Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Enel Chile SA (ENIC, Financial) reported solid EBITDA and net income results for the first half of 2024, reflecting strong operational performance.
- The company added approximately 250 megawatts of new renewable energy capacity, supporting its long-term decarbonization goals.
- Enel Chile SA (ENIC) secured a 20-year regulated PPA, representing sales of around 3.6 terawatt hours, diversifying its sales portfolio.
- The hydro portfolio performed outstandingly, with hydro production exceeding guidance by 72% compared to the second quarter of 2023.
- The company has a solid level of liquidity to support future CapEx deployment, with available committed credit lines of $750 million and cash equivalents of $305 million.
Negative Points
- Enel Chile SA (ENIC) faces regulatory uncertainties, particularly regarding the stabilization mechanism and the potential increase in subsidies for vulnerable families.
- The company has significant accounts receivable related to the stabilization mechanism, totaling approximately $1 billion, which impacts liquidity.
- Higher depreciation, amortization, and bad debt expenses were reported, mainly due to new renewable capacity and higher credit losses among residential customers.
- The company experienced critical weather events that affected the stability of electricity supply, impacting quality indicators and increasing operational costs.
- Enel Chile SA (ENIC) reported a decrease in total CapEx by 9% compared to the previous year, which may impact future growth and project completion timelines.
Q & A Highlights
Q: Can you provide more details on the receivables recovery mechanism and the expected timeline for full recovery?
A: As of June, we have $1 billion in receivables, including $150 million in interest. We expect to recover $550-$600 million through factoring by the end of 2024. The remaining amount will be recovered between 2025 and 2027, with a small portion extending to 2035. (Giuseppe Turchiarelli, CEO)
Q: What impact will the recent distribution tariff updates have on your financials?
A: The recent tariff decree resulted in a 5% increase for distribution, 4% for transmission, and 8% for generation for customers consuming less than 350 kWh. For those consuming more, the increase is 33% for generation. This adjustment aligns with our strategic plan and does not pose any significant issues. (Giuseppe Turchiarelli, CEO)
Q: Given the updated hydro generation estimates, is your 2024 guidance conservative?
A: We confirm our 2024 guidance. While our hydro generation estimate has increased to approximately 12 TWh, we are still assessing the impact of the upcoming melting season. We remain confident in our guidance range. (Giuseppe Turchiarelli, CEO)
Q: How much do you expect to monetize from receivables this year?
A: We expect to monetize around $550-$600 million from receivables through the factoring process by the end of the year. (Giuseppe Turchiarelli, CEO)
Q: What is the expected impact of the recent extreme weather events on your distribution OpEx and CapEx?
A: The extreme weather events in May resulted in additional costs of approximately $3 million. We are in discussions to manage the situation, but no further significant impacts are expected at this time. (Giuseppe Turchiarelli, CEO)
Q: Can you provide details on the remuneration mix for your new battery projects?
A: The revenue for our battery projects primarily comes from capacity payments and ancillary services. We are awaiting regulatory updates for additional revenue streams. The batteries can be charged from both the solar power plants and the grid, depending on the situation. (Giuseppe Turchiarelli, CEO)
Q: How do you plan to manage the accumulated debt in the distribution segment from the 2020-2024 tariff delay?
A: We expect to receive payments for the accumulated debt in the first quarter of next year. (Giuseppe Turchiarelli, CEO)
Q: Are you still on track to hit the 33 TWh sales target by 2024, given the expiration of several regulated contracts?
A: Yes, we are on track to meet our sales target. We are negotiating with customers to fulfill the expiring contracts and remain confident in achieving our goals. (Giuseppe Turchiarelli, CEO)
Q: What are the current costs for new solar and wind projects per megawatt, and what about the cost of batteries?
A: The cost for wind projects is around $1.6 million per MW, and for solar projects, it is between $0.7-$0.8 million per MW. Battery costs are improving, and we expect to reach around $1 million per MW. (Giuseppe Turchiarelli, CEO)
Q: How does the recent tariff decree impact Enel Chile's performance?
A: The tariff decree has a minimal impact on our performance. The main effect is on the distribution company, with an increase of around $16 million, primarily from adjustments for previous years. The generation company is not significantly affected. (Giuseppe Turchiarelli, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
