GDF Suez Returns to Profit, But Warns of Drag from Lower Oil

By William Horobin and Inti Landauro

PARIS--GDF Suez SA (GSZ.FR) Thursday reported a return to profit in 2014 but warned that low oil and gas prices will weigh on profitability this year and the energy company said it expects 2015 profits to be at a similar level to last year.

The return to net profit--2.4 billion euros ($2.72 billion)--comes after the company reported deep losses in 2013 on write downs on European power plants.

But headwinds will persist in 2015 due to the recent drop in oil and gas prices, GDF Suez said.

"The recent, considerable fall in oil and gas prices will have a short-term impact," Chief Executive Gerard Mestrallet said.

To limit the impact on its bottom line, GDF Suez said it will reduce operating expenditure by around EUR250 million this year and delay around EUR2 billion in investment in 2015 and 2016. Still, net recurring income--a measure of net income that strips out restructuring costs and other impairments--will be between EUR3 billion and EUR3.3 billion this year, compared with EUR3.1 billion in 2014, and a decline of around EUR0.3 billion from 2013.

GDF Suez already faced a number of challenges in 2014: gas sales in France fell around 15% due to mild weather; two nuclear reactors in Belgium were halted; and a drought in Brazil disrupted hydroelectric operations.

Overall for 2014, revenue fell 6.6% to EUR74.69 billion, below the EUR78.22 billion average forecast of 24 analysts polled FactSet. Earnings before interest, tax, depreciation and amortization in 2014 declined 6.7% to EUR12.14 billion

Write to William Horobin at [e-mail]

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