Endesa confirms the targets for 2022 despite an extremely volatile first quarter in the electricity sector

• The company presents its results from January to March, in which it registers a 31% decrease in ordinary net profit to €338 million, although if the extraordinary impacts recorded in 2021 were to be excluded this result would increase by 14%
• Gross operating result (EBITDA) stands at €914 million, 10% less than in the first quarter of last year, but 10% higher if the atypical results in 2021 are not taken into account
• Endesa is maintaining its financial objectives for the year as communicated to the market: Net ordinary income of €1,800 million and EBITDA of €4,100 million
• 90% of the renewable capacity that the company expected to come into operation in 2022 is already in operation or under execution, as well as 70% of that scheduled for 2023
• The figures for commercial activity are outstanding with an increase of 800,000 customers in the deregulated market over the last 12 months to reach 6.4 million, an increase of 13%. The network of public and private charging stations also increased by 36%, to 10,200 in the same period
• In this regard, the company is maintaining its strategy of assessing business and domestic clients, whatever the tariff they have contracted, to help them manage their consumption in circumstances where there are high prices for wholesalers and raw materials
• Debt increased to €10,334 million, affected by the impact of commodity prices and an increase in the regulatory balance to be collected, although the average cost of this debt continues to fall and stands at 1%, a historical low for the company.
• Endesa has already sold all its own production of inframarginal electricity (nuclear, hydroelectric and unregulated renewable) for 2022 and 82% for 2023

Endesa today informed the market of the results for the first quarter of 2022, a period strongly marked by the deterioration of the macroeconomic scenario and high prices for raw materials, especially for gas (350% more expensive on average than in the first quarter of 2021). As a result, and following the trend for the second half of 2021, prices in wholesale electricity markets reached an average of €229 in Spain, €232 in France, €249 in Italy and €238 euros in the United Kingdom between January and March. In spite of this, and the impact that this situation has had on the results for the quarter, Endesa is maintaining the forecasts for 2022 as a whole as communicated to the market: Gross operating income (EBITDA) of €4.100 million and ordinary net profit of €1,800 million.

José Bogas, Chief Executive Officer of Endesa, had the following to say about these results: "We started the year facing an even more challenging situation than in the previous year, marked by macroeconomic tension arising from the impact of the war in Ukraine and by the transfer of this conflict to a commodity market that had already been highly inflated for several months. Endesa still has confidence in the strength of its vertically integrated business model to be able to meet its targets for 2022. And we are also maintaining our strategy of assessing and helping all customers, whichever tariff they have contracted, to overcome the turbulence of the energy market in their homes and companies."

As for the main financial figures, the company has recorded a 10% decrease in EBITDA, to €914 million. If the extraordinary items recorded in the first quarter of 2021 are not taken into account, essentially €188 million from a court ruling on CO₂ emission rights, EBITDA would have increased by 10%.

Ordinary net profit stands at €338 million, 31% lower than in the same period in 2021. If we do not take into account the extraordinary result because last year's CO₂ ruling, it would have increased by 14%.

At the end of March, Endesa had already sold 100% of its own energy (nuclear, hydroelectric and unregulated renewable) for this year, and 82% for 2023.

Innovative model in Portugal and commercial success

With regard to other significant operational dimensions, it should be noted that the company already has in operation or under execution 90% of the new renewable power planned for this year, as well as 70% for 2023. Specifically, Endesa has 2,000MW of renewable power under execution (half of the target included in the 2022-2024 strategic plan) and has 8,000MW of power in an advanced state of administrative processing. All this in Spain and Portugal.

In the first quarter, two significant milestones were also reached with regard to new renewable capacity in Portugal, which are the basis for an innovative model that the company will implement in the neighbouring country. The first consists of the assignment of the Pego fair transition tender, the first of its kind to be developed in the Iberian Peninsula, which involves Endesa making an investment of €600 million to raise 365MW photovoltaic, 264MW wind and 168MW of batteries, together with a 500kW electrolyser to produce green hydrogen. All this to take advantage of part of the capacity to connect to the electricity grid after the closure of the Pego coal plant last November. The second milestone is Endesa's first floating photovoltaic project to install 43.5MW in the Portuguese reservoir of Alto Rabagão, hybridised with 48MW of wind power and 48MW for batteries.

The quarter also features outstanding developments with regard to customer-based commercial activity, with a 13% increase in the client portfolio in the deregulated market to reach 6.4 million in Spain and Portugal, compared to the first quarter of 2021. Charging stations for electric vehicles increased by 36% to 10,200 at the end of the quarter, including public and private stations, compared to the same quarter in 2021.

Other financial indicators

The complex situation in the commodity markets, together with an increase in regulatory items pending collection, had an adverse effect on the working capital required to finance the company's operations. This resulted in a negative cash flow for operations amounting to €476 million.

Hedging this negative cash flow, the disbursement of investments in the period amounting to €533 million and the payment of dividends for €529 million led to an increase in net debt to €10,334 million at the end of the quarter.

The cost of liabilities is in any case at an all-time low, 1%, half a percentage point below that recorded at the end of 2021. And the percentage of debt linked to sustainability criteria has risen five points, to 65%, compared to the end of last year.

Luca Passa, the chief financial officer, commented as follows: "The first quarter of the year was marked by an extremely volatile energy scenario, which we have been able to manage because of the solidity of our integrated electricity company model. We are maintaining the pace of our transformation towards a decarbonised and sustainable company, with an increase in gross investments of 48% compared to the same period in 2021 to €402 million, most of this in networks and renewables. I would also highlight our ample liquidity position with €4,403 million, which enables us to cover almost two years of debt maturities."