- The company held a General Shareholders' Meeting in Madrid today, at which it reaffirmed its financial and business objectives despite the turbulence in global energy markets and regulatory measures.
- Specifically, with regard to the proposal by the Governments of Spain and Portugal to cap price of gas used to produce electricity at €50/Mwh, Chief Executive Officer José Bogas said: "According to preliminary estimates, the cost of this measure could exceed €6,000 million which, if we take into account the measures already proposed in RD
- 6/2022, would have to be assumed by demand as a whole."
- Bogas defended the ongoing contribution of constructive, viable solutions by Endesa to all stakeholders to try to solve the real cause of the problem: The impact of high gas prices
- In his speech to shareholders, he condemned the invasion of Ukraine by Russia and, faced by the escalation of gas prices caused by the war, he defended the ongoing attitude of the company advising domestic and business customers to help them manage the current situation.
- The company's chief executive, who has been re-elected to office for four more years, reiterated Endesa's commitment to the most extensive and agile electrification possible in Spain and Portugal. He also defended the company's role as an industrial agent and key player in this process in the Iberian Peninsula despite the "undeserved criticism based on erroneous premises" surrounding the electricity sector
Endesa today held a General Shareholders' Meeting at its corporate headquarters in Madrid, the first in person after two years in virtual format because the pandemic, with quorum reached by the attendance of 84.9% of share capital. It included an analysis by the Chief Executive Officer José Bogas of the complex situation that the sector is going through as a result of the geopolitical tensions resulting from the war in Ukraine, as well as how this tension has affected energy raw materials markets globally. And, how as a result of all this, the Spanish and Portuguese Governments plan to introduce measures to alleviate the sharp rise in gas prices based on recognition by Europe of the energy exceptionality for the Iberian Peninsula.
In his speech to shareholders, Bogas ensured them: "We understand that specific solutions are being sought, we also understand that the situation merits these measures, but these should be at a European level, restricted in time and aimed at solving the root of the problem, which in this case is the high price of gas." He also recalled that on Tuesday, the Ministers of Ecological Transition of Spain and Portugal announced that the proposal to cap the price of gas used to produce electricity would be €50/Mwh for a period of 12 months.
Firm strategy and a constructive attitude
The company's Chief Executive commented on this proposal in the following terms: "Until we are given all the details regarding the measure, it will be difficult to assess the consequences. According to some preliminary estimates, the cost of capping the price of gas at €50/megawatt hour could exceed six thousand million euros per year that, taking into account that the measures already proposed in RD 6/2022, would have to be assumed by demand as a whole".
"There is no doubt that the scenario or context we are experiencing may be a conditioning factor for the future, but we insist on our willingness to stick to our roadmap with regard to our strategy." He reminded us that the plan stands on three axes: Decarbonisation, the promotion of electrification, and digitalisation-platforming to maintain a solid leadership in Spain as a vertically integrated company.
The Chief Executive Officer reiterated that Endesa will continue to maintain the same attitude as in recent months. In this regard, he reminded us how the company has developed specific proposals and shared them with all the players involved with the aim of providing solutions that help make the best decisions to tackle the price rises. "Focussing on the source of the problem: Gas."
"We have also done our best to explain to all our stakeholders what was really happening. We are also advising our clients to opt for efficient and long-term energy solutions, aimed at cushioning the impact of the rise in wholesale prices on their homes and companies," he explained.
To summarise: "We have not ceased in our efforts to engage in dialogue and explain our outlook on how to provide constructive solutions and reduce uncertainty".
Balance sheet for the 2021 business year
The Chief Executive Officer then reviewed the main financial and business milestones reached by Endesa over the past year. With regard to the former, he indicated the following key points:
- Gross profit (EBITDA) of €4,278 million, 6% more than in 2020 in comparable terms and 7% more than the forecasts announced to the market on Capital Markets Day in November
- Ordinary income of €1,902 million, also 12% higher than that announced to the market in November
- Distribution of a dividend of €1.44 per share charged to the results for 2021, 11% higher than that announced on Capital Markets Day
"These results for 2021 show that we have very successfully navigated a particularly complicated year due to the impact of the large rise in commodity prices, especially gas, and as a result of wholesale electricity prices at European level: An average of over 200% in Spain, Germany, France and the United Kingdom". Bogas reiterated that this price increase "neither benefits us nor strengthens us" since the company sells its own nuclear, hydroelectric and renewable energy at fixed prices between one and two years in advance at prices that have nothing to do with those of the daily pool.
He also focussed on Endesa's achievements with regard to recovering the path of portfolio growth in the deregulated market, which closed the year at 5.9 million customers. And he made special mention of the good reception for the so-called Única Tariff, the only subscription tariff on the market and one of the most competitive. "The customer pays a fixed amount per month if historical consumption does not increase by 30%. It has already been contracted by 46% of customers who no longer opt for the regulated tariff".
Sustainability and decarbonisation
The Chief Executive Officer also detailed the different milestones reached with regard to sustainability and decarbonisation, providing shareholders and those attending the meeting with the following facts and achievements recorded in 2021:
- 75% of gross investment for the year, which increased by 33% to €2.200 million compared to 2020, in line with the European Union's new green taxonomy if investment in gas and nuclear technologies is not included
- Power from renewable sources grew by 8%, to 8,400MW and a licence was obtained to close the Litoral coal-fired plant, which will be dismantled following the criteria of Circular Economy and Creation of Shared Value with the environment
- Barely 1% of revenue now comes from coal activity and the last plant remaining in operation, As Pontes, is expected to obtain a licence to close sometime this year
- The gross portfolio for renewable projects amounts to 77,000 MW to meet the 2024 targets and our Outlook for 2030
- Charging stations for electric vehicles increased to 9,500, 34% more than at the end of 2020
- Our commitment to sustainability has been acknowledged by numerous international indexes, including MSCI, ESG Leaders and Dow Jones, both globally and at a European level
- 52% of free float is already held by ESG shareholders
In short, he stressed, "we are proud that the profitability of our business is in balance with the utmost respect for human, ecological and share capital. You can be both sustainable and profitable".
All this, he stressed, has increased investor confidence in Endesa.
Outlook for 2030 and digitalisation
Sr Bogas then reviewed the conditions on which the company will move in the next decade in order to reach by 2040, ten years earlier than initially planned, the goal of being a 100% renewable company including a complete exit from the gas business, both with regard to generation and retailing, and without resorting to carbon capture techniques or emission compensation.
The company faces this challenge as the main electricity company in Spain with 21.9 gigawatts of gross capacity managed, more than 300,000 kilometres of network, 12.5 million end users and 11.9 million customers in Spain and Portugal. With these foundations, Endesa is preparing to implement its Outlook for 2030 based on the following industrial and business milestones:
- Investment of €31,000 million by 2030, 22% more than initially estimated. Of these, €12,000 million will be destined to boosting clean generation in order to triple renewable power to 24,000MW by the end of the decade
- A further €12,000 million to modernise and digitalise network infrastructures with a view to improving the quality of service, bringing the regulated asset base to €13,000 million.
- To reach 400,000 public and private charging stations
As a transversal strategy to all this, the Chief Executive Officer made special mention of the efforts to be made in digitalisation. "The hardest work in this area is being done in Distribution, but work is also being done in Generation to make our plants operationally more efficient. This digital transformation also includes improving data management processes, cloud storage, data-driven decision making and promoting cybersecurity".
As a logical development of digitalisation, Sr Bogas focussed on platforming. "This means working in an integrated and transversal way, putting the customer at the centre and taking advantage of all the opportunities that technology offers us".
Board of Directors
With regard to the proposed renewal of his position as Chief Executive Officer for a further four years, Sr Bogas said: "I would like to thank Sr Francesco Starace, Vice-President of Endesa and Chief Executive Officer of Enel, as well as the entire Board of Directors, for their trust". And with regard to the new lady directors who are joining the administrative body, he said: "We would like to welcome Francesca Gostinelli and Cristina de Parias, while thanking Patrizia Grieco for her work and support in recent years as a director".
As a key objective for his new term of office at the helm of Endesa, Sr Bogas said: "My commitment, since I was appointed Chief Executive Officer in 2014, has been and continues to be for Endesa to develop from within, to move from coal to wind while remaining leaders; to be the best reflection of what Enel, with Francesco Starace at its head, had the ability to foresee: To be the world's best electricity company with regard to clean energy to be a leader in the decade of electrification."
A process in which he acknowledged that there were tensions, volatility and resistance, but also progress, acknowledgement and successes. "That is why I would like to congratulate the business lines and the staff areas for the work they are doing to achieve it." "It is worth making the effort and losing a little sleep to create an emission-free, efficient, accessible, sustainable and cost-effective electricity system".
Key driving company despite the misinformation
The Chief Executive Officer dedicated the final part of his speech to defending the strategic role of companies such as Endesa in an environment marked by what he defined as "discouraging remarks critical of the sector, undeserved most of the time and at other times based on erroneous premises".
"We should not accept that a series of advantageous and simplifying narratives with regard to a complex and regulated reality, such as we have in the electricity sector, should cloud the essential role
that a company like Endesa plays in the country's economy." Sr Bogas contrasted this criticism with facts and figures:
- Endesa is one of the country's leading industrial investors
- The company has been paying taxes amounting to more than €3,000 million annually in a sustained manner for years
- We generate over 9,000 direct jobs, and thousands more indirect jobs
- We provide an essential service with high quality to millions of families, SMEs and large companies
- We are leaders in a sector involving hundreds of generating companies and retailers
- We fully comply with the recommendations for Good Corporate Governance
- Our profitability is absolutely reasonable according to the data of the Central Balance Sheet of the Bank of Spain
"We are neither an oligopoly, nor do we make extraordinary profits. Even though some of these criticisms are repeated insistently, they will not derail an honest, professional corporate entity with very clear sustainable objectives."
Sr Bogas concluded by emphasising that electrification is the future of Spain and Portugal and is the axis on which the future growth of the company will pivot, which aims to remain an essential pillar of the Enel Group.