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Gas Natural 1Q Earnings Climb 16 Percent

Posted on: Tuesday, 9 May 2006, 18:04 CDT

MADRID, Spain - Gas Natural SDG SA, Spain's biggest gas distributor, trying to revive its takeover attempt for utility Endesa SA, said Tuesday that its first-quarter net profit grew more than 16 percent, boosted by the performance of its core Spanish market and one-time gains.

Chief Executive Rafael Villaseca defended the company's bid for Spain's largest utility and criticized Endesa's management for challenging it through the courts - which have suspended the offer while a rival bid from German energy company E.On AG gains momentum.

Villaseca accused Endesa of trying to prevent its shareholders from deciding which bid, if any, they would accept - but said he's optimistic that they will eventually accept Gas Natural's hostile bid.

"We are firmly convinced that our project is completely valid," Villaseca said. "This is the only offer that makes industrial sense."

Gas Natural offered 22 billion euros ($28.06 billion) in shares and cash for Endesa last year. After 31 lawsuits seeking injunctions, Endesa has obtained two separate suspensions, including one from the Supreme Court.

Meanwhile, E.On's 29.1 billion euros ($37.12 billion) cash offer for Endesa has won unconditional regulatory approval from the European Commission, which pressured Spanish regulators to approve the deal, despite the government's opposition to the foreign bid.

Shares in Gas Natural fell 0.8 percent to close at 24.58 euros ($31.31) in Madrid trading.

Gas Natural said it earned 276.6 million euros ($352.8 million), compared with 238 million euros in the first quarter of 2005.

The company had one-time gains of 98.8 million euros ($126 million), mostly from selling 3.6 percent of its stake in natural-gas transport company Enagas. Gas Natural is required to reduce its stake to 1 percent under conditions laid out by the government in February when it approved Gas Natural's offer for Endesa.

If the bid for Spain's biggest utility fails, Gas Natural has to reduce its stake to 5 percent by 2006. The company reported a 9.2 percent stake in Enagas as of March 31.

Higher gas demand and electricity prices boosted Gas Natural's earnings before interest, taxes, depreciation and amortization more than 29 percent to 507.9 million euros ($647.9 million) in the first quarter, compared to 392.9 million euros in the same period last year.

Electricity business EBITDA in Spain more than tripled to 71 million euros ($90.6 million), driven by high wholesale prices and a jump in generation. The company's gas-distribution business in Spain increased 3.3 percent to 217.6 million euros ($277.57 million) on higher demand and higher consumer prices.

Source: Associated Press/AP Online

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