Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net debt has decreased slightly better than anticipated, indicating improved financial health.
- CapEx is ramping up, showing commitment to future growth despite some delays.
- Achieved a record 82.1% renewable energy penetration in Portugal, driven by hydro and solar projects.
- Positive developments in the SES process and energy transition plans in Portugal.
- Operational performance was strong with no interruptions in electricity service and high availability in gas services.
Negative Points
- EBITDA decreased by 2.7%, primarily due to lower remuneration on assets.
- Net profit saw a significant decrease of close to 23%, impacted by non-recurrent factors and increased financial costs.
- Licensing and subsequent approvals remain a major challenge, causing delays in project execution.
- Concerns about delays in CapEx projects, which may affect the ability to meet the EUR300 million target for the year.
- Rate of return on gas transportation and distribution has decreased, impacting overall remuneration.
Q & A Highlights
Q: Can you provide more color on the government's stance regarding energy transition investments and the regulatory framework for electricity transmission?
A: The government is committed to continuing the energy transition, and we have had many interactions to explain our plans and challenges. They understand the importance of our projects for the country's economy. Regarding regulation, the government typically leaves this to the regulator, and we don't expect any changes. (Rodrigo Costa, CEO)
Q: Can you update us on the legal evolution regarding the special levy and any actions taken to recover past amounts?
A: The legal process is slow, but we have won several decisions recently. While we are optimistic about a positive outcome, final decisions are still pending. If we win, we expect the reimbursement process to be straightforward. (Rodrigo Costa, CEO)
Q: Is achieving more than EUR300 million in CapEx for this year still realistic given the delays?
A: It's possible but not guaranteed. Some projects have been delayed, but we are confident we can catch up in 2025. (Rodrigo Costa, CEO; Joao Caetano Carreira Faria Conceicao, COO)
Q: How does the current rate of return compare to other European countries, and can you adapt your investments if the rate of return is not increased?
A: Our rate of return is lower than in other European countries. We are pushing for fair returns and focusing on solar agreements with better rates. If necessary, we can allocate capital differently, but our primary focus is on executing current plans and negotiating better returns. (Goncalo Joao Figueira Morais Soares, CFO)
Q: Can you quantify the expected contribution of solar direct agreements for 2024?
A: The impact is around EUR3 million now and should be EUR7-8 million by year-end. (Goncalo Joao Figueira Morais Soares, CFO)
Q: What is the potential impact of a lower corporate tax rate proposed by the Portuguese government?
A: If implemented, it would be positive. However, the outcome is uncertain due to ongoing budget negotiations. We should have more clarity by mid-October. (Goncalo Joao Figueira Morais Soares, CFO)
Q: What are the implications of the recent court rulings on the special levy?
A: The rulings have been positive, but final decisions are still pending. If we win, we expect to recover past payments and interest without issues. (Rodrigo Costa, CEO)
Q: How are you addressing the delays in CapEx projects?
A: We recently received important licensing decisions for major projects. While the first half of the year typically has lower execution levels, we are optimizing our plans over a three-year period to catch up. (Joao Caetano Carreira Faria Conceicao, COO)
Q: What is the status of your discussions with the regulator regarding fair returns?
A: We are actively discussing with the regulator and government to secure fair returns, especially given the increased cost of capital. We expect more clarity next year, with potential insights from Spain's regulatory decisions later this year. (Goncalo Joao Figueira Morais Soares, CFO)
Q: How are you managing the impact of lower returns on your investment strategy?
A: We are focusing on solar agreements with better returns and pushing for fair regulatory returns. If necessary, we can adjust our capital allocation strategy. (Goncalo Joao Figueira Morais Soares, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
