France's Engie earnings top forecast on higher revenue from grid networks

Engie Earnings Surpass Expectations with Grid Network Revenue Boost

Engie Reports Strong Third-Quarter Performance

By Forrest Crellin

Nov 5 (Reuters) - French utility Engie on Thursday reported a 35.7% rise in third-quarter earnings, beating expectations thanks to higher revenue from grid networks.

Financial Highlights and Analyst Expectations

• Europe's largest gas network operator posted earnings before interest and taxes, excluding nuclear activities, of €7 billion ($7.9 billion) for the first nine months of the year

• That implies a third-quarter figure of about €1.7 billion, according to Reuters calculations, ahead of analyst expectations of €1.6 billion, based on a Visible Alpha consensus

• Engie said it now expects to reach the upper end of its full-year EBIT, excluding nuclear, guidance range of €9.2 billion to €10.2 billion

Outlook and Sustainability

• Chief Financial Officer Pierre-Francois Riolacci told analysts the stronger outlook should prove sustainable after the company raised guidance at the half year stage following the early completion of its purchase of UK Power Networks

Recurring Growth

• "The growth of net income is driven by a good level of performance ... it means that it is recurring, so you should not see that as one off," Riolacci said

Infrastructure Division Performance

• Engie's infrastructure division earned €790 million in the quarter, up 62% from a year earlier, boosted by a full quarter of contribution from UK Power Networks

Market Reaction and Analyst Commentary

• Engie shares initially fell, but were flat at €24.07 at 1030 GMT. The stock has come under pressure this year from the company's large exposure to France, which is facing political upheaval, analysts say

• JPMorgan analysts said the guidance upgrade was partly offset by a larger-than-expected increase in net debt, driven by higher energy commodity costs that led to larger margin-call payments and increased spending on gas inventories($1 = 0.8880 euros)

Reporting and Editing

(Reporting by Forrest Crellin. Editing by Tomasz Janowski and Mark Potter)