Spain's Naturgy to invest $16.5 bln in green shift

MADRID, July 28 (Reuters) - Spanish power company Naturgy (NTGY.MC) pledged on Wednesday to invest 14 billion euros in the next five years, mostly to boost its renewable generation capacity and transform power and gas networks, in a bid to increase core earnings around 30% by 2025.

A longtime major producer and trader of natural gas, Naturgy is trying to shift to the low-carbon energy sources that governments across the world hope will reduce their dependence on planet-warming fossil fuels.

It wants to add 9.4 gigawatts (GW) to its renewable fleet to reach 14 GW and raise annual ordinary earnings before interest, tax, depreciation and amortisation (EBITDA) to 4.8 billion euros ($5.7 billion) in 2025 from 3.7 billion euros in 2020.

The energy management and supply businesses will receive a 1.2 billion euro portion of the total.

"It's a plan that grows around the energy transition, something absolutely necessary for Naturgy today," Chief Executive Francisco Reynes said.

With a long history in volatile Latin American markets, Naturgy will now invest in countries with stable currencies and regulation, particularly in Europe, Australia and the United States.

Reynes said buying and selling assets was not core to the plan but the company would look at all opportunities.

Naturgy shares the European Union's target to cut carbon emissions by 2050 to net zero, meaning no more than can be absorbed by natural sinks such as forests or artificial systems like carbon capture.

The EU wants 40% of final energy consumption to come from resources like wind and solar in 2030 from roughly 20% in 2019. Spain aims to build around 60 GW of capacity this decade. read more

Australian investor IFM Global Infrastructure Fund offered to buy a 23% stake in Naturgy for 4.9 billion euros in January and is still waiting for approval from the Spanish government.

The company's shares had since risen above the bid price of 22.37 euros, but fell back after half-year results and the strategic plan was released on Wednesday, to be quoted at 22.33 euros each, 1% lower on the day, at 1051 GMT.

Shareholders will receive a payout of 1.20 euros per share per year, which Reynes described as a "floor".

Net profit including the impact of layoffs in Spain and the resolution of a dispute in Egypt rose 17% in the first half to 557 million euros ($657.65 million) on Wednesday, buoyed by recovering energy demand and prices.

That result was nonetheless 20% lower than the same period of 2019 before the COVID-19 pandemic hit.

($1 = 0.8468 euros)

Reporting by Isla Binnie; editing by David Evans

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