London (Platts)--6Dec2012/918 am EST/1418 GMT

GDF Suez' share price dived 15% Thursday to Eur14.66 after the group lowered its expectation on profits in 2013 and 2014, citing a 'challenging' market place in Europe.

In a statement released after markets closed on Wednesday, the French group said it expects net income excluding recurring items in 2013 of Eur3.1-3.5 billion ($4.1-4.6 Billion), lower than the Eur3.7-4.2 billion it expects this year.

GDF Suez said that it expects a difficult market place in Europe in 2013 and 2014, due to lower commodity prices and regulatory, fiscal and competition pressure. Net profit in 2014 is expected to be "in the same range as in 2013," it said.

The group is to reduce net debt by Eur11 billion in 2013-2014 to Eur30 billion, and annual capital expenditure is to be cut by 20% over the period to around Eur7-8 billion per year, it said.

GDF Suez is accelerating its activity in fast-growing markets such as the Asia region and re-orientating itself around its energy business.

Equity traders showed their disappointment at the company's revised forecast, a sell-off Thursday dragging GDF Suez shares down to the lowest level for several years. The share price was at around Eur15 at 11:30 Thursday (1030 GMT) and the stock has not closed a trading day below this level since 2003.

GDF Suez' new outlook is "another example of the crises European utilities are facing," said Per Lekander, research analyst at UBS.

"It is mainly created by renewables and weak demand eliminating mid-merit generation profits, and amplified by government intervention through taxes, regulated prices and lack of possibility to close unprofitable businesses," he said.

Use of gas-fired power plant has dropped this year due to low power demand and price spreads between gas, coal and carbon. GDF Suez's profits have also been impacted by regulatory measures and taxation in important domestic markets such as France and Belgium.

Speaking at the start of an investors day Thursday, CEO Gerard Mestrallet warned the impact on profits of the French government's gas tariff freeze would be Eur185 million this year, AFP reported. His comments follow a report in Le Figaro newspaper that the government was looking at increasing tariffs by around 2-3% in January, following a decision by France's Council of State that a price cap for Q4 was illegal. A rise of 2-3% would not be sufficient to pay back the utility for previous price freezes, which the government has pledged to claw back from consumers over time.

Former monopolies GDF Suez and EDF are the exclusive providers of French regulated gas and electricity prices and the government has pledged to keep rises below inflation levels to protect consumers.

GDF Suez was not immediately available for further comment.

--Robin Sayles, newsdesk@platts.com --Edited by Maurice Geller, maurice_geller@platts.com