Endesa made an ordinary net profit of €2,398 million in 2022, an increase of 26%, and made a historical record in investment: €2,343 million

José Bogas, Chief Executive Officer and Marco Palermo, Chief Economic-Financial Officer.
José Bogas, Chief Executive Officer and Marco Palermo, Chief Economic-Financial Officer.
Gross Operating Income (EBITDA) increased by 25% to €5,327 million.
 
  • Endesa's net ordinary income was €2,398 million, 26% more than in 2021, mainly due to the good performance of the gas business and the high level of operations in the combined cycle plants. This figure will enable us to propose the distribution of a gross dividend of €1.585 per share, 6% higher than expected.
  • The investment made during the year reached a historical peak: It amounted to €2,343 million, 8% more than in the previous year. 76% of this investment is in line with European Union taxonomy. In 2023 there are plans to reach anew historical maximum with a 20% increase in investment.
  • Endesa's tax contribution for the year amounted to €3,843 million. Spain represents 85% of that figure and the company remains among the five largest tax payers in the country.
  • The consolidated net result stood at €2,541 million, an increase of 77%, with growth mainly explained by two factors: The good performance of the gas business as a whole and a substantially lower deterioration in the value of non-mainland businesses compared to 2021.
  • Gross operating income (EBITDA) stands at €5,327 million on a like-for-like basis, representing an improvement of 25% despite a decrease in the performance of the commercial business, a reduction in margin for renewable energies and the negative impact of regulatory measures on the distribution business.
  • During the year, Endesa added 908 megawatts of new renewable capacity, reaching a total of 9,300 megawatts. Including nuclear, 71% of Endesa's mainland installed capacity is free of CO2 emissions. 73% of mainland production in 2022 was equally emission-free.
  • Of the 4,400MW of new renewable power that is expected to be incorporated as part of the 2023-2025 strategic plan, 1,400MW are already in execution. 
  • At the end of the year, it was confirmed that Endesa had been awarded the first fair transition tender in Spain, for Andorra (Teruel), which was in addition to the award of Portugal's first fair transition tender, for Pego (Abrantes).
  • The company's strong commercial performance continues, with the addition of 900,000 domestic and business electricity customers in the deregulated market compared to the close of 2021, reaching a total of 6.8 million. This saw the number of customers grow by 2% to 10.5 million.  
  • The network of charging stations for electric vehicles totalled 13,900 stations by the end of the business year, a year-on-year increase of 47%.
  • At the next General Shareholders' Meeting, the date of which is still to be confirmed, the company will propose the approval of the renewal of the four directors whose mandate ends this year.
  • Endesa has made an appealed with regard to corporation tax before the National Court on the grounds that it is discriminatory and unjustified.

Endesa's businesses performed positively in 2022, the year which saw the deepest energy crisis in recent decades as a result of the Russian invasion of Ukraine, which today has been going on for one year. Imbalances in the global gas market, which led to emergency measures being taken by public administrations, went hand-in-hand with a general deterioration in the economic outlook for the main economies. Under these circumstances, Endesa's vertically integrated business model, together with a firm commitment to decarbonisation, were confirmed as a model that is resistant to market difficulties.

2022 was also confirmed as the year with the highest electricity prices in the history of Spain. The volatility of gas prices was undoubtedly the basic reason for this, despite the fact that in the last quarter of the year there was substantial moderation due to the fact that the price of gas reached the levels last seen in September 2021. 

The average wholesale price on the Iberian market in 2022 was €168 per megawatt hour (MWh), 50% higher than in 2021. The application of the gas price cap mechanism from June onwards, together with the above-mentioned reduction in the price of gas towards the end of the year, enabled Spain and Portugal to compare favourably with the rest of the main markets in the surrounding area: Germany (€235/MWh), France (€276), Italy (€304) and the United Kingdom (€240).

The year also saw numerous regulatory measures both at European and Spanish level. With regard to one of these, a 1.2% tax on the income of certain energy companies approved by the Spanish Government, Endesa filed an appeal with the National High Court because it considered it to be unjustified and discriminatory. This measure is in addition to an appeal filed by the Spanish electricity association AELEC a week ago.

With regard to Endesa's main economic dimensions, EBITDA (gross operating profit) reached €5,327 million, 25% higher than in the previous year. Growth was mainly due to the extraordinary context of the gas market, which encouraged increased production with gas combined cycles, as well as the improved performance in the wholesale gas business. All this despite a worsening in the performance of commercial businesses, where Endesa maintained a policy of reasonable prices within a context of high prices; renewables, due to low hydroelectric production; and electricity distribution, affected by regulatory measures.

Ordinary net profit, which is the basis for the distribution of dividends, increased by 26%, to €2,398 million. Consolidated net income amounted to €2,541 million, 77% more than in 2021. It should be noted that in 2021, Endesa's consolidated net income was negatively affected by a decrease of €489 million due to the deterioration of business in non-mainland territories. Deterioration in this regard was substantially lower in 2022 (€27 million). The growth was also based on the same reasons that explain the rise in EBITDA, partly offset by higher financial and tax costs.

These results will enable Endesa to:

  • Remunerate its shareholders, including almost 200,000 Spanish retail investors, with €1.585 gross per share
  • Undertake the largest annual investment in its history, €2,343 million, 8% more than in 2021. Between 2020 and 2022, that is, during the pandemic, post-pandemic and energy crisis, the company's investment in Spain totalled €6,153 million
  • Register €900 million in company tax expense for 2022, which represents an effective rate of 25.6%. Endesa's total tax contribution amounts to €3,843 million, 85% corresponding to Spain, which makes the company one of the five largest tax payers in the country
  • Maintain the company's direct workforce at 9,260 employees, who have seen their salaries revalued at around 5% in application of the current collective agreement

 

Take firm steps in decarbonisation

With regard to the road to decarbonisation, Endesa's CO2-free mainland production during the year accounted for 73% of the total. The breakdown by technology confirms the trend seen in the first three quarters of the year: A fall in hydroelectric production against the backdrop of a severe drought combined with the increase in exports (on account of the drought also in Portugal and problems with French nuclear installations and, since 15 June, the entry into force of the gas price cap) which has resulted in an increase in production from combined cycle power plants (75% more compared to 2021). Nuclear generation grew a further 4% and accounted for 51% of all Endesa's own generation during the year. Installed production capacity in non-emitting technologies already accounts for 71% of the total, compared to 69% at the end of 2021. In total, Endesa produced 52.4 TWh (terawatt hours) in the mainland in 2022, an increase of 13% year-on-year.

Additionally, Endesa is awaiting authorisation for the definitive closure of the last coal-fired plant on the mainland, As Pontes, which currently has two groups operating alternately. 

With regard to the promotion of renewables, these technologies already total 9,300 MW (11% more than at the end of 2021), out of a total generating capacity of 17,700 MW in the Iberian Peninsula. The portfolio of renewable projects comes to about 90,000 MW. A third of the 4,400 MW of new clean power that will be incorporated in the 2023-2025 period is already under construction. 

The deadline of 25 January set by the Spanish Government to obtain an environmental impact statement for renewable projects under promotion has been met without significant effects on the project portfolio of Enel Green Power España, Endesa's renewable subsidiary.

In addition to the above, there were two further great success in 2022 with regard to the fair transition strategy in traditional production areas with coal-fired plants to make the switch to renewable energies, storage, green hydrogen production and creation of shared value with institutions and organisations in the areas surrounding these locations. After winning the Pego (Portugal) fair transition tender in the first half of the year, in November Endesa received confirmation of the award of 1,200MW of access and connection capacity included in the Andorra (Teruel) tender. The project for the area includes the construction of 14 hybridised solar/wind plants with a total capacity of 1,800MW. In other words, Endesa will lead the first two fair transition processes in the Iberian Peninsula, placing it in a leadership position in the transformation of the energy system in Spain and Portugal.

 

Consolidation of growth in electricity customers

In the midst of the challenging situation described above, Endesa consolidated growth in its portfolio of deregulated customers, both domestic and business, a trend that has continued since the end of 2021. The company added 900,000 customers in the deregulated market, an increase of 15% to reach a total of 6.8 million, of which 400,000 are companies (one hundred thousand more than a year earlier). This positive trend has resulted in a 4% increase in the volume of electricity destined for this deregulated portfolio, to reach 78 terawatt hours during the year. The number of customers contracted the regulated tariff reached 3.7 million.

In total, Endesa ended 2022 with 10.5 electricity million customers in Spain and Portugal, 2% more than in the middle of last year. 

With regard to electric mobility, the company maintains the leadership in Spain with a network of 13,900 charging stations, 47% more than the 9,500 at the end of 2021. Also noteworthy is the growth of e-home contracts, which increased by 18% year-on-year, to 2.6 million.

With regard to the sales strategy for in-house generation (nuclear, hydroelectric and renewable) up to two years in advance, Endesa has already placed 98% of the generation expected in 2023, and 85% of what it expects to generate in 2024. In all cases, at a price of €65/MWh, in line with the government regulation in this regard which establishes a limit of €67/MWh.

With regard to gas, Endesa decreased the volumes used by 3%, to 99 TWh. The reduction in consumption by customers, mainly businesses (from 77 to 64 TWh) was almost offset by a higher demand for thermal power plants (from 25 to 36 TWh). Higher gas production, and opportunities identified and exploited in the wholesale market, explain the growth of the business margin to €6/MWh from the abnormally low level of 2021 (€1/MWh). The client portfolio closed at 1.8 million, of which 1.5 million were in the deregulated market.

The magnitude of the distribution business also showed a certain resilience. Distributed energy increased to 132 TWh, an increase of 1%, of which 109 TWh was consumed by its own customers, similar to 2021 thanks to a growth in demand in the islands. The volume of electricity losses and interruption time also continued to register improvements compared to 2021. In this regard, Endesa draws attention to the need to ensure a stable regulatory framework that will enable the high volume of capital necessary to achieve the net-zero emissions targets.

José Bogas, the Chief Executive Officer, said the following with regard to the company's performance in 2022: 

"We were successful in overcoming one of the most challenging years in recent times, both with regard to the market context and regulatory interventions. We are retaining and attracting new customers thanks to products and services that enable us to protect them from price peaks. To the 8% increase in investment in 2022, the year in which we reached our highest historical level, we will add an increase of 20% already announced for 2023. This shows our firm commitment to the energy transition in the Iberian Peninsula that will boost energy independence and lower electricity prices. All this enables us to offer a substantial improvement in our shareholder remuneration, 10% more than in 2021, which will bring the dividend yield to about 9%".

In the corporate sphere, today we also learned that Endesa's board of directors has proposed the renewal of the four directors whose mandate expires this year, which needs to be approved at the ordinary shareholders' meeting to be held on a date yet to be announced.

As for the developments in the company's net debt, it has reached €10,900 million, which represents an increase of €2,100 million compared to the end of 2021. The increase explained by the volume of investments and the payment of dividends for 2021 (totalling €1,532 million), partially offset by the free cash flow of €1,672 million achieved during the year.

It should be noted that this free cash flow figure was especially affected by regulatory items pending payment by the Administration, which increased from €800 million at the end of 2021 to €2,300 million at the end of last year.

The leverage ratio (net debt to EBITDA in comparable terms) stands at 2 times, from 2.1 times at the end of 2021. 

Marco Palermo, Endesa's Chief Economic-Financial Officer, said the following to investors: 

"A commitment to sustainable financial instruments enabled us to close 2022 with 64% of our gross debt linked to sustainability criteria, an improvement on the initial target and approaching the 87% we set as a goal for 2025. The volume of transactions closed last year that respect these ESG criteria amounted to €14,000 million. The next step for 2024 is to include a specific scope 1 greenhouse emissions reduction target in some of our transactions." 

Financial indicators

Millions of euros FY 2022 FY2021* Variación (%)
REVENUE 32.896 20.899 57,4%
OPERATING EXPENSES 27.331 16.621 64,4%
EBITDA 5.565(1) 4.278 30,1%
EBIT 3.687 1.956 88,5%
NET INCOME
2.541 1.435 77,1%
ORDINARY NET PROFIT 2.398(3) 1.902(2) 26,1%
OPERATING CASH FLOW 1.672 2.621 -36,2%
NET FINANCIAL DEBT 10.869 8.806 23,4%
GROSS INVESTMENTS
2.389 (0,8)% (0,8)%

(1) Operating expenses include a 167% increase in power purchases, mainly resulting from the increase in prices in the wholesale electricity market

(2) The first half of 2022 includes the extraordinary positive effect of the partial sale of the electric mobility business.

(3) Data at 31 Dec 2021

Operational indicators

FY 2022 FY 2021 Change (%)
Net Installed Capacity (MW) (1)
22.044 21.140 4,3%

Renewable capacity

9.196 8.312 10,6%

Renewable capacity % share

42% 39%
Output (MW) 64.716 57.592 12,4%

Renewable production

12.794 -5,9% -5,9%

Renewable production quota %

22,2%
Net electricity sales (GWh)
79.003 79.458 -0,6%

Regulated market

8.210 10.705 -23,31%

Free market

70.793 68.753 3%
Numer electricity customers (thousands)
10.545 10.251 2,9%

Regulated market

3.716 4.373 -15,0%

Free market

6.829 5.878 16,2%
Electricity Distributed (GWh)
131.813 131.090 0,6%
Gas sales (GWh)(2)
63.756 76.991 -17,2%
Number of gas customers(thousands)
1.779 1.684 6,8%

Regulated market

313 232 34,9%

Free market

1.486 1.452 2,3%
Public and private recharging stations
13.898 9.482 46,6%

(1) Net sales to end client

(2) Excluding own generation consumption

About Endesa

Endesa is the largest electricity company in Spain and the second largest in Portugal. The company is also the second largest gas operator in the Spanish market. Endesa operates an end-to-end generation, distribution and marketing business. Through Endesa X it also offers value-added services aimed at the electrification of energy usage in homes, companies, industries and Public Administrations. In addition, it has created a new line of business. Endesa X Way is fully dedicated to electric mobility. Endesa is firmly committed to the United Nations SDGs and strongly supports the development of renewable energies through Enel Green Power España, the digitalisation of grids through e-distribución, and corporate social responsibility (CSR). The Endesa Foundation is also active in CSR-related matters. Our workforce numbers around 9,260 employees. Endesa is a division of Enel, the largest electricity group in Europe.

 

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