Naturgy increases its investment by 53% to 3 billion, focusing on energy transition and Spain

Naturgy improved its EBITDA in 2023 to 5,475 million euros (+11%) and recorded a net profit of 1.986 billion (+20%), in a year marked by falling energy prices and a volatile scenario. The networks business obtained an EBITDA of 2,638 million (+7%) and the deregulated businesses, 2.949 billion (+15%).

Some 90% of the investment was targeted at energy transition projects, with 1.73 billion going to renewable energy generation and more than 900 million to distribution networks. Naturgy currently has 6.5 GW of installed renewable capacity in operation (3.3 GW of wind generation, 2.2 GW of hydroelectric generation and 1.0 GW of photovoltaic) and expects to end 2024 with around 8 GW of installed capacity in operation, to which a pipeline of projects under development of almost 20 GW should be added, mainly in Spain, Australia and the USA.

In the field of renewable gases, Naturgy manages a total of 70 projects which are currently at various stages of development, all of them in Spain and focused on biomethane (60 projects) and hydrogen (10 projects). Naturgy wants to lead in our country the opportunity that biomethane represents as a vector of the energy transition. According to the latest analyses by Sedigas, the potential of biomethane in Spain could reach 160 TWh, equivalent to 50% of the current demand for natural gas.

In terms of balance sheet management, the improvement in the company’s cash flow made it possible to both increase investments and maintain the level of net debt at 12.090 billion, reducing the debt/EBITDA ratio to 2.2x. This financial policy enabled S&P this year to reaffirm the group’s BBB rating.

Naturgy continues to make progress on its ESG commitments. In 2023, the company increased its emission-free installed capacity to 40% and implemented 353 biodiversity initiatives to contribute to the preservation of natural capital in the geographies where it operates. In terms of diversity, Naturgy achieved 36% female presence in management positions. And as regards its commitments to the territories where Naturgy operates, more than 90% of its purchases of goods and services were contracted from local suppliers.

“The good results for 2023 reflect, once again, the commitment, professional quality and good performance of the entire Naturgy team, as well as the soundness of our industrial growth plans and prudent financial management. We work every day to adapt this company, which is 180 years old, to a new environment: transforming our business mix and making a positive contribution to the challenges of the energy transition in the countries in which we operate, especially in Spain”, explained Naturgy’s executive chairman, Francisco Reynés.

Since the beginning of the 21-25 Plan, and until the end of 2023, Naturgy generated a total aggregate EBITDA of 13,958 million euros, invested 6,430 million euros, distributed a total of 3,908 million in dividends to its shareholders and paid taxes amounting to 3,177 million euros. In parallel, the company’s indebtedness has been reduced from a net debt to EBITDA ratio of 3.9x at the beginning of 2021 to 2.2x at the end of 2023.

Regarding future prospects, as it did in 2023, Naturgy does not currently quantify its earnings targets for 2024 due to the extreme volatility of energy markets and the unexpected weather. The energy group has set management priorities for the current year: i) maintaining the commitment to invest in the energy transition, mainly in Spain, with a special focus on renewable electricity generation and the development of renewable gases, as well as the strengthening of all its distribution networks; ii) regulatory management and management of natural gas supplies and supply contracts, with the aim of ensuring energy supply and competitiveness; and iii) continuous improvement of the customer experience, providing adequate service and prices. As a result, Naturgy expects similar investment levels in 2024 together with a prudent financial policy, which should allow to maintain its dividend at the current levels.

The Board of Directors of Naturgy has agreed to call the General Meeting 2024 on 2 April at the company’s headquarters in Madrid. At this meeting, the payment of a final dividend of €0.40/share will be submitted for approval, in line with the €1.40/share committed for 2023.