The total market capitalization of the 20 largest European electric and multi-utilities companies totaled €499.08 billion at the end of the fourth quarter of 2019, with 10 companies recording quarter-over-quarter declines in their market cap and 16 utilities experiencing a change in their rankings on the list, according to data compiled by S&P Global Market Intelligence.
EnBW Energie Baden-Württemberg AG climbed five spots to 15th from 20th in ranking, as the German utility posted the biggest increase in its market cap to €13.68 billion, up 29.5% from the third quarter of 2019. During the quarter, EnBW marked its exit from the Hungarian market, took a final investment decision on a 180-MW solar park and won rights to build offshore wind capacity in Germany. On the earnings front, the utility reported adjusted EBITDA of €1.69 billion for the first nine months of 2019, up 7.4% from the corresponding period of 2018.
A 14.8% increase in market cap for U.K.-based SSE PLC vaulted the company to 11th as of Dec. 31, 2019, from 12th three months earlier. London-headquartered National Grid PLC also improved its ranking by two positions to third from fifth and finished the quarter with a market cap of €38.79 billion. The two utilities' stocks jumped as they breathed a sigh of relief on Dec. 13, 2019, after a crushing general election defeat for the opposition Labour Party meant plans to renationalize the industry went up in smoke. Analysts expect that a Conservative win brings the promise of a relatively lower corporate tax rate of 19%, compared to Labour's 20%-28% and the 20% proposed by the Liberal Democrats.
Italy's Enel SpA and Spain's Iberdrola SA remained by far the largest European utilities by market cap, retaining their first and second spots, respectively. Enel's market cap improved 3.2% quarter over quarter to €71.89 billion, while Iberdrola saw its market cap drop 3.7% to €58.40 billion as of Dec. 31, 2019. In October 2019, reports surfaced that PPL Corp. and Avangrid Inc., which is majority owned by Iberdrola, were considering merging all or parts of their businesses.
Austrian utility VERBUND AG posted the steepest quarter-over-quarter drop in market cap of 10.9% to €15.54 billion, sliding to the 13th spot from 11th in the third quarter of 2019. During the quarter, the utility received an upgrade from S&P Global Ratings and withdrew its bid to acquire EDP - Energias de Portugal SA's 2-GW hydro portfolio in Iberia.
French utilities Engie SA and Electricité de France SA, which navigated new terrain in 2019, saw their rankings slip during the quarter to fifth and sixth spots, respectively, from fourth and third spots in the third quarter. Engie's market cap dropped 3.9% to €34.71 billion and EDF's market cap declined 1.7% to €30.78 billion. Meanwhile, Suez SA earned the 20th spot on the list, with a market cap of €8.33 billion.
According to analysts, a potential restructuring of EDF could generate considerable value for shareholders by placing the company's nuclear and renewable businesses in separate subsidiaries. Engie, which unveiled plans in December 2019 to close roughly 1 GW of coal-fired generation in Chile and Peru between 2019 and 2024, was not expected to get the French government backing for CEO Isabelle Kocher for another term.
The S&P 500 was up 28.9% at year-end 2019 from its position at the end of 2018. In comparison, S&P Europe BMI Utilities Index grew 22.3% and STOXX Europe 600 Index increased 23.2%.