Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- EDP SA (EDPFY, Financial) achieved a 97% renewable generation in the first nine months of 2024, highlighting significant progress in decarbonization.
- The company reported a 7% increase in net profit, reaching nearly EUR1.1 billion, supported by improved performance below EBITA.
- Hydro generation increased by 66% year-on-year, reflecting strong hydro resources and contributing to a stable EBITA of EUR3.9 billion.
- EDP SA (EDPFY) is well-positioned to capitalize on data center growth opportunities in Iberia, with more than two gigawatts of grid access opportunities.
- The company maintains a strong focus on efficiency, with OpEx decreasing by 2% year-on-year, contributing to improved financial performance.
Negative Points
- Lower asset rotation gains impacted the renewables segment, with a 10% decrease in EBITA year-on-year.
- The company faces potential risks from the CMEC judicial case in Portugal, although EDP SA (EDPFY) maintains that the risk of any indirect penalty is remote.
- Operational execution since 2020 has faced challenges, with some delays in installation pace and operational issues.
- The Brazilian Real's depreciation has limited impact due to local currency funding, but it still affects net income.
- Asset rotation gains are expected to face short-term pressure, with similar impacts anticipated in the next couple of transactions for 2025.
Q & A Highlights
Q: Can you provide insights into EDP's growth strategy, especially considering the flat net profit growth outlook?
A: Rui Teixeira, CFO, stated that EDP is comfortable with the 2025 consensus and emphasized the value of their diversified portfolio. He mentioned plans to increase investment in networks by 50% and highlighted the potential for growth in renewables, particularly in the US. He also noted that EDP has the flexibility to pivot between different parts of their business across various geographies.
Q: How is EDP preparing for potential risks in the US market, especially with the recent elections?
A: Rui Teixeira, CFO, explained that EDP has pivoted to US-based production for solar panels to mitigate risks related to tariffs and import restrictions. He also mentioned that tax credits are likely to remain stable due to bipartisan support and the Safe Harbor provision, which protects projects that have initiated construction.
Q: What is the opportunity for EDP in the data center market in Iberia?
A: Rui Teixeira, CFO, highlighted that EDP is well-positioned to attract demand for data centers due to their competitive generation and flexible supply capabilities. The value creation comes from increased network investments, PPAs, and overall demand growth, which helps reduce costs and dilute fixed costs.
Q: Can you provide an update on EDP's long-term outlook, particularly for 2026?
A: Rui Teixeira, CFO, confirmed that EDP maintains its guidance for 2026. He noted that the diversified portfolio allows EDP to keep its guidance despite varying performances across different segments and geographies. He also mentioned that the additional hydro performance this year contributed approximately EUR150 million in value.
Q: What are EDP's expectations for hydro production in 2025, given the current hydro reserves?
A: Rui Teixeira, CFO, stated that EDP assumes an average hydro year for 2025. While current hydro levels are high, which is advantageous for the coming months, the best guidance remains to expect average rainfall and hydro production levels.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
