How are European utility brands valued globally?
As leading global utilities face surging profits and declining brand valuation, new research conducted by brand valuation consultancy Brand Finance, finds that seven of the top 10 utilities in brand ranking globally are European.
The results come courtesy of Brand Finance’s Utilities 50 2023, which finds State Grid Corporation of China (SGCC) in the first place, its brand score valued at nearly five times that of Italy’s Enel in second.
Utilities from France held the most spots in the top 10, with EDF, Engie and Veolio in third, fourth and seventh respectively.
Of the top 10 utility brands reported by the ranking, seven are European:
- State Grid (China)
- Enel (Italy)
- EDF (France)
- Engie (France)
- E.ON (Germany)
- GD Power Development (China)
- Veolia (France)
- Iberdrola (Spain)
- EnBW (Germany)
- KEPCO (South Korea)
According to the report, brand value “refers to the present value of earnings specifically related to brand reputation. Organisations own and control these earnings by owning trademark rights.”
European utilities: Germany sprinting
German-based brand RWE was found to be the fastest-growing brand, up 116% to $2.3 billion. RWE is also a new entrant in the ranking, coming in at 29th position. RWE is one of a number of high-performing German brands in the ranking.
Like most energy providers, states Brand Finance, RWE has financially benefited from favourable conditions in the power generational market.
Following a widespread divestment in Russia, the German government invested heavily in diversifying its energy market and turning towards domestic providers. Resultantly, German utilities brands have experienced a remarkable surge in both their performance and brand value.
The aggregate brand value growth for the four German utilities brands included in the ranking was 64%, making it the fastest growing country in the ranking. Over the last year, RWE has made financial gains on its 2021 levels across all business segments, which the report claims to have undoubtedly contributed to RWE’s brand value growth in 2023.
Fellow Germany-based brands E.ON (brand value up 13% to $6 billion), EnBW (brand value up 91% to $4.1 billion), and Uniper (value up 52% to $3.6) have all made significant gains.
EnBW jumped nineteen places to ninth in the ranking in 2023 after its adjusted EBITDA increased over the past year. Its considerable resilience, states the report, allowed it to increase investment in expanding renewables and the associated grid infrastructure across its markets.
Conversely, Spain
Spanish utilities brands have faced difficulties because of the war in Ukraine, including an energy crisis and supply chain issues.
This resulted in cost absorption and subsequent price hikes for customers.
Despite these challenges, Brand Finance found that Iberdrola has emerged as the top-performing Spanish brand, with brand value increasing by 11% to reach $4.2 billion.
This growth can be attributed to the brand’s international presence, particularly in the US and Brazil, where it has contributed to profit growth (up by 11.7% compared to 2021) and offset the decline in profits in Spain.
Furthermore, Iberdrola continues to prioritise investment in renewables and smart grids to promote energy autonomy and accelerate electrification. According to Brand Finance, 2022 saw the brand invest almost $12 million, a 13% increase from 2021, and is set to invest more in 2023 to further expand its renewable installed capacity.
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State Grid reigns
Although European brands occupy the majority of the top 10, China’s State Grid was found to be the world’s most valuable and strongest utilities brand.
This marks the sixth consecutive year the utility has occupied first place, despite a marginal 2% brand value reduction.
Its brand is still worth over $47 billion more than both the second and third most valuable utilities brands, with both Enel (down 13%) and EDF (down 4%) at $11.7 billion.
State Grid, the world’s largest utilities company, owes much of its brand value to its dominance in the Chinese utilities market.
As well as being the most valuable utilities brand, State Grid in China is also the strongest. It has a Brand Strength Index (BSI) score of 86.9 out of 10 with a corresponding AAA brand rating. It is the only utilities brand to achieve AAA brand rating status in the ranking.
The ranking adds that, in 2023, State Grid plans to invest a record $75 billion in transmission infrastructure and energy storage systems. This is a 4% increase in last year’s investment and the sixth consecutive year that investment has grown.
This significant investment demonstrates the power and size of State Grid, states Brand Finance, and the fundamental role it plays in China’s economy.
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High growth, stagnating image
According to the consultancy’s report, the coupled effects of sanctions on Russia and elevated energy prices have seen brand revenues surge – average YoY revenue increase was found at 21%.
However, profits have also led to a consequential decline in brand equity for many brands within the utilities ranking.
Consumers, states Brand Finance, are starting to raise concerns about the escalating profitability of these brands, especially amidst a widespread energy crisis and mounting inflation, which has added to the financial difficulties experienced by many.
This trend is evident through the decreasing scores in the BSI for several major utilities brands worldwide, and an average BSI decrease of 4%.
As a result, the report recommends that leading utilities brands need to focus on rebuilding trust and enhancing their reputation among consumers, an effort that will be essential to foster higher growth in brand value that aligns with the increase in revenue.
On the rankings report, Richard Haigh, managing director of Brand Finance, commented: “The global utilities industry is increasingly transitioning to a more sustainable future in which brands are upping their investment in renewables, while phasing out reliance on non-renewable energy sources.
“The Utilities 50 2023 ranking reflects this change as many brands double down on greener strategies and the communication of this to stakeholders, while renewables-focused brands are increasingly seeing brand value growth and becoming more influential and valuable.”
With three of the top 10 utility brands hailing from France, make sure to follow and register for Enlit Europe, taking place in Paris, France from 28 to 30 November 2023.
