UPDATE 2-Gas Natural plans to cut guidance after 2012

Tue Nov 6, 2012 7:54am EST

Related Topics

* Nine-month EBITDA 3.8 bln euros, vs 3.8 bln forecast

* Nine-month net profit 1.1 bln euros, vs 1.1 bln forecast

* International gas offsets weak Spanish power generation

* To cut guidance after 2012 due to weak European economy (Adds CEO comments on guidance)

MADRID, Nov 6 (Reuters) - Spanish electricity and gas firm Gas Natural Fenosa plans to cut earnings guidance and focus on debt in its next strategic plan due to deteriorating economic growth in Europe, its chief executive said on Tuesday.

Growing international exposure helped Gas Natural post an 8.1 percent rise in nine-month core profit to 3.8 billion euros ($4.9 billion), offsetting weakness in its Spanish electricity business and putting it on track to meeting 2012 targets.

But uncertainty in Spain and the rest of Europe will weigh when the company presents a new strategic plan in coming months, CEO Rafael Villaseca said.

"After 2012 we expect lower growth than we had forecast in our current strategy."

Gas Natural's 2010-2014 strategic plan had forecast core profit of between 5.7 billion euros and 6.1 billion euros, targets the company had already warned in April may be difficult to meet due to regulatory uncertainty in the Spanish energy sector.

The company will continue to focus on international expansion and improving its financial situation, Villaseca said, with net debt seen falling to between 15 billion and 16 billion euros this year, down from 17.3 billion in 2011.

GROWING PRESENCE ABROAD

International markets now account for 42.7 percent of earnings before interest, tax, depreciation and amortisation (EBITDA), up from 36.3 percent at the same time last year. Distribution of gas and electricity grew in Latin America between January and September, while falling in Europe.

Gas was the most resilient part of the business in the nine-month period, with earnings from gas distribution dropping 1.1 percent in Spain to 690 million euros, while EBITDA for the electricity side of the business tumbled 13.1 percent to 465 million.

Spain proposed a 6 percent levy on power generation in September to slow a growing 24 billion euros tariff deficit created by a previous government policy of making utilities sell energy below cost price.

The tax was less harsh than feared and utilities were expected to pass on the cost to customers, though firms will still have to take losses.

Gas Natural said the new regulation "resulted in a reduction in regulated revenues associated with distribution and commercial management of access".

The company provides gas in several Latin American countries, including Brazil, Colombia and Mexico. Earnings from gas distribution in the region grew 3.5 percent to 477 million euros.

Electricity also fared better abroad, with nine-month earnings rising 26 percent to 278 million euros in Latin America.

Gas Natural also has a presence in European countries such as Belgium, Italy and Portugal as well in African countries including Angola, Kenya and South Africa.

Its shares, which have lost 9 percent so far this year, were down 1.0 percent at 11.985 euros by 1122 GMT, underperforming a 0.4 percent rise on Spain's blue chip index. ($1=0.7823 euro) (Reporting By Tracy Rucinski and Clare Kane; Editing by Dan Lalor and Mike Nesbit)

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