Enel SpA (ENLAY) (H1 2024) Earnings Call Highlights: Strong Financial Performance and ...
Ordinary EBITDA: EUR11.7 billion, up by 9% year-over-year.
Ordinary Net Income: Increased double digits.
Funds from Operations (FFO): EUR5.5 billion.
Net Debt: EUR57.4 billion, with a net debt-to-EBITDA ratio of 2.4 times.
Renewables Production: Increased by 10 percentage points.
Emission-Free Production Share: Almost 85%.
Cash from Disposals: More than EUR5 billion.
CapEx in Networks: More than 50% of total investment.
European Countries EBITDA: Accounted for 73% of total, increasing 13% year-over-year.
Grids' EBITDA: Increased 4% net of 2023 disposals.
Renewables EBITDA: EUR3.7 billion in the first half of 2024.
Retail EBITDA: Decreased by EUR100 million.
Operating Cash Flow: Increased by almost 8 times.
Emission Intensity: Decreased by 41% over the past 12 months.
Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Enel SpA (ENLAY) reported a strong financial performance with an ordinary EBITDA of EUR11.7 billion, up by 9% compared to the previous year.
The company achieved significant cash generation, with FFO reaching EUR5.5 billion, providing coverage for net CapEx.
Enel SpA (ENLAY) successfully executed its disposal plan, cashing in more than EUR5 billion, which contributed to deleveraging efforts.
The company recorded a 41% decrease in emission intensity over the past 12 months, highlighting its commitment to environmental sustainability.
Enel SpA (ENLAY) made progress in its partnership business model, completing deals worth around EUR2 billion, enhancing value and accelerating returns.
Negative Points
The retail segment in Italy experienced a decrease in EBITDA by EUR100 million due to the normalization of margins.
The company faced challenges with the regulatory framework in Spain, impacting capital allocation decisions.
Enel SpA (ENLAY) recorded a negative evolution in its retail client base in Italy, attributed to previous pricing strategies.
The thermal generation segment saw a decline due to lower output and the end of mandatory coal production requirements.
Working capital dynamics were negatively impacted by non-recurring items and seasonality, affecting short-term cash flow.
Q & A Highlights
Q: Numbers continue to be strong and you confirm the guidance, what factors could drive a revision upwards? A: Let me say everything's going well. And as I said before, we see the old '24 numbers to move to the upper part of the range. But it's not the right moment now to talk about a potential revision of the guidance that remain the existing ones. - Flavio Cattaneo, CEO
Q: When will you officially disclose the level of DPS for '24? In case it will be above EUR0.43 per share, how does this translate to '25 and '26? A: Our dividend policy is extremely clear. If we reach cash flow neutrality, we'll pay up to 70% of the net ordinary income. For years to come, our Capital Market Day is in November, and you will have the answer to your question. - Flavio Cattaneo, CEO
Q: We recorded a negative evolution on retail clients in Italy, what are the main drivers of this evolution? And what do you project for the future? A: The evolution of the customer base is a consequence of price strategy executed before our appointment. We are now adjusting prices moving back to market condition and for a fair marginality. Our churn rate is below the market average, and in July, we have already clear sign of recovery. - Flavio Cattaneo, CEO
Q: Any news on the grids regulation in Spain? How can you define your capital allocation in absence of visibility on the regulatory framework? A: We have met the Spanish government explaining that it's difficult to increase our allocation of resources in the grid without a supportive regulatory framework. We think the government understood and a fair agreement will be reached. - Flavio Cattaneo, CEO
Q: Can you provide granularity on the targeted renewable additions for this year and the capacity currently in execution? A: The additional capacity we have guided is 100% confirmed. We have two gigawatts deployed in Latin America, mainly in Brazil. In Europe, we added around 550 megawatts, mainly in Italy, while the rest was added in North America and Australia. - Stefano De Angelis, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.