25.05.2020
Creditreform Rating has confirmed the A- unsolicited corporate issuer rating of Engie S.A. The negative outlook remains in place. Relevant rating aspects are the Company´s strong market position and its resilient, integrated business model, as well as diversified product portfolio. A substantial part of the Company´s earnings is generated in regulated or contracted businesses, creating a basis for predictable and sustainable cash flows. The Group has strengthened its business profile by optimizing its activities with the divestiture of coal-fired power plants and enlarging the share of regulated and contracted activities. This strategy, together with the implementation of the cost reduction program, has led to an improvement of the Group´s earnings capacity. The Company is exposed to changes in commodity prices, weather, and regulation, as well as to operational and financial risks related to nuclear power generation. The Company´s growth strategy in sustainable energy generation and efficiency solutions as well as its network operator activities in times of energy transition are associated with considerable capital expenditure. Given the French state´s currently substantial interest in Engie´s share capital, as well as its systemic importance for the country, we consider the Company to be government-related, which still has a positive impact on our rating assessment. The main reasons for the negative outlook are the effects of the COVID-19 pandemic and the resulting overall economic slowdown. We expect a deterioration of the Company´s earnings due to the overall containment measures and decline in energy demand, as well as an intensification of counterparty risks, which, despite the credit protective measures announced by the Company, could lead to a deterioration of its financial metrics and of its rating.