Company Reports

Naturgy owns and operates around 70% of the Spanish gas distribution network. It’s also the third-largest electricity distributor operator in Spain. In gas, the company has historically generated economic profits, delivering double-digit returns that consistently exceeded allowed levels. Naturgy has not replicated this return profile in electricity, where it has less scale. In addition, rising investments in Spain’s power grid are inflating the accounting value of its regulated asset base, narrowing the spread between book and regulated returns.

Naturgy reported strong second-quarter results, with group EBITDA up 3% year over year to EUR 1.6 billion, ahead of FactSet consensus. Management upgraded its 2026 outlook to EBITDA above EUR 5.5 billion (from EUR 5.3 billion) and net income above EUR 2.1 billion (from EUR 1.9 billion).

Naturgy owns and operates around 70% of the Spanish gas distribution network. It’s also the third-largest electricity distributor operator in Spain. In gas, the company has historically generated economic profits, delivering double-digit returns that consistently exceeded allowed levels. Naturgy has not replicated this return profile in electricity, where it has less scale. In addition, rising investments in Spain’s power grid are inflating the accounting value of its regulated asset base, narrowing the spread between book and regulated returns.

Naturgy owns and operates around 70% of the Spanish gas distribution network, and it’s the third largest electricity distributor operator in Spain. In the gas business, the company has historically generated economic profits, delivering double-digit returns that consistently exceeded the regulator’s allowed levels. Naturgy has been unable to replicate this return profile in its electricity distribution activities, where it has a more limited scale. In addition, rising capital investments in Spain’s power grid are inflating the accounting value of its regulated asset base, narrowing the spread between book returns and those permitted by the regulator.

Naturgy reported a strong set of first-quarter results. EBITDA was up 6.5% year over year to EUR 1.36 billion, supported by positive contributions across all divisions, and net income of EUR 530 million was up 5% year over year, exceeding FactSet consensus. Full-year guidance was reaffirmed.

Naturgy shares fell 8% at the market open following BlackRock’s Global Infrastructure Partners’ accelerated placement of its remaining 2.79 million shares, or 11.4% of capital, at EUR 25.20 per share. The transaction was priced at roughly a 6% discount to the prior close of EUR 26.70.

European TTF gas prices jumped by 36% on March 2 to EUR 43/megawatt-hour after Qatar Energy halted LNG production following the targeting of the world's largest export facility, Ras Laffan, by an Iranian drone attack. This sent the German April forward power price up by 18%.

Naturgy reported full-year results in line with guidance. EBITDA was flat year on year while net income rose 6.4% to EUR 2.0 billion. For 2026, management guides to flat EBITDA and lower net income of EUR 1.9 billion, consistent with its 2025-27 strategic plan and in line with our estimate.

Ahead of an EU summit in Antwerp that started Feb. 12, industry leaders urged EU leaders to slash energy prices. German Chancellor Friedrich Merz backed them by calling for a postponement of the phase-out of free carbon allowances for industrials, which was due to commence in 2026.

The European utilities sector increased by nearly 8% since the end of September, outperforming the market by 5% due to stabilizing interest rates, solid third-quarter results, and hopes that artificial intelligence growth will boost electricity consumption in Europe.

Naturgy owns and operates around 70% of the gas distribution network, and it’s the third largest electricity distributor operator in Spain. In the gas business, the company has historically generated economic profits, delivering double-digit returns that consistently exceeded the regulator’s allowed levels. Naturgy has been unable to replicate this return profile in its electricity distribution activities, where it has a more limited scale. In addition, rising capital investments in Spain’s power grid are inflating the accounting value of its regulated asset base, narrowing the spread between book returns and those permitted by the regulator.

We have updated our view on Naturgy, a diversified utility controlling 70% of the gas distribution network in Spain, and with significant exposure to gas and power networks in South America.

Naturgy reported third-quarter EBITDA of EUR 1.4 billion, down 6% year over year, as adverse foreign exchange movements and tough comparisons weighed on distribution network performance, which declined 8%.

European utilities shares decreased by 3% since the end of June, underperforming the market by about 6%.

Naturgy Energy reported EBITDA of EUR 2.8 billion in the first half of 2025, in line with the record level seen in the same period last year. The firm completed the EUR 2.3 billion share tender offer announced last March and provided full-year guidance for 2025.

European utilities rose by 12% in the second quarter, outperforming the market by 10%.

Networks account for more than half of Naturgy's EBIT. Around half of networks' EBIT comes from Spain where the group is the leader in gas distribution. As it has consistently achieved high profitability and returns in the past in this business, the regulator imposed a sharp remuneration cut in 2021. Networks' returns are higher in Latin America and indexed to inflation.

European utilities increased by about 10% in the first quarter of 2025 thanks to good full-year results, attractive shareholder remuneration, and limited exposure to US tariffs. The latter was key in the material outperformance of the sector.

We confirm our EUR 25.70 fair value estimate after no-moat Naturgy released 2024 results in line with our expectations. Its 2025-27 business plan includes a dividend step-up, investment reduction, and a tender offer to its reference shareholders (those with the most voting power) to increase the free float to return to MSCI indexes. The firm will pay a 2024 dividend of EUR 1.60, above the EUR 1.40 paid on 2023 results and the floor of the same amount. It intends to increase it by 6% annually, pointing to a 2027 dividend of EUR 1.90. Shares appear fairly valued after the 5% increase at the time of writing, but the dividend yield of 5.9% is attractive.

Networks account for more than half of Naturgy's EBIT. Around 60% of networks' EBIT comes from Spain where the group is the leader in gas distribution. As it has consistently achieved high profitability and returns in the past in this business, the regulator imposed a sharp remuneration cut in 2021. Networks' returns are higher in Latin America and indexed to inflation.