Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Endesa SA (ELEZF, Financial) reported a strong financial performance with EBITDA growing by 16% to EUR 3.9 billion and net income increasing by 33% to EUR 1.4 billion compared to the same period last year.
- The company achieved a significant increase in emission-free output, reaching 88% of total production, supported by an expansion in renewable capacity to over 10 gigawatts.
- Endesa SA (ELEZF) successfully stabilized its customer portfolio at 6.7 million, maintaining the average level of the last five years despite earlier declines.
- The company has secured almost all of its 2024 and 2025 output and 70% for 2026, providing a high degree of protection against market volatility.
- Endesa SA (ELEZF) maintained a strong cash flow generation, which was sufficient to cover investment needs and dividend payments, keeping net financial debt stable at EUR 10.4 billion.
Negative Points
- Endesa SA (ELEZF) experienced a reduction in its customer base due to intensified competition and sustained low prices, although there was a change in trends in the third quarter.
- Average electricity prices in the first nine months of 2024 were down 42% compared to the previous year, contributing to market volatility.
- The company faced a significant drop in industrial customer demand for gas, leading to a 15% decrease in total gas sales.
- Endesa SA (ELEZF) reported a decline in energy-intensive industrial consumption, particularly in the paper and metal industries.
- The company is operating in a regulatory vacuum, with uncertainty around the allowed return in power grids and potential capital allocation challenges.
Q & A Highlights
Q: How does Endesa plan to allocate capital given the regulatory uncertainty in Spain, and are there plans for acquisitions or share buybacks?
A: Jose Damian Bogas Galvez, CEO, stated that Endesa is in a strong sector with many opportunities. The company aims to maintain a strong balance sheet to pursue these opportunities. While M&A opportunities are considered if they fit the equity story and create shareholder value, the focus remains on strategic investments like the partnership with Masdar. Regulatory clarity is expected to support future investments, particularly in distribution and electrification.
Q: Can you provide an update on the data center connections and their impact on power demand in Spain by 2030?
A: Jose Damian Bogas Galvez, CEO, mentioned that Endesa has approved connections for about 3 gigawatts, involving around 50 sites. These connections are made directly with final users and intermediaries. By 2030, data centers are expected to contribute over 15 terawatt hours to Spain's power demand.
Q: What is the outlook for gas unitary margins, and how much of this is hedged for the coming years?
A: Marco Palermo, CFO, indicated that the current EUR 2 per megawatt hour is not yet the stabilized margin, and they expect higher margins. The company has hedged a significant portion of its gas sales, providing comfort in meeting future margin targets.
Q: What is the current status of Endesa's customer base, and what measures are being taken to address customer losses?
A: Jose Damian Bogas Galvez, CEO, acknowledged the loss of customers due to aggressive competition from small suppliers and oil companies. However, Endesa has stabilized its customer base and expects it to remain stable, focusing on retaining high-value customers and maintaining attractive supply margins.
Q: Can you clarify the guidance for 2024, particularly regarding the expected net income and any potential exceptional items in Q4?
A: Jose Damian Bogas Galvez, CEO, confirmed confidence in reaching the upper end of the full-year EBITDA and net income guidance. No specific exceptional items are expected in Q4, but the company prefers to remain cautious and confident in achieving its objectives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
