Engie shares rise 5% on strong gas trading, power grid income

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By America Hernandez

PARIS, July 31 (Reuters) - French utility Engie on Friday reported a 3.3% rise in first-half earnings, beating expectations thanks to strong natural gas trading and higher income from electricity transmission fees.

Europe's largest gas network operator said earnings before interest and taxes, excluding nuclear, for the January-to-June period were €5.3 billion ($6.1 billion).

RBC analyst Joseph Pepper said the results looked strong across the board, adding it was a positive sign that Engie had upgraded its guidance at a time when warmer weather and low rainfall negatively impacted gas sales and hydropower production.

Its shares rose 5% to €27.37 by 0923 GMT. The stock is up 24% year to date.

Engie raised its annual guidance to EBIT excluding nuclear of between €9.2 billion and €10.2 billion, up from a previous range of €8.7 billion to €9.7 billion.

STRONG GAS TRADING, LOWER GAS DELIVERIES

"Our energy management business performed better than we had expected due to the gas price volatility from the situation in the Middle East, but it is important to note that these gains were marginal compared to the Russian gas crisis of 2022," CFO Pierre-Francois Riolacci said on a press call.

Engie's supply and energy management business, which sells power ​and gas to retail customers and business clients and engages in some trading, earned €1.55 billion, a 0.4% rise from the same period last year, with trading earnings offsetting depressed sales.

EBIT from batteries and power production fell 8.5% to €1.8 billion, as gas generation income dropped 30% on warmer weather and less gas usage.

Engie CEO Catherine MacGregor said Engie was well-positioned to bid for tenders to build gas plants in Germany, Spain and the Netherlands, beginning this fall.

ELECTRIFICATION, POWER GRIDS ON RISING TREND

"Our upgraded annual guidance is mainly due to the positive effects of our acquisition of UK Power Networks and the success of our internal efficiency programme, which contributed €304 million," Riolacci added.

Energy infrastructure activities were up 13%, reaching €2.2 billion, due to a near-doubling of income from electricity networks after Engie finalised its purchase of the major British grid operator in May.

"We continue to see the need for quick electrification driving governments to tender more auctions for offshore wind globally, and under better conditions, so we are positive on this trend despite the noise in the United States," MacGregor said.

Several data centre deals, of which 4 gigawatts are in the advanced stage, should be finalised in the next 12 months.

($1 = 0.8690 euros)

(Reporting by America Hernandez in Paris, Zakarya Meliani and Gianluca Lonostro in Gdansk; Editing by Susan Fenton and David Holmes)