French utility Gaz de France (1020848.FR) Wednesday said full-year net profit rose 7.6%, helped by colder weather in the last quarter of 2007 and gains from the purchase and sale of energy.
The French gas company, which plans a tie-up with Franco-Belgian utility Suez (SZE.FR), said 2007 net income rose to EUR2.5 billion, from EUR2.3 billion in 2006.
That beats an average estimate of EUR2.33 billion from a Dow Jones Newswires survey of seven analysts' forecasts.
On Aug. 29, Gaz de France said net profit for the first half of 2007 was EUR1.51 billion, down 11% on the year-earlier period as a mild start to the year hit sales and prices.
GdF suggested a turnaround when it unveiled its 2007 revenue on Jan. 23, posting a figure of EUR27.43 billion, down 0.8% on 2006 total revenue of EUR27.64 billion. GdF then noted improved market conditions and colder than normal temperatures in the fourth quarter of the 2007.
Along with its net profit number, GdF unveiled a proposed dividend for 2007 of EUR1.26 a share, which it said represents a 15% jump from 2006. GdF will ask shareholders to approve that payout at its Annual General Meeting, slated for May. 19.
In a move designed to converge its accounting methods with Suez, GdF changed the way it calculates earnings before taxes, interest, depreciation and amortization, or Ebitda. What last year it called Ebitda, it now refers to as adjusted operating income.
That number rose to EUR5.67 billion from EUR5.15 billion a year earlier. It exceeded the EUR5.34 billion average estimate from the poll of seven analysts.
GdF also said it expects that number to hit EUR6.1 billion by the end of 2008. That target assumes gas prices in France reflecting real supply costs, average climate conditions, and no significant changes in the price of oil, to which gas prices are coupled.
Meanwhile, adjusted operating income for GdF's energy purchase and sales segment doubled compared with 2006 to EUR1.08 billion in 2007, the company said.
Matthias Heck, an analyst at Oppenheimer Research, said GdF has "surpassed expectations" with its results, pointing in particular to a strong performance in the purchase and sale of energy.
GdF's Chairman and Chief Executive Jean-Francois Cirelli said: "The step-up in growth experienced in the second half of 2007 augurs well for another good year in 2008."
He added he is confident the tie-up with Suez won't overshoot its target date of June 30 2008 at the latest.
He said 2008 is "the year during the first half of which we will see the creation of one of the world's new global energy leaders - GdF-Suez."
As well as aiming for a 10% rise in its adjusted operation income, GdF expects its investment spending to reach EUR4 billion in 2008, a rise of 20% from 2007.
At a press conference to present GdF's 2007 results, Cirelli said investment will be "principally organic" and will include spending on gas exploration and paying off the cost of power plants.
Another objective is to pay out a dividend for 2008 between 10%-15% higher than the payment proposed for 2007 earnings, GdF said.
GdF shares have risen 6.5% over the past 12 months, as investors reacted positively to news, in September, of a definitive plan for a tie-up with Suez. That's against a CAC 40 down 13.7% over the same period.
The shares closed up 2.2% at EUR37.38 on a CAC 40 up 1.1%.