GDF ditches monopoly past, invests in growth markets

Thu Feb 27, 2014 4:55pm EST
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By Geert De Clercq and Benjamin Mallet

PARIS (Reuters) - GDF Suez GSZ.PA, with its traditional European business under pressure, plans to focus investment on power production in fast-growing emerging economies and on Europe's shift to renewables and energy efficiency.

The French former gas and power monopoly plans to invest 9 to 10 billion euros per year in the next three years, of which only 2.5 billion to maintain existing assets, with a focus on small to medium-size acquisitions. In 2013, GDF invested 7.5 billion euros.

"It is clear that the utilities business model is changing. We want to grab all new opportunities," Chief Executive Gerard Mestrallet told a news conference about 2013 earnings.

GDF announced a 15 billion euro writedown on European gas-fired power plants and gas storage facilities that knocked the firm to a 9.74 billion euro loss.

Mestrallet said that once two planned power plants in Germany and the Netherlands are finished, GDF will build no new power plants in Europe for the foreseeable future and will focus generation investment on growth markets.

At the end of 2013, GDF had 15 gigawatts of projects under construction or under advanced development, of which close to 90 percent in fast-growing markets. One gigawatt is roughly equivalent to the output of one nuclear plant.

The group is also targeting strong international growth for energy services. It wants to increase revenues from energy efficiency by 40 percent between 2013 and 2018 and to double sales outside Europe by 2019.

GDF unit Cofely is the European market leader in energy services - heating, cooling and ventilation systems and services - with sales of around 15 billion euros.   Continued...

The logo of French group GDF Suez is seen on a building in the financial district of La Defense, near Paris August 1, 2013. REUTERS/Benoit Tessier