Looking for Opportunities Among Europe’s Largest Electricity Companies

Most European equity markets were down by digits last year due to the debt crisis. Along with stocks from other sectors investors also dumped the traditionally stable utility stocks. The STOXX® Europe 600 Utilities Index reached a high of over 600 before the global financial crisis (GFC) of 2008 in US dollar terms. On 1/20/12 it closed at well below 300 for a loss over 50% from the peak.

European markets are performing well so far this year and many utilities in particular look cheap at current levels. Fears over nuclear power generation in Germany has for the most part subsided and large European utilities are looking for growth both in the European market and emerging markets. For example, earlier this month German electric utility E.ON announced a strategic partnership with Brazilian company MPX to invest in the Brazilian and Chilean energy markets. E.ON plans to ultimately invest € 350 million for a 10% stake in MPX.

The chart below shows the Top 15 Electricity Producers in Europe in 2009:

Source: Vattenfall Annual Report 2010

The largest players in the European energy market in terms of sales are EDF (France), Enel (Italy),
E.ON (Germany), GDF Suez (France), and RWE (Germany). These firms have operations across Europe and some of them also have significant presence outside of Europe. In addition to these larger firms, there are a number of regional companies including Centrica and SSE (UK), CEZ (Czech Republic), Dong (Denmark), EDP (Portugal), Fortum (Finland), Gas Natural Fenosa and Iberdrola (Spain), Statkraft (Norway), Vattenfall (Sweden) and Verbund (Austria). There are also a large number of local electricity suppliers mostly municipality-owned. In Sweden there are some 120 such firms, in Germany about 900 and in The Netherlands some 80.

The Top European Electricity Producers are listed below together with their ADR tickers, if available and the current dividend yields for consideration:

1.Company: Electricite de France (ECIFY)
Current Dividend Yield: 7.00%
Country: France

2.Company: E.ON AG (EONGY)
Current Dividend Yield: 10.22%
Country: Germany

3.Company: RWE AG (RWEOY)
Current Dividend Yield: 14.50%
Country: Germany

4.Company: GDF Suez (GDFZY)
Current Dividend Yield: 7.46%
Country: France

5.Company: Enel (ENLAY)
Current Dividend Yield: 13.11%
Country: Italy

6.Company: Vattenfall
Current Dividend Yield: N/A
Country: Sweden

7.Company: Iberdrola (IBDRY)
Current Dividend Yield: 1.39%
Country: Spain

8.Company: EnBW
Current Dividend Yield: N/A
Country: Germany

9.Company: CEZ (CZAVF)
Current Dividend Yield: N/A
Country: Czech Republic

10.Company: PGE (PGPKY)
Current Dividend Yield: N/A
Country: Poland

11.Company: Statkraft
Current Dividend Yield: N/A
Country: Norway

12.Company: PPC
Current Dividend Yield: N/A
Country: Greece

13.Company: Fortum (FOJCY)
Current Dividend Yield: 6.92%
Country: Finland

14.Company: SSE (SSEZY)
Current Dividend Yield: 5.94%
Country: UK

15.Company: Edison Spa
Current Dividend Yield: N/A
Country: Spain

Note: Dividend yields noted above are as of Jan 20, 2012

It must be noted that the respective state is the majority owner in many European utilities such as EDF (France),  GDF Suez (France), Enel (Italy) and Fortum (Finland). Sweden’s Vattenfall is unlisted since it is 100% owned by the state.

Disclosure: Long EONGY, RWEOY

Leave a Reply

Your email address will not be published. Required fields are marked *