Summary: Naturgy Energy Group S.A.

Naturgy Energy Group S.A.'s (Naturgy's) cashflows are stable and predictable thanks to its fully regulated electricity and gas distribution activities (67% of 2018 EBITDA). The company's credit profile benefits from a higher contribution from fully regulated activities in Spain, Latin, and Central America than for other European integrated utility players. Naturgy's gas, power, service sales, and international LNG (about 33% of 2018 EBITDA) continue to suffer as a result of a weak operating performance and increasing competition. Despite strong results in 2018 thanks to lower procurement costs and better pricing environment in LNG, we see some potential long-term risks of underperformance in the business division. Naturgy is a relatively small player in LNG, thus not fully benefiting from economies of

...Naturgy Energy Group S.A.'s (Naturgy's) cashflows are stable and predictable thanks to its fully regulated electricity and gas distribution activities (67% of 2018 EBITDA). The company's credit profile benefits from a higher contribution from fully regulated activities in Spain, Latin, and Central America than for other European integrated utility players. Naturgy's gas, power, service sales, and international LNG (about 33% of 2018 EBITDA) continue to suffer as a result of a weak operating performance and increasing competition. Despite strong results in 2018 thanks to lower procurement costs and better pricing environment in LNG, we see some potential long-term risks of underperformance in the business division. Naturgy is a relatively small player in LNG, thus not fully benefiting from economies of scale and vertical integration in the gas value chain, and is exposed to gas price fluctuations in the service sales business. Naturgy stands out among European integrated utilities due to...

Summary