August 30, 2017 / 1:03 PM / a year ago

Alpiq may offload growth units as it seeks to stem dam losses

* Alpiq may sell majority stakes in “growth” units

* Previously said only up to 49 pct stakes on auction block

* Analysts lament lack of strategic focus

ZURICH, Aug 30 (Reuters) - Swiss utility Alpiq said on Wednesday it may sell majority stakes in its three money-making divisions in the hunt for a formula to reverse chronic losses from its dam portfolio.

The units — Digital & Commerce, Industrial Engineering and Building Technology & Design — are the only ones producing operative earnings for Alpiq, whose hydroelectric assets dragged it to a first-half loss of 109 million Swiss francs ($113.9 million).

A spokeswoman said Alpiq would now be willing to sell majority stakes in all three to help shore up liquidity, reduce debt and preserve access to capital markets. Previously, Alpiq’s board had approved only sales of up to 49 percent.

“Starting in 2018, Alpiq will open up the portfolio to investors in order to further develop these profitable business areas,” the spokeswoman said.

This week, Alpiq also reversed a 2016 decision to divest nearly half of its hydroelectric assets after buyers failed to emerge.

The dams are losing money because it costs more for them to produce power than it costs to buy electricity on European wholesale markets.

Lausanne-based Alpiq’s struggle to settle on what assets to keep makes it difficult to forecast what the utility will look like and how it will make its money in the future, some analysts said.

“The strategic lack of focus is intensifying,” wrote Zuercher Kantonalbank analyst Sven Bucher in a note.

“While other Swiss utilities like BKW have set clear strategic goals, there is no such clarity on the future structure and profitability of Alpiq.”

Bern-based BKW, which releases half-year results on Sept. 5, has avoided massive losses and write-offs that have plagued Switzerland's water-power heavy utilities Alpiq and canton-owned Axpo. [ ]

Bucher, who rates Alpiq stock “underperform”, is not counting on Alpiq being saved by Bern, despite the Swiss electricity industry’s intense lobbying for parliamentary intervention.

“We think it’s risky for shareholders to expect a political solution for problems bedevilling Swiss hydropower,” said Bucher, pointing out Swiss mountain cantons are fighting tooth and nail against industry’s efforts to reduce utilities’ annual payments for water.

Alpiq shares, which have fallen 3.3 percent this year, were unchanged by midday.

$1 = 0.9569 Swiss francs Reporting by John Miller, editing by David Evans

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