* Engie one year into three-year strategy overhaul
* New investments not yet compensating sold assets' profit
* CEO says investors keeping faith in firm's strategy
By Geert De Clercq
PARIS, Dec 7 French utility Engie is
in the contraction phase of its three-year transformation plan
when investments in new assets have not yet replaced earnings
from assets sold, its chief executive said on Wednesday.
CEO Isabelle Kocher said investors who follow Engie closely
understand this and are keeping faith in the firm's strategy.
Engie has realised some 41 percent of a 15 billion euros
($16.12 billion) three-year asset sales programme and plans to
invest some 22 billion euros in new activities such as renewable
energy production, gas and distributed energy.
"We are one year into a three-year transformation plan and
this is the most thankless part," Kocher told reporters.
She said that once old assets are sold, new investments do
not always yield returns right away.
"What happens is the immediate loss of revenue. We reinvest
organically and that will produce profit contributions in two or
three years. We have said this from the beginning," she said.
Engie shares, down 27 percent since the start of the year,
are the third-worst performers in the CAC40 French index
and the second-worst performers in the Stoxx Europe Utilities
index. French media have raised questions about Engie
board chairman Gerard Mestrallet's confidence in Kocher, who has
succeeded him as CEO.
Kocher declined to comment on Engie's stock market
performance, but said the utility's dividend policy had been
made clear from the outset and there were no surprises.
"Investors understand well what we are doing... People
looking at the company long term see that we are in the
contraction phase," she said.
Kocher said Engie would stick with its three-year plan.
"We are ahead of schedule in every way, both in terms of
asset sales and in terms of reinvestment," she said.
Kocher said Engie would invest mainly on an organic basis
although there may be some acquisitions to complete its
technology base, such as the October acquisition of urban
three-dimensional modelling specialist Siradel.
Mestrallet confirmed his support last month for Kocher - who
was appointed this spring - following media reports that her
position was under threat due to Engie's falling stock price and
difficulties with putting in place its strategy.
Mestrallet and Kocher have set the former French gas
monopoly on a course to focus more on renewables, energy
services and regulated activities that are not exposed to
commodity prices. Writedowns on its oil and gas business led to
an 8.7 billion euros charge in 2015, pushing Engie into a 4.6
billion euro net loss.
($1 = 0.9305 euros)
(Reporting by Geert De Clercq; editing by Susan Thomas)