Engie Sa Ord

Good morning, everyone. It's my pleasure to welcome you to NG's nine-month conference call. Shortly, Catherine and Pierre-Francois will present our nine-month performance, following which we will open the lines to Q&A. With my polite request of limiting your questions to one or two only, please. And with that, over to Catherine.

Thank you very much, Delphine. Good morning, everyone. Welcome to the presentation for our nine-month 2025 results. when we can report a resilient set of numbers in what we could perhaps say is the new norm of a choppy economic, political, and geopolitical environment. We have continued to grow in renewables and flexible power, and we've done it, as always, by executing with efficiency. We are dynamizing our performance, and we are further simplifying our asset portfolio. With our ideal combination of green and flexible energy plus expertise in energy management, we are putting ourselves in pole position to meet the challenges and opportunities of booming data center demand and, in general, electrification. In nuclear, we embark on a new chapter with the restarts of both reactors in our new joint venture with the Belgian government, triggering the transfer of the remaining waste liability off our balance sheet, a big step for Engie delivered at last. Finally, on the basis of our nine-month results and final quarter outlook, we are on track to achieve the upper end of our net recurring income group share guidance range of 4.4 to 5 billion euros. Before moving on, I want to take a moment to remind ourselves what we are at at ENGIE. We are first and foremost a utility, which means that we are here to bring people something useful, something that they really need. And as a utility, we are focused on the energy transition, which means affordable, greener energy in a new environment of rising demand fueled by electrification and data center. Green power is often quickest to market, the more so given procurement bottlenecks or new gas plants. Component costs have fallen drastically. But that alone doesn't automatically imply that greener output is cheaper than what we have today, as there are negative prices, there is curtailment, which are undoubtedly a challenge, which shows that the system needs further optimization. And how are we doing this? we are moving faster to combining green output with batteries, pump storage, and flexible gas. And also being pragmatic about what can be electrified. Gas will remain an indispensable part of the energy system, and gas in turn will need to be decarbonized. As a utility focused on the energy transition, we have an ideal combination of assets and market know-how that is making greener energy more affordable and more attractive, which is why I am more excited than ever about the ambition we have at ENGIE to become the best energy transition utility. Moving on to this next slide, some headline numbers, EBIT excluding nuclear was down 7.3% on an organic basis at 6.3 billion euros with a rising contribution from networks and recalling a high basis of comparison in terms of energy pricing in SEM and hydrovolumes in our renewables and flex-powered GPU. Our performance actions achieved a tripling of boost to the EBIT over the first nine months of 2025 versus last year, to an unprecedented amount of 477 million euros. You'll remember that we are targeting 1 billion euros minimum of performance improvement over the 25 to 27 period, which represents an increase versus the previous years. In particular, a culture and competitiveness plan, also known as a C-square plan, is taking on a real momentum. The initial top-down approach is now complemented by a bottom-up approach, meaning that that every manager is responsible for developing and implementing the most relevant action plan covering the key areas we have identified, bringing efficiencies in procurement, improving span and layer, reducing general and administrative expenses, to name a few. I am really pleased to see the level of ownership from our management team on this topic and the promising results. Moving on, cash flow from operations stand at a strong level of 11.4 billion euros. The structure of our balance sheet remains solid, with economic net debt equating to 3.2 times of EBITDA at the end of September, well below the ceiling of four times. In conclusion, we approach the final part of 2025 with confidence, and I can confirm our guidance for the full year with net recurring income group share at the upper end of the range. Turning to this next slide, we added over 2 gigawatts of renewables and base in Q3 alone, making 4 gigawatts for the first nine months. Two major projects to mention, the Dieppe-le-Treport offshore wind farm, which in September installed its first turbine foundation. Also, the signing of the 1.5 gigawatt solar project in Abu Dhabi a few weeks ago. our largest renewables project that demonstrates our global reach and ability to compete successfully for the biggest ticket project within our investment criteria. In terms of green PPAs, we saw a big acceleration in Q3 with 3.1 gigawatts signed to date. In the U.S., we are moving forward with 1.7 gigawatts under construction, supported by demand for PPAs where buyers are anticipating scarcity and are looking to secure their supply. An example of that is a recently announced PPA with META covering the entire output of a 600 megawatt sensor project in Texas, which is due on stream in 2027. Some uncertainty in that market remains. with, for example, the risk of delays in permitting from the impact of the U.S. government shutdown. As with renewables, I want to stress a similar breadth of geographical presence and optionality in Engie's flexible power assets. This slide shows that we are expanding our portfolio in several European countries where we enjoy an integrated business presence. We've been actively contributing to Belgium's security and flexibility of supply. Our 875-megawatt Flemal CCGTs is now operational. It achieved full power at the end of October and is currently undergoing final tests to fine-tune processes. And at the start of October, we connected the first phase of our 200-megawatt base at Villevoorde, ahead of schedule. and early next year we'll be starting construction of an 80-megawatt base at Drogonbos. In Italy, we acquired two base projects of 200 megawatts combined in the Puglia region in July, enhancing a 4.2 gigawatts of generation portfolio and our supply business in that country. In Romania, where we have 240 megawatts of wind and solar, as well as a regulated gas distribution business, we are launching the SIDU-based project with 80 megawatt capacity due on stream late 2026. Moving on to this next slide, I want to share with you quickly how we are leveraging our key strengths in order to capture the opportunities presented by the data center boom, a boom that leads me to state with conviction that in the U.S. particularly, even those who don't believe in the energy transition believe in energy additions. What are these key strengths and how do they fit the needs of data center developers? First, we have a massive portfolio of over 1,000 generation and flexibility sites while data centers need land as well as grid access. So we can help. We aim to co-locate the substantial data center capacity with our production plans. Second, we will leverage a pipeline of over 100 gigawatts of renewables and BES, as well as a recognized capability to provide anything from basic as-produced PPA to sophisticated 24-7 as-consumed products. How? By stepping up the pace of new tech and data center PPAs and providing the quick-to-market additional energy that tech so badly needs. Worth mentioning here that ENGIE has so far signed a cumulative volume of over 5 gigawatts of renewable PPAs with tech and hyperscalers. And third, we have best-in-class B2B supply and energy management, where data center developers want to maximize their energy competitiveness. So here, we can help as well. Finally, it's a pivotal year for our business in Belgium, one of our two home markets. I already mentioned the opening of our flexible flammable gas-fired power plant, plus two further best projects to add to the Calo project, which is already underway, bringing us to 380 megawatts of storage capacity. Since then, we won significant volumes in the recent Belgian CRM auctions. with around 2 gigawatts in each of these three auctions, thereby giving long-term visibility to the operations of our existing fleet, while contributing to Belgium's security of supply. Last but not least, in nuclear, we are delighted at the success of the first stage extension work of the Tienge 3 and Dool 4 reactors, and their timely reconnection to the grid, with full availability for the winter season. This is the final milestone for our Belgian agreement, which is now fully in force, meaning that the transfer of nuclear waste liabilities has now been completed. Our liabilities are now limited to dismantling and low-category nuclear waste, and for our nuclear operation in Belgium, our exposure to merchants will end from the start of December. It is really a new chapter that kicks off for Engie in Belgium, nuclear, which encompasses relatively modest, but more importantly, dearest earnings and a dearest balance sheet. With that, I will pass it over to Pierre-Francois.

Thank you, Catherine, and good morning, everyone. Thank you for being here with back-to-back calls, so apologies for this busy day. I'm pleased to present, of course, Engie's nine-month financial results for 2025, a period which is marked by resilient earnings and also robust cash flow. EBITDA excluding nuke reached 9.8 billion and EBIT excluding nuke came in at 6.3 billion. Both metrics reflect the normalization in our markets, lower hydro volumes and also some FX headwinds. Organic variants stand at minus 4% and minus 7% respectively after several years of exceptional performance. Against these headwinds, growth and performance are growing momentum and our quality of earnings is evident in our cash flow from operations, which stands at $11.4 billion. Net financial debt increased by $2.7 billion, only due to the Belgian nuclear agreement, while economic net debt decreased by $1.4 billion, highlighting our disciplined approach to managing our balance sheet with credit ratios that leave us with significant headwinds. Importantly, our 2025 guidance is confirmed, and based on Q3 performance, we actually expect to reach the upper half of the range for EBIT, excluding NUC, and the upper end for net recurring income. NG continues to demonstrate resilience and agility, positioning us well for the remainder of the year. Consequently, we foresee sustained growth in our four quarters, outperforming last year's Q4 and taking H2 25 above H2 24 as expected. This reflects our confidence in ENGIE's ability to deliver consistent and predictable growth over the coming years with a low point expected in 2026 net recurring income following the phase down of our nuclear activity. Let's now turn to the evolution of ENGIE's EBIT over the first nine months. As you can see, EBITX Renewal Standard 6.3, the headline story is very simple. It's one of investments and performance initiatives offsetting the impact of market normalization and lower volumes. On the negative side, indeed, we faced significant headwinds from effects and scope, as well as from price and volatility, particularly within our supply and energy management activities. where market normalization led to lower reserve reversals and also reduced results on gas and energy. One of the items, such as positive impact of renegotiated gas contracts in 2024 and increase in 2025 for gas transport tariff, also weighed on the results. Those impacts were partly compensated by the tariff increase in our French gas networks. Volumes were another challenge, especially in renewables, where lower resources in Europe, most notably hydro in France, but not only, drove a substantial decline. Networks also saw reduced consumption, particularly in Germany and France, contributing to the overall volume effect. However, these pressures were partly offset by strong commissioning activities, plus 3.27 million, with new assets in renewables, networks, and local energy infrastructures coming online and contributing positively to EBIT. Performance improvements across all segments, striking plus 477 million, as Catherine was alluding to, added further support, demonstrating the effectiveness of our operational excellence and competitiveness programs, as well as the successful upturn of some loss-making activities. Other effects include notably the cost of our employee shareholding plan for a bit more than 50 million. Nuclear EBIT is down 577 million, with negative volume effects linked to the permanent shutdown of Dole 1 in February 2025, as well as conformity outages of TH3 and Dole 4. This decrease is also explained by some lower prices captured in Europe. In summary, while market normalization and lower volumes presented clear challenges, ENGIE's discipline investment and performance initiatives are enabling us to land our EBIT trajectory at a much higher level than pre-crisis. If we review now ENGIE's EBIT evolution by reporting segment for the first nine months, you should note that renewable and flex power EBIT is negatively impacted by FX, minus 75, and by scope, minus 97, with exposure to Brazilian real and US dollar for effects, and also with disposal of gas generation assets in Singapore and Pakistan, as well as a deconsolidation in Morocco. Renewables and best activities decreased organically by 136 million. This was due to the normalization of volumes in Europe, as hydrology in France returned to more typical levels after exceptionally favorable conditions last year. Overall volume impact in Europe, net of the hydro tax amounts to 419 million euros. This was partially offset by the very strong contribution of new commission assets, plus 255, and improved operational performance, plus 55. Q4 should benefit from a softer base effect supported by also supporting a more positive outlook, significantly more positive outlook. We are also pleased to report that we have resolved all pending disputes with Nordex USA and Engie Renewables, and the parties anticipate continuing their strong commercial relationship. Turning to gas generation, It declined by 126 million organically. The main driver here was a continued drop in capture spreads in Europe, minus 260 million, mostly in H1. And the high comparison base thought this was partly balanced by favorable price effects internationally, especially in Chile and in Australia. And the end, of course, of the inframarginal tax in France. In infra, the picture is positive. EBIT from networks increased by an impressive 705 million, driven by tariff increases implemented last year and related to the new regulatory period. Strong performance in French activities and the annual revision of distribution tariff in France further supported results in Q3. In Latin America, EBIT grew thanks to new power line construction in Brazil and tariff indexation in both Brazil and Mexico. While the bulk of the profit increase was secure in H1, with the full impact of tariff increase in Europe, Q3 was a good quarter. Local energy infrastructure saw an organic EBIT decrease at 36 million, which is actually an improvement versus the first half. The anticipated normalization of market prices impacted spread captured by cogeneration facilities, but this was mitigated by improved performance and selective development of new urban heating and cooling networks. Moving to supply and energy management now, EBIT in B2C activities declined by 1.31 million organically, mainly due to a strong and atypical year in 2024. Still, good margins in Europe and a market environment that allows for full valuation of risk helped question the impact and are supporting a full year ambition close to half a billion. B2B EBIT, decreased organically by 129 million, reflecting a drop in timing effect that had positively impacted the 9 months 24. But again, commercial performance remains solid, with margins in line with expectations, and we are all set for a strong year. Finally, energy management EBIT decreased by 7%. 75 million organically, reflecting continued market normalization, softer activity due to geopolitical and economic uncertainties, and lower market reserves releases compared to last year. A negative one-off related to gas transport tariff updates in Austria and the Netherlands also weighed unresolved in H1, whereas last year's third quarter benefited from a positive one-off linked to gas contract renegotiations. Overall, same performance is on track, and we expect B2B plus energy management to land the year slightly below $2 billion, as we tailor our offerings to evolving client needs and adjust our contract timelines accordingly. So, as we look across our segment, it's clear that 25 has kept us on our toes, whether it's the weather, the geopolitical uncertainty, or energy market evolution. But beyond the granular explanation of each business and taking some steps back, despite persistence of trading in EM, you can see in Q3 the first tangible signs of some parts of the business going back to growth. For R&B, volumes and prices headwinds are stalling. For generation in Europe and for ADI, the decrease of clean spark spreads, including hedging, is now largely behind us. And throughout the organization, our performance efforts are gaining momentum. With our team's agility and a portfolio built for all seasons, we are ready to keep moving forward. Let's now focus on Engie's cash flow from operation for the first nine months. Again, our ability to generate cash remains exceptionally strong, supported by disciplined working capital management and a solid operational performance. One thing to mention is the positive cash impact from the phase down of our nuclear activities, which has contributed to a reduction in working cap for about 7,000 million. This effect, combined with stable operating cash flow and the positive impact of lower gas prices on storage, has enabled us to sustain cash generation at a very high level. For the period, Cash flow from operations stands at $11.4 billion, confirming NG's robust fundamentals and our capacity to navigate changing market conditions. The strong cash generation, and that we expect to continue, is a key enabler of our strategy. It does fund our performance efforts in digital and restructuring, our investment program in generation, flexibility and infra, and last but not least, healthy dividend to our shareholders. Let's now turn to Engie's credit ratios and debt profile as of September 25. Our leverage ratios remain stable and well within our targets, with net financial debt to EBITDA at 2.5 and economic net debt to EBITDA at 3.2. Over the period, net financial debt increased to 36 billion, driven by the cash-out impact of the nuclear deal in Belgium. Our cash flow from operation has more than finance maintenance and gross investments, in addition to supporting dividend payments. It is worth noting that other impacts amounting to a decrease of 0.3 billion debt include the effect of disposals for 0.7 billion. Economic net debt stands at 46.4, down from 47.9 billion at the end of 2024. The group balance sheet continues to improve, driven by disciplined working cap management and the powerful cash machines that are our cash networks and downstream operations. In short, Engie's financial structure is rock-solid, providing us with the flexibility to invest, reward our shareholders, and meet our long-term commitment, even as we navigate the complexities of the energy transition. Now let's wrap up with Engie's full-year 2025 guidance. Guidance remains unchanged. However, we expect now to reach the upper half of the range for EBITX screening nuke and the upper end for net recurring income group share. This reflects The group's strong operational performance and well-controlled financial expenses due to strong cash generation. Our dividend policy remains attractive with a payout ratio of 65-75% based on net recurring income and a floor set at 110 per share. Our strong investment grade rating is maintained and we continue to target an economic net debt to a video ratio below 4 over the long term. Key assumptions for the year include updated market commodity prices and foreign exchange rates, average weather condition, and recurring net financial costs between 1.9 and 2.1. The recurring effective tax rate is expected to be in the 24-26% range, including the special tax in France. Looking ahead, we expect Renewables and Flex to deliver healthy growth in Q4, and we anticipate a very solid Q4 in B2B. Continuing the momentum established in Q3, For this quarter, they are not fully representative of the longer-term trend, as the tale of market normalization for B2B will still impact 2026. We expect energy management to deliver growth in the fourth quarter versus Q4-24, with results stabilizing in the middle of our mid-term guidance in the years ahead. Of course, subject to the usual ups and downs on market volatilities. Q1 2025 benefited from unusually high market volatility, which set a strong benchmark. While Q1 26 may not reach the same level, we expect solid fundamentals to continue supporting performance throughout the year. In summary, Engie is well positioned to deliver on its commitments with robust earnings, disciplined financial management, strong balance sheet, and a clear strategy for shareholder returns. With that, back to Catherine.