Engie, the dividend machine soon privatized

After the rejection of the privatizations of Aéroports de Paris (ADP) and the Française des Jeux (FDJ), the Senate finally offered a consolation prize to the government. It gave the go-ahead for almost total privatization of Engie. On 6 February, as part of the review of the Pact Act, the right-wing majority adopted the article abolishing the minimum threshold of state ownership of the capital it still holds in the group born of the absorption of Gaz de France by Suez in 2008. Once the text has been definitively adopted, the government will be able to sell the 23.61% of shares that the state still owns. The previous disposals are far from having the promised effects.

The dreams of gigantism vanished

Fourteen years after the transformation of GDF into a public limited company and the first opening of the capital, dreams of gigantism have vanished. The promises to make the group, through the merger with Suez, "the second largest French energy player" after EDF, "the world's number 1 liquefied natural gas" or the "first independent electrician of the world", did not performed. They broke with the collapse in gas prices caused by the eruption of the American shale gas market and the decline in the price of electricity generated by the price of coal and the rise of renewable energies. As a result, between 2008 and 2017, the group saw its results deteriorate, from 83 billion euros to 65 billion euros in sales. The exit of the Suez environment branch accounts in 2013 only partly explains this decline.

To set the bar, Engie has launched a plan to sell 15 billion euros of assets over the 2016-2018 period. As of December 31, 2017, € 13.2 billion have already been sold and, according to the group's CGT coordinator, Eric Buttazzoni, "the $ 15 billion was exceeded in 2018". With this program, Engie aimed to refocus on regulated activities. In "The World" of March 3, 2016, the CEO, Isabelle Kocher, explained that "assets exposed to the market" should no longer represent "only 15% of our activities at the end of 2018". "It's the case," assures Eric Buttazzoni.

In addition to these asset closures, management has also launched a savings plan to halt the decline in its gross operating surplus from 19.6 to 9.4 billion euros between 2008 and 2016. Baptized "Lean 2018 ", this program was, according to management," a gain of 1.3 billion euros "in terms of gross operating surplus. "This represents more than 3 billion savings, largely to the detriment of employment," says trade unionist CGT recalls that, in the same period, Engie has cut 10,000 jobs, including 2,500 in France. This drastic austerity cure has hardly borne fruit. In 2017, the gross operating surplus fell further to 9.3 billion euros. On a like-for-like basis, its growth reached only 5.3%, according to management, while Lean 2018 generated a "gain" of 947 million euros. "It is likely that the savings plan had negative effects on turnover," says Eric Buttazzoni. Like Greece, austerity ends up killing growth.

When dividends end up subsidiaries

The savings plan saves shareholders. After a fall of 1 euro, in 2016, to 70 cents, in 2017, the dividend per share increases to 75 cents for 2018. The holders of capital have thus shared more than 1.8 billion euros. A sum financed by the subsidiaries formerly integrated into Gaz de France. In 2017, GRT Gas (transport), Storengy (storage), Elengy (LNG terminals) and GRDF (distribution) paid 1.487 billion euros in dividends to Engie. They thus financed 87.2% of what the group paid to its shareholders (1.704 billion euros) while they realized only about 6.3 billion euros of turnover, or less than 10% of that of Engie. "To pay such dividends, the management of Engie indebted its subsidiaries," denounces Frederic Ben, head of the gas industry at the CGT energy, which points the case of GRDF which paid 1 billion euros while its result net was only 150 million euros in 2017. "It also undermines security," he accuses. The number of "intervention zones" has increased from 480 to 320, "increasing the size of each of them and the response time" in the event of a gas leak.