Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- EnBW Energie Baden-Wuerttemberg AG (XTER:EBK, Financial) reported solid performance in Q2 2024, with earnings developing well across all segments.
- Adjusted EBITDA for H1 2024 stood at EUR2.6 billion, and adjusted net profit was around EUR900 million, meeting expectations.
- The company successfully issued green bonds totaling EUR1.2 billion, with 100% of the proceeds used for climate-friendly projects.
- EnBW secured an attractive offshore wind site in the North Sea and received grants for large-scale hydrogen projects, strengthening its renewable energy portfolio.
- The company reduced its coal-fired generation capacity by almost 1 gigawatt in H1 2024, significantly lowering its CO2 intensity target.
Negative Points
- Adjusted EBITDA in the renewables segment decreased year-over-year due to lower realized electricity prices and lower trading results.
- The company expects a lower adjusted EBITDA in the second half of the year compared to the first half, primarily due to seasonal factors in the grid business.
- Net debt increased by EUR0.9 billion in H1 2024, mainly due to significant net cash investments.
- Personnel expenses in both transmission and distribution grid businesses increased, slightly offsetting positive developments.
- The company anticipates net debt to rise to EUR15 billion to EUR16 billion by year-end, driven by high investments in various projects.
Q & A Highlights
Q: How do you expect the business to develop beyond this year, particularly regarding the timetable for new projects like SuedLink, Ultranet, and Mona?
A: We expect SuedLink to be operational by late 2025 and Mona by 2029. SuedLink investments will yield immediate operating results. We do not foresee a decline in operating results in 2025 and beyond; instead, we anticipate a gradual increase in underlying operating results through 2030 due to high investments in various projects, including onshore wind and solar.
Q: Are you considering using Chinese wind turbines for your offshore projects?
A: Currently, we are not considering Chinese turbines for our projects. However, in the future, given the limited number of suppliers in Europe, it might make sense to explore this option.
Q: Have you secured a Contract for Difference (CfD) for the Mona project?
A: No, we have not secured a CfD for Mona yet. The Final Investment Decision (FID) is expected in 2026, and we plan to participate in the CfD auction that year. We are also considering Power Purchase Agreements (PPAs) as an alternative.
Q: What is the current state of the PPA market in the UK?
A: The PPA market in the UK is robust, with significant demand driven by companies' efforts to decarbonize and reduce their CO2 footprints. We see a sensible interest in PPAs in the UK.
Q: Why is your adjusted EBITDA outlook for the second half of the year lower than the first half?
A: This is typical, especially in our grid business, where we usually see around 55% of EBITDA in the first half and 45% in the second half. This seasonal pattern explains the lower adjusted EBITDA outlook for the second half.
Q: What is your net debt outlook for the full year?
A: We expect net debt to increase from EUR12.6 billion to between EUR15 billion and EUR16 billion by year-end, driven by significant investments in projects like He Dreiht, UK projects, fuel switch projects, SuedLink, and Ultranet. Our gross investments for the full year are expected to be around EUR7 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
