(1) Excluding EGPE contribution in both periods.
(2) As of 30th September 2017.
(3) As of 31st December 2016.
Endesa's CEO, José Bogas, said “In the third quarter of 2017 the deregulated business stabilised despite a continuing very complex backdrop registered in the first part of the year. Nevertheless, high wholesale market prices continue to have an unfavourable impact on our results versus previous year. On the other hand, the consolidation of Enel Green Power España as well as the cost-efficiency plans launched in recent years are proving effective and impacted Endesa’s results positively. Our fourth quarter outlook as well as the positive impact from actions we carried out make us confident to meet our 2017 financial targets.”
- All the above factors caused Endesa’s gross margin to drop 7.7%, reaching 4,006 million euros despite the increase in revenues.
- When analysing EBITDA decline, the following factors must be taken into account:
The deregulated business margin dropped significantly (-18%), due to the aforementioned cost increases.
The full consolidation of Enel Green Power España had a positive effect on Endesa’s gross margin by 152 million euros, partly offsetting the generalised decline in company margins, underscoring the effectiveness of Endesa’s generation mix diversification strategy. Furthermore, Endesa was awarded 879 MW of wind and solar capacity in the renewables tenders held in May and July. This capacity is expected to become fully operational in 2020.
The gross margin of the regulated business increased by 1% and is equal to 59% of the total margin, reaching 2,348 million euros, which has partially offset the drop in the deregulated business margin.
Fixed costs dropped by 3% on a like-for-like basis, i.e., without taking into account the change in scope of consolidation due to the acquisition of Enel Green Power España, as well as other minor adjustments.
The company registered lower expenses for the Social Tariff in the first nine months of 2017 compared to the first nine months of 2016 thanks to the repayment of the amounts disbursed by Endesa for the Social Tariff for 2015 and 2016 (142 million euros), after the Spanish Supreme Court ruling ordered the reimbursement of these amounts.
- EBIT dropped by 18.5% mainly reflecting the decline in EBITDA.
- As a result of all these factors, net income dropped by 16.9%.
Net financial debt, clash flow and investments
- Operating cash flow dropped by 1,179 million euros, mainly due to the lower results posted during the period and lower net cash-in amounts from compensation for generation cost overruns in Non-Mainland Territories.
- Despite Endesa’s payment of a dividend of 1.333 euros gross per share on 2016 results, which amounted to a total disbursement of 1,411 million euros, the company’s net financial debt increased by just 815 million euros compared with December 31st, 2016.
- Gross investments reached 632 million euros in the first nine months of 2017, dropping by 14% on the corresponding period of 2016.