 25 TWh, up slightly (+1%) over the 2008 3rd quarter figure. At the end of September 2009, the customer portfolio included more than 810,000 managed electricity contracts in France, of which 610,000 were residential customers.

In addition, the business line’s electricity production came to 21.6 TWh, down slightly (-0.8 TWh); the increase in thermal and wind power electricity generation (+1.2 TWh) offset less favorable hydroelectricity generation conditions in 2008. The production base continues its growth with the industrial commissioning September 1, 2009 of “Cycofos” the new 420 MW combined cycle gas turbine.

BENEDELUX division

As at September 30, 2009, Benedelux Division revenues totaled EUR 9,453 million, down –2.9% compared with the same period in 2008. However, organic growth was positive at +0.8% taking into account the effect of disposals (-EUR 356 million) related to the sale of ORES and the sale of 250 MW of nuclear power capacity to SPE.

Electricity sales volumes grew by +3.5% to 85.6 TWh (organic growth of +3.2%) raising revenues to EUR 7,070 million. The rise in sales volumes in wholesale and export markets offset a decline in sales to the business customer segment, a result of the economic downturn.

Electricity production, at 65.5 TWh was up by +7.9%, reflecting by a very sharp improvement in nuclear power plant availability which reached 90% at the end of September 2009, compared with 82% in 2008.

In Belgium and Luxembourg, sales volumes were down 0.9 TWh (-1.7%), reflecting an uneven trend between various segments: residential customers +0.4 TWh, industrial customers and distributors –4.9 TWh, and wholesale customers +3.6 TWh. In all segments, average prices were up, with the exception of retail customers. All together, revenues were down -EUR 141 million (-2.8%).

Electricity sales volumes in the Netherlands declined –1.7 TWh (-EUR 126 million). This change mainly reflects a decrease in wholesale volumes (-1.0 TWh). The industrial customer segment increased slightly, with the decline in volumes sold (-0.5 TWh) offset by increased prices.

In Germany, the decrease in electricity sales volumes (-0.5 TWh) was offset by an increase in average prices.

Finally, electricity sales volumes in the Benedelux Division outside Benelux-Germany grew substantially: +6 TWh (+EUR 398 million). This was due mainly to sales in the wholesale markets in France, the United Kingdom, Poland and Hungary and to sales to distributors in France.
 
Natural gas sales totaled EUR 1,940 million as at the end of September 2009, for a –6.3% drop in organic terms due to declining prices. In both 2008 and 2009, prices in this zone had followed the trend in market prices. Sales volumes remained flat for the period, at 51 TWh (+0.4%). The decline in other markets was offset by an increase in sales volumes in the Netherlands and in sales volumes to residential customers in Belgium.
 

EUROPE division

As at September 30, 2009, the Energy Europe Division revenues came to EUR 5,762 million, for a total change of –9.8% compared to the same period in 2008.

This decrease resulted from a combination of positive changes in consolidation (+EUR 599 million) related in particular to the acquisition of VPP in Italy (+EUR 417 million), to the changed consolidation method for Italcogim Spa (+EUR 35 million), the acquisition of Izgaz in Turkey (+EUR 120 million), of Teesside in the United Kingdom (+EUR 23 million) and negative exchange rate fluctuations in Eastern Europe (-EUR 211 million) and the United Kingdom (-EUR 194 million).

The organic change in revenues came to –13.7% and is explained by:

• Western Europe (-EUR 665 million), which relates mainly to a reduction in electricity volumes sold in Spain (-1.9 TWh) in a depressed market and to lower gas volumes sold in the United Kingdom (-7.5 TWh);
• Italy (-EUR 120 million), mainly a decline in volumes, both in electricity (-0.2 TWh) and in natural gas (-2.5 TWh) related to the country’s slower industrial activity;
• Central and Eastern Europe (-EUR 32 million), particularly a decline in electricity volumes sold in Hungary (–2.1 TWh) and natural gas volumes in Romania (-2.8 TWh) partially offset by an increase in energy prices.
   

NORTH AMERICA division

As at September 30, 2009, revenues of the North American Division totaled EUR 3,019 million, down –3.5% compared with the same period in 2008. This evolution takes into account generally positive changes in group structure (first time consolidation of FirstLight for +EUR 148 million and sale of Chehalis -EUR 76 million). Exchange rate fluctuations were also positive (+EUR 289 million).
While sales of electricity and natural gas increased (respectively +5.5 TWh to 38.5 TWh and +3.1 TWh to 69.3 TWh), revenues were down on an organic basis (-14.1%), due to price weakness both in electricity and in LNG (after hedging).
 

LATIN AMERICA division

Revenues for the Latin America Division came to EUR 1,477 million, down –8.6% from the same period the year before. In organic terms, the decline was –9.8%. Revenues benefited from a positive Group structure effect (+EUR 49 million) following the acquisition of Ponte de Pedra in May 2008 and of Econergy in December 2008 (assets in Brazil and Bolivia). Negative exchange rate fluctuations (-EUR 33 million) include the depreciation of the Brazilian real.
With electricity sales volumes at 29.9 TWh, down slightly (-04 TWh) in relation to 2008, and natural gas sales stable at 6.7 TWh, the division’s performance was impacted mainly by an unfavorable 2008 basis of comparison in Brazil (-EUR 37 million) and unfavorable price effects in Chile and Peru (-EUR 76 million).
 

ASIA, AFRICA &  MIDDLE EAST division

As at September 30, 2009, the revenues of Asia, Africa, and Middle East Division were EUR 1,173 million, up +32.7% mainly thanks to the acquisition of Senoko in Singapore in September 2008 and to the appreciation of the U.S. dollar against the Thailand baht.
The organic revenues were down –6.5% reflecting lower gas prices in Turkey (-EUR 55 million) and maintenance of power plants in Thailand (-EUR 10 million).

Electricity sales volumes were 19.0 TWh, an increase of +1.2 TWh.
 

Revenues of the Global Gas & LNG Business Line, including intra-Group services, totaled EUR 15,138 million, an increase of +0.9%.

As at the end of September 2009, Global Gas & LNG contributing revenues came to EUR 7,798 million, down slightly from the same period last year, with a decline in organic terms of –3.6%.

The change in contributing revenues to the Business Line is explained mainly by:

• The negative price effects on short-term and other sales related to lower commodities prices, as well as by lower external LNG sales volumes due to unfavorable market conditions: 9.3 TWh as at the end of September 2009 (12 cargoes) versus 43.1 TWh as at the end of September 2008 (52 cargoes), a difference of –33.8 TWh.

• The reduction in the contribution from Exploration-Production revenues, which amounted to EUR 1,085 million (-29% in organic terms), principally due to:
  • an oil price drop of -€31/Boe for a decline of -43% (the average price of Brent falling from €73/Boe to €42/Boe as at the end of September 2009),
  • the drop in the average NBP price (from €25/MWh to €13/MWh as at September 30, 2009, or -48%) even if its impact was limited by indexation mechanisms and hedging techniques,
  • total contributing hydrocarbon production equivalent to the same period in 2008.

These negative impacts are largely offset by:

• growth in the sales of natural gas to large European accounts (volumes of sales up by +4 TWh or 129.2 TWh as at the end of September 2009 versus 125.2 TWh as at the end of September 2008, plus a positive price impact after hedging), with the launch of the new commercial brand
• GDF SUEZ Global Energy;
• the dynamic of short-term sales and to a lesser extent other sales, with volumes sold up by
• +18.5 TWh (from 59.6 TWh as at the end of September 2008 to 78.1 TWh as at the end of September 2009).
   

Total revenues of the Infrastructures Business Line, including intra-Group services, amounted to EUR 4,015 million, an increase of +5.3% over the same period in 2008.

Growth in the business line’s revenues remains supported by:
-    the introduction on July 1, 2008 of the new distribution infrastructures access rates (+5.6% increase), matched by a new rate adjustment on July 1, 2009 (+1.5%);
-    the introduction on January 1, 2009 of the new transportation infrastructures rates in France (average increase 6%);
-    the +2.7% increase on April 1, 2009 in the average level of storage access rates in France;
-    the increase in the subscribed capacities of the German transport network (+8.7 TWh) thanks to the commissioning of new facilities and of storages facilities (+2.3 TWh);
-    an increase in volumes dispatched by GrDF because of more severe weather conditions at the start of 2009 (+6.6 TWh).

Contributing revenues were EUR 707 million as at the end of September 2009, up +21.7% over the same period in 2008. This improvement was due mainly to the increase of volumes conveyed by GrDF and GRTGaz on behalf of third parties as a result of the more substantial market opening.

Revenues for the Energy Services Business Line totaled EUR 9,804 million, down –1.8%.

In France, thanks to their commercial dynamism, Services activities (Cofely France) advanced +2.8% in organic terms (+EUR 65 million). They also profited from favorable weather conditions at the start of the year. Installation and maintenance activities recorded a decrease in organic terms of –3.6% (or -EUR 98 million). There were mixed performances across the Business Line: Inéo reported a limited decline in billings; Endel is seeing a greater slowdown in its markets that has led to a contraction in its revenues. Finally, the HVAC sector (climate engineering and refrigeration) reported an increase in its activity.

In Belgium, in organic terms, the reduction was –5.3% (-EUR 63 million), the growth in Services and the Oil & Gas activities was not enough to overcome the effects of unfavorable economic conditions.

Activity in the Netherlands showed organic reduction of –9.6% (or -EUR 87 million) related to the slowing economy. Government projects in the infrastructures sector will not compensate for the contraction of private customer demand in all regions.

Tractebel Engineering continues its sustained development in all areas, with organic growth of +15.5% (or +EUR  44 million).

Outside France and Benelux, the Business Line’s activities were down –4.5% in organic terms in Northern Europe (or -EUR 41 million), despite sustained growth in Germany. In the countries of Southern Europe, the level of activity was down by –1.7%. Energy price levels are discouraging growth in Italy and the Spanish market remains depressed. Finally, the electricity and natural gas subsidiaries grew organically by +5.1% (or +EUR 16 million) under the effect of price adjustments and the commissioning of new assets.

SUEZ ENVIRONNEMENT generated revenues of EUR 8.9 billion as at the end of September 2009, down
 -0.9% on a constant exchange rate basis from the same period in 2008.
SUEZ ENVIRONNEMENT detailed its end of September 2009 revenue trend and operating performance in its November 5, 2009 publication.
 

Next communication:

• March 4, 2010: publication of the GDF SUEZ 2009 results

COMPLEMENTARY ANALYSIS

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