Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Encavis AG (XTER:ECV, Financial) confirmed its guidance for fiscal year 2024 despite challenges in the first half.
- The company is set to benefit from a takeover offer by Elbe BidCo, managed by KKR, which aims to enhance its energy transition efforts.
- Encavis AG (XTER:ECV) has ambitious plans to increase its capacity target from 5.8 gigawatts to 7 gigawatts by 2027.
- The company secured significant financing agreements, including a EUR203 million project refinancing and a EUR300 million syndicated revolving credit facility.
- Encavis Asset Management is actively working on projects, including the largest German solar farm, Bartow, with a new PPA contract and financing secured.
Negative Points
- Encavis AG (XTER:ECV) reported a 7% drop in energy production due to unfavorable weather conditions and negative price periods.
- The company experienced a 9% reduction in revenues, attributed to lower power production and prices.
- There were unexpected shutdowns due to negative prices, impacting power production and revenues.
- The Asset Management business faced delays in project investments due to interest rate environments and investor reluctance.
- The company had to account for EUR5.4 million in costs related to the partnership with Elbe, KKR, and Viessmann, affecting financial comparisons.
Q & A Highlights
Q: Can you provide an update on the takeover offer by Elbe BidCo and its expected impact on Encavis?
A: Christoph Husmann, Chairman of the Management Board and CFO, explained that the takeover offer by Elbe BidCo, managed by KKR and Viessmann, was accepted by 87.41% of shareholders. The deal is expected to close in Q3 or Q4 2024. This transaction aims to benefit Encavis and the energy transition, with a new target of reaching 7 gigawatts of capacity by 2027, up from the previous target of 5.8 gigawatts.
Q: How did the weather and market conditions affect Encavis's energy production and financial results in H1 2024?
A: Christoph Husmann noted a 7% drop in energy production due to unfavorable weather conditions and negative electricity prices, leading to a 9% reduction in revenues. The existing portfolio's production was down by 130 gigawatt hours, partially offset by new parks. The reduced volumes and lower prices contributed to a EUR21.3 million negative deviation in operating profit.
Q: What are the recent financing developments for Encavis?
A: Encavis signed two non-recourse project refinancing agreements totaling EUR203 million for plants in Spain and a EUR300 million syndicated revolving credit facility. These financings support the company's accelerated growth strategy towards 2027. Additionally, SCOPE Ratings confirmed Encavis's investment-grade issuer rating of BBB minus.
Q: How is Encavis's Asset Management business performing, and what are the expectations for the second half of the year?
A: The Asset Management business faced delays in project investments due to interest rate environments and investor reluctance, resulting in reduced revenues and negative performance. However, Encavis expects a turnaround in the second half of the year as project investments resume.
Q: What is the outlook for Encavis's guidance for 2024?
A: Despite the challenges in H1 2024, Encavis maintains its guidance for the year, assuming standard weather conditions in the second half and considering the volatile power price environment. The company remains focused on its strategic growth and investment plans.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
