Gas Natural Posts Surprise Profit Increase on Latin America

Gas Natural SDG SA, Spain’s largest gas supplier, reported a surprise increase in the first quarter as growth in Latin America offset declining demand at home.

Net income rose 1 percent to 411 million ($539.1 million) from 407 million in first quarter of 2012, the Barcelona-based company said today in a regulatory filing. That compared with a 380 million euro mean estimate in a Bloomberg survey of analysts.

About 586 million euros, or 44 percent of the company’s earnings before interest, tax, depreciation and amortization, or Ebitda, came from Gas Natural’s operations in Colombia, Mexico, Brazil and other countries in Latin America in the first quarter of 2013, about 8 percent more than a year earlier.

In Spain, Prime Minister Mariano Rajoy’s measures to rein in a 5.6 billion gap between costs and sales of power included a 7 percent tax on all generation and lower payments for energy distribution. That, combined with the prioritization of renewable energy over gas-fired plants, cut earnings, Chairman Rafael Villaseca said in a call with analysts today.

Shares fell 1.7 percent to 15.99 euros at the close of trading in Madrid, the second-largest drop in Madrid’s IBEX 35 Index and the third-biggest drop in Stoxx 600 Utilities Index. Last month, the shares posted their biggest monthly drop since May.

Gas Natural, which was going to present its strategic plan in May, has delayed the date until the government presents a set of new regulatory measures expected before the end of the first half, Villaseca said.

Preparing Production

“The government is preparing a reduction in regulated revenues” that could erode Ebitda by more than 100 million-euros in 2014, according to a report by UBS analyst Alberto Gandolfi, who downgraded the the stock to sell from neutral on April 29.

Union Fenosa Gas SA, a joint venture between Gas Natural and Italy’s Eni SpA, reported an 86 percent drop in Ebitda to 13 million euros in the first quarter, due to “more severe than expected supply disruptions” to its liquefied natural gas plant in the Mediterranean coast, according to BPI. Damietta, as the plant is known, has been inactive since December.

Fenosa is suing Egypt’s state-owned natural gas provider as the disruption could lead to as much as a 90 million euro drop in Ebitda for 2013, the UBS report said.