Release Date: October 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Enagas SA (ENGGF, Financial) has successfully reduced its net debt to EUR 2.4 billion following the divestment of its stake in Tallgrass Energy.
- The company has maintained a strong liquidity position and expects to close the year with net debt at approximately EUR 2.4 billion.
- Enagas SA (ENGGF) has received credit rating upgrades from Standard & Poor's, Fitch, and Moody's, reflecting an improved risk profile.
- The company is making significant progress in the development of green hydrogen infrastructure in Europe, with Spain positioned as a leading hub.
- Enagas SA (ENGGF) has exceeded its core after-tax profit target for the first nine months of 2024, reaching EUR 233.5 million, up 7.8% year on year.
Negative Points
- The company's after-tax profit, including the impact of asset rotation, was negative EUR 130.2 million.
- There is uncertainty regarding the regulatory framework and remuneration rates for the upcoming period, which could impact future financial performance.
- The GSP arbitration award in Peru has been delayed, creating uncertainty around its financial implications.
- Enagas SA (ENGGF) faces potential challenges from the cancellation or suspension of hydrogen projects by other players, which could affect strategic ambitions.
- The company anticipates a lower contribution from its subsidiaries in the fourth quarter, impacting overall financial performance.
Q & A Highlights
Q: Could you explain why the business plan update has been pushed back to the first quarter of 2025 and what visibility you hope to have by then?
A: Arturo Gonzalo Aizpiri, CEO, explained that the delay is due to the need for more visibility on key parameters related to the regulatory framework and upcoming remuneration period. The CNMC's consultation on revising the financial remuneration rate is expected to provide significant insights. Additionally, institutional changes in the EU and Spain, including new leadership, are factors. The company also awaits the GSP arbitration award, which is crucial for the strategic update.
Q: What type of information do you hope to capture in the nonbinding call for interest for H2Med, and how relevant is it for your business plan?
A: The CEO stated that the call for interest aims to gather informative insights on infrastructure needs and capacity demands for 2030. This process is crucial for understanding the demand for Pan-European infrastructure and will inform the business plan, particularly regarding CapEx for the Spanish backbone network and international infrastructures.
Q: Regarding the 2024 financial targets, are you in a position to reach a net income around EUR300 million?
A: Arturo Gonzalo Aizpiri noted that while Q3 results suggest a higher net income, nonrecurrent effects and lower contributions from affiliates in Q4 necessitate a prudent estimate. The company expects to exceed EUR280 million in net income, excluding asset rotation effects.
Q: When can we expect more visibility on hydrogen regulation, and what are your expectations from the regulator regarding hydrogen investments?
A: The CEO mentioned that the transposition of the EU directive into Spanish law has begun, with expectations for completion within two years. The draft law for recreating the National Energy Commission includes hydrogen regulation aspects. The first regulatory period for hydrogen is anticipated by 2027, coinciding with the next natural gas regulatory period. As hydrogen becomes a regulated system, investment risks are reduced, potentially minimizing the need for extra remuneration.
Q: How do you view the National Energy Plan's viability, and do you have a plan B if hydrogen investments are reduced?
A: Arturo Gonzalo Aizpiri expressed optimism about the plan, emphasizing the non-negotiable objective of decarbonization by 2050. The plan's ambition aligns with European goals, and Enagas is committed to its implementation. If hydrogen investments face delays, the company has supplementary ideas, such as CO2 capture and storage, to maintain stability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
