Endesa’s profits fall 14% through September due to the adverse price escalation

The maintenance of the fixed-price contracts will translate into an estimated savings of 3,300 million for the year as a whole for its clients.

Bogas (Endesa): The price of electricity could fall from the second quarter of 2022

Endesa has managed to close the first nine months of the year with an ordinary net profit of 1,459 million euros. The figure represents a decrease of 14% compared to the same period of the previous year. Comparing the reported net result with that of 2020, the decrease remains at 3%.

This decrease reflects the negative impact that the exceptional rise in electricity prices, motivated mainly by the strong increase in the price of gas and, to a lesser extent, of the CO2 emission rights, is taking into account your income statement.

Along with this, and despite this adverse context marked by the escalation of energy raw materials, Endesa has recorded a gross operating result (EBITDA) of 3,125 million euros. The company maintains its objectives for the year, backed by non-recurring items and continuous management efforts.

Adverse situation

These results are especially significant in the current situation, which does not benefit the company’s strategy or its income statement. In the case of Endesa, all of its own base generation, from energy hydroelectric, nuclear and non-regulated renewables, It is sold in advance to cover fixed price contracts with industrial and residential clients at prices much lower than those currently set by the pool.

This contracting model will allow an estimated savings of 3,300 million euros to our clients, both in the business and residential segments, this year as a whole.

In this sense, 100% of the own base production of 2021 has already been covered with forward sales, a percentage that reaches 88% by 2022 at the end of September.

“We are aware of the difficulties faced by many households and industrial customers due to high energy costs. And that is why we are open to dialogue with the Administration to find the most efficient solutions for this conjunctural context ”, said the CEO of Endesa, José Bogas during the presentation of results to investors.

“The additional measures approved by the Government last week in RDL 23/2021 to modify RDL 17/2021 introduce rationality, in addition to increasing protection for vulnerable consumers. One aspect, the latter, which Endesa strongly supports and which is in line with the company’s commitment to society, which will lead us to contribute approximately 90 million euros to finance the social bond this year ”, he pointed out.

“Despite the complex energy and regulatory situation, Endesa has ratified its main financial and business objectives for the whole of the year,” he concluded.

Decarbonization

In the current context, Endesa maintains its firm commitment to the decarbonisation of the generation mix, and has boosted its portfolio of renewable projects by an additional 22 GW since the beginning of the year, now adding more than 61 GW.

Specifically, it has 11.2 GW of mature and ongoing renewable projects. The acceleration of the projects under construction will allow the incorporation of 700 MW of renewable capacity in the year, complying with the forecasts for the year.

The data for the first nine months of the year indicate that the total peninsular production reached 34.4 TWh, keeping the records of last year. The increase in solar and wind capacity, together with the increase in nuclear production, offset the lower hydroelectric production.

Until September, 85% of the peninsular production was free of CO2 emissions, in line with the goal of reaching 89% by 2023. Thanks to the commitment to decarbonisation, the peninsular renewable capacity already represents around 45% of the company’s peninsular production.

In the segment commercialization, sales remained stable in relation to the first nine months of last year, with positive advances in liberalized sales, especially in the SME segment and in international sales (Portugal and the rest of Europe), which offset the decrease registered in the regulated market.

The company’s strategy is paying off by reducing the trend of customer churn despite high competitive pressure. In the third quarter, a positive balance of 55,000 new contracts was achieved in the liberalized market, a trend that is expected to continue in the future despite the highly challenging environment.

As to electric mobility, Endesa closed the first nine months of the year with a network of 8,400 charging points installed, which represents an increase of 19% compared to the same period last year, and consolidates its leadership in electric vehicle charging infrastructure in Spain.

Financial results

Regarding the main financial figures, Endesa obtained a EBITDA of 3,125 million euros in the first nine months of the year, in line with the results of the same period of 2020. In comparable terms, discounting the provisions of personnel amounting to 143 million made last year, EBITDA increased by 4% .

The investment reached 1,414 million euros, with a growth of 20.5% compared to the same period of the previous year.

The regulated business performance met expectations with a 3% improvement in gross margin to 2,248 million euros, while EBITDA grew 7% to 1,719 million.

At liberalized business the increases were 2 and 1%, respectively. The difficult market context was offset by non-recurring income, mainly from the recovery of CO2 costs in 2006 (188 million), the return of the hydraulic canon after the Supreme Court ruling (48 million) and other income from Commodity derivatives transactions (+297 million euros).

The total fixed costs they reached 1,403 million in line with that registered the previous year in comparable terms thanks to the strategy based on the personnel efficiency plans.

While the net debt it increased by 45% to 10 billion euros. The increase is mainly due to the payment of the dividend charged to the 2020 results paid during the year and the decrease in operating cash flow to 862 million registered in the first nine months.

The leverage (ratio of net debt to EBITDA), thus stands at 2.4 times in comparative terms, while the cost of debt reaches extraordinarily low levels, maintaining its path of reduction. The average interest falls to 1.5%, which distinguishes Endesa as the integrated utility with the most competitive financing cost in Europe.

The financing linked to sustainability criteria it represents 57% of total gross financial debt, which represents a significant advance compared to 45% in 2020. This brings Endesa closer to the goal of reaching 60% by 2023.