MADRID (Reuters) - Spanish utility Naturgy (NTGY.MC) on Wednesday reported a 14% drop in first-half core earnings on lower demand for gas and electricity as a result of the coronavirus outbreak, sparking a sharp drop in its shares.
Naturgy’s earnings before interest, tax, depreciation and amortisation fell to 1.87 billion euros (1.70 billion pounds) in the first half from 2.18 billion euros a year earlier. Net profit fell 44% to 334 million euros.
“These are clearly not good results, but clearly we are impacted by what is happening in the world and the coronavirus,” Chief Executive Francisco Reynes told analysts during a call on Wednesday.
The company said lower demand for gas and electricity during lockdowns in the first half had depressed prices, while weaker currencies in Latin America further eroded profitability.
Shares were down 4.7% at 16.63 euros in mid-afternoon trading, making the company the blue chip IBEX 35 index’s worst performer. Fellow Spanish energy firm Iberdrola, which also reported earnings on Wednesday, was down 1.1%.
Naturgy is a major global buyer of liquefied natural gas (LNG), which was already experiencing oversupply even before the pandemic further dented demand for the super-chilled fuel.
The company said it had already cancelled contracts for 20 TWh worth of gas as prices slump, and expects to keep this policy in the second half of the year.
It still expects to achieve efficiencies worth 500 million euros, and targets 2020 core earnings, excluding exceptional items, of around 4 billion euros, down from 4.7 billion euros last year.
The company said it would update the market on its business plan and financial guidance in autumn and reaffirm its commitment regarding dividends.
It said its priority remains shareholder returns, although it has suspended its share buy-back program.
Reporting by Inti Landauro; Editing by Isla Binnie, Jose Elías Rodríguez and Jan Harvey