May 12, 2020 / 6:33 AM / 16 days ago

France's Engie to speed up cuts to unprofitable business

PARIS (Reuters) - French utility Engie said on Tuesday it would accelerate plans to withdraw from some markets and leave more than 25 countries by 2021, while shrinking its client solutions division, which the coronavirus crisis has hit hard.

FILE PHOTO: A logo of French energy company Engie is seen at an office building in La Defense business district in Courbevoie near Paris, France, October 12, 2019. REUTERS/Regis Duvignau

Engie, whose operations span the globe and include nuclear and gas, posted a 3.7% fall in first-quarter revenue to 16.5 billion euros ($17.85 billion), hurt partly by unseasonably warm weather which lowered energy demand.

The novel coronavirus outbreak began to feed through to sales by the end of March as lockdowns were enforced in Europe, Engie said, adding its client solutions unit, which provides companies with heating and cooling systems for instance, was affected the most.

Engie’s operating income fell 2.1% on a comparable basis to 1.9 billion euros, while areas including renewable energy and nuclear performed well, it said.

The group, which has yet to appoint a new chief executive after ousting former boss Isabelle Kocher earlier this year, said it would refrain from rolling out activities in some new countries and withdraw from some others.

“Engie has fine-tuned its market rationalisation target with a decision to exit over 25 countries by 2021,” the company said, adding this would have little impact on operating income.

Engie said it intended to “further rationalise its Client Solutions activities, exiting business with low profitability or non-core in the context of its strategy”. It did not give details.

The division spans a wide range of services, including electrifying public transport networks.

Engie, which is 23.6% owned by the French state, had already scrapped its dividend and financial guidance because of the COVID-19 crisis.

Its board voted not to award Kocher, the only female boss of a blue-chip French company, a second mandate in February following internal disagreements over strategy.

Reporting by Benjamin Mallet and Sarah White; editing by Jason Neely and Barbara Lewis

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