Spain’s Naturgy reports lower than expected Q1 net profit, shares fall

MADRID (Reuters) – Spanish gas and electricity group Naturgy posted a 9.4% fall in net profit on Thursday as demand in its home market dropped and commercial margins narrowed, sending its shares down 6% in afternoon trading.

Net profit in the first quarter fell to 347 million euros ($361.09 million) from a year earlier, the company said, below the 412 million euros mean estimate in a Refinitiv poll.

Naturgy, which operates in Spain and Latin America, is in the process of shifting to low-carbon energy sources seen as vital to reducing global warming after it had become a leading natural gas trader.

The company said its international activities improved in the quarter though its business in Spain continued to experience margin pressure as long-term contracts prevented it from lifting prices as wholesale costs recently soared.

Naturgy shares underperformed the Madrid blue chip index Ibex, which was down 1.9%.

The company said it will offer its industrial gas customers a fixed price of 55 euros/MWh until the end of 2025, below current prices in European gas markets.

Earlier this year, Naturgy said it will split into two separately listed entities, with one focused on infrastructure and the other handling power generation and marketing.

($1 = 0.9610 euros)

(Reporting by Emma Pinedo, editing by Inti Landauro, Kirsten Donovan)