* First-quarter net profit slump 42%
* Gas over-supply was a problem even before virus outbreak
* New regulation in Spain trims profit there (Adds details and comments from company)
By Inti Landauro and Isla Binnie
MADRID, April 29 (Reuters) – Spanish utility Naturgy is taking advantage of slumping gas prices to renegotiate supply contracts, it said on Wednesday, after the crippling effect of the coronavirus crisis on demand sent its first-quarter net profit plunging 42%.
A global glut of liquefied natural gas (LNG), of which Naturgy has long been a major buyer, now has even fewer takers as economies shut down to help to stem the spread of a virus that has infected more than three million people.
Naturgy did not say which contracts it was seeking to renegotiate, only that it was “taking steps to activate price revision in gas supply contracts, in line with the current environment”.
Sinking gas demand in Spain and Latin America in March dragged the firm’s first-quarter net profit down to 199 million euros ($216 million) from 341 million euros a year earlier.
Lower prices weighed on revenue, which dropped 20% from a year earlier to 5.07 billion euros. Currency weakness in Latin America also dragged on profitability.
Naturgy said its networks business in Spain and in Latin America also suffered as lower volumes of gas were pumped through the pipes.
Across all its operations, reported core earnings before interest, tax, depreciation and amortisation fell to 944 million euros from 1.12 billion euros.
New regulations in Spain aimed at limiting price rises for consumers kicked in this year, trimming Naturgy’s profit from electricity distribution there.
During the quarter, Naturgy boosted its available liquidity to 9.6 billion euros by selling bonds.
Despite the grim market backdrop, the company confirmed it planned to pay an annual dividend of 1.37 euros per share. Last week, it said the collapse of a deal to end its business in Egypt would not affect how much money it returned to shareholders.
Naturgy, which changed its name from Gas Natural in 2018, is one of the retailers authorised to sell energy at a discount to needier consumers, eligibility for which has been extended.
It is also among companies to have been barred from cutting off supply if clients do not pay their bills.
The company’s stock was little changed in mid-morning trade.
Its shares have fallen 30% so far this year, with most of that loss incurred since mid February, when multiple companies cancelled orders for gas.
The company said it maintained its longer-term plan to divest a sprawling network of assets. This month, it sold independent power producer Iberafrica for 62 million euros.
$1 = 0.9216 euros
Reporting by Isla Binnie and Inti Landauro; Editing by David
Goodman and Mark Potter