GDF SUEZ has reported revenues of EUR83.05 billion for the year-end 2008, compared with the revenues of EUR71.23 billion in the previous year-end. It has also reported a net income of EUR6.5 billion for the year-end 2008, compared with the net income of EUR5.7 billion in the previous year-end.
Gerard Mestrallet, chairman and chief executive officer, commented: “In 2008, GDF SUEZ exceeded all its targets. This operating performance demonstrates the strength of the Group’s business model. Thanks to our ambitious, long-term strategy, the Group has substantial assets to stand up to the current crisis – it enjoys leadership positions in both electricity and natural gas, diversified and complementary businesses, and the capacity for dynamic and profitable development in promising energy and environment markets. This longterm vision remains in place despite the deteriorating economic situation. The Group has set ambitious industrial and financial goals for 2011. In the short run, we will focus on the performance plan, liquidity levels, and our selective approach to capital expenditure.”
Results advanced strongly and exceeded targets
The Group met and exceeded all performance targets set for 2008 despite the effects of worsening economic conditions and regulatory factors that adversely impacted Group results in 2008 (inability to pass on to consumers the full increase of natural gas supply costs in France and a EUR250 million tax imposed by the Belgian government on local nuclear energy producers).
All performance indicators also show double-digit organic growth. As a result, EBITDA reached EUR13.9 billion, for a total increase of +11% over 2007 and an organic growth increase of +12.5%.
Energy France Business Line benefited from favorable market prices for its electricity generation activities and from a 140 MW increase in installed capacity, mainly from new renewable energy startups (hydro, wind, etc.). The business line was adversely affected, however, by an inability to pass on fully costs (natural gas supply and other costs in regulated tariffs in France : – EUR679 million in 2008).
Energy Europe and International Business Line was able to take advantage of market conditions, particularly the International Division where the main drivers of growth were LNG activities in North America and electricity in Brazil. The Europe Division benefited particularly from the full effect from the startup of electricity generating units in Italy.
Global Gas & LNG Business Line was able to take advantage of favorable market conditions. Exploration- Production benefited from an exceptionally high annual average price per barrel of oil ($97/barrel), and its other activities profited from arbitrage opportunities due to attractive price differentials between international markets. The business line’s EBITDA also reflects an increase in production volumes (essentially through new fields coming on line in the Netherlands and Norway) and natural gas sales to major customers.
Infrastructures Business Line significantly boosted the value of industrial assets in its four business areas (transmission, storage, terminal activities and distribution), increased its transmission and storage sales capacities, and benefited from more favorable weather conditions than in 2007. 2008 was also marked by the conclusion of distribution and transmission rate agreements valid until 2012, thus providing the business line with a clear medium-term visibility. Finally, at the December 17, 2008 Extraordinary Shareholders’ Meeting, shareholders approved by more than 99% the separate incorporation, through Elengy and Storengy, of the business line’s LNG terminal and storage activities.
Energy Services Business Line benefited from growth in demand for energy efficiency and continued operating improvements in most of its entities. Through Cofely, the new unified commercial brand for the Group’s energy services subsidiaries, the business line will be able to increase its visibility and confirm its leadership in Europe.
SUEZ ENVIRONMENT reported improved performance in all segments, particularly “Water Europe,” thanks to dynamic sales and positive price effects and, on the international side, to strong performances by Degrémont, and activities in North America, Asia, and Central Europe. “Waste Europe” posted positive growth for the full year but was impacted during the 4th quarter by the economic slowdown and decline in recycling activities. SUEZ ENVIRONMENT continues to benefit from synergies with energy activities, especially in the Middle East.
The Group presents a strong balance sheet, with EUR28.9 billion in net debt, equal to two years of EBITDA, and a gearing ratio of 46%.
The Group is developing in accordance with an investment program that is ambitious, balanced, and disciplined in each of its business lines. GDF SUEZ remains confident about the long-term market fundamentals in the energy and environment sectors. The Group is sticking to its industrial ambitions with a dynamic program of net capital expenditures at EUR30 billion for the period 2008-2010. Projects, either completed or underway, and entirely secured and funded over the next two years, will contribute to EBITDA’s growth in 2009 and 2010.
In 2008, the Group completed EUR11.8 billion in net capital expenditures, expanding and consolidating major positions, particularly in electricity generation (United States, Brazil, Singapore, the Middle East, Germany, Italy, etc.) and in upstream natural gas activities (Nam acquisition in the Netherlands, explorationproduction licenses in Libya and in Azerbaijan).
GDF SUEZ also concluded agreements in 2008, whose effect will be felt in 2009, with ENI (May 2008) and E.ON (December 2008), which will significantly strengthened its industrial presence in Italy and Germany, two key markets for the Group in Europe. With these transactions, GDF SUEZ has balanced and strengthened its industrial presence while complying with European Commission requirements and commitments to the government of Belgium in connection with Pax Electrica II.
The Group has also reaffirmed its ambition to participate in the global revival of nuclear energy. GDF SUEZ is recognized as a new civil nuclear player in France where it will participate as associate partner in the country’s second EPR project. In addition, the Group has recently signed partnership agreements with Iberdrola and SSE in connection with the land auctions being organized by the U.K.’s Nuclear Decommissioning Authority to prepare for the construction of new nuclear power plants.
To support its development and industrial ambitions, the Group hired more than 32,000 new employees in 2008, some 13,000 in France and 3,700 in Belgium. This recruitment campaign will continue in 2009.
A proactive Group standing up to the crisis and announcing ambitious, medium-term targets:
The development of GDF SUEZ is based on a vigorous, balanced, and value creating growth model. GDF SUEZ has strong assets to weather the economic and financial crises ahead while remaining confident about its ability to deliver its long-term objectives for growth – leadership positions in both electricity and natural gas, diversified and complementary businesses, and a capacity for dynamic, profitable development in promising energy and environment markets. This long-term vision remains in place despite the deteriorating economic situation. The Group has set a 2011 EBITDA target that its realistic and consistent, with its industrial development plan, the full effect of the Efficio performance plan, its “strong A” credit rating target, and its ordinary dividend policy, assuming improved macro economic conditions by 2011.