- Endesa has recorded ordinary net profit of Euro 594 million between January and March 2023, 76% up on the same period in 2022, thanks to the progressive normalisation of energy market conditions resulting from the fall in gas prices. This contrasts with the high prices recorded in the first quarter of last year.
- Gross operating profit (EBITDA) increased by 60% to Euro 1,462 million, thanks to the strong performance of the conventional and renewable generation business, and the return of supply activity to normal.
- Renewable energy production (hydroelectric, solar and wind) grew by 32% compared to the first quarter of 2022, which, when combined with nuclear generation, increases the volume of electricity produced without greenhouse gas emissions on the Iberian Peninsula to 83%.
- Over the past twelve months, Endesa has added around 900 megawatts of new renewable capacity, coming to 9,300 megawatts by the end of March, up by 10%. The entirety of the 1,100 MW of solar and wind power expected to be connected in 2023 are now under construction.
- The company's strong commercial performance continues, with the addition of 480,000 electricity customers in the deregulated market compared to March 2022, coming to a total of 6.8 million. As a result, sales to the domestic segment increased by 13% to 6.2 terawatt-hours (TWh).
- The network of charging stations for electric vehicles totalled 15,350 stations in March, a year-on-year increase of 51%.
- The increase in renewable energy production covers 77% of fixed-price sales to customers, 14 TWh in the quarter, with emission-free electricity.
- The investment made between January to March amounts to Euro 409 million, up by 2%.
- Endesa has already sold 100% of its own production (hydroelectric, nuclear and renewable market) for 2023 and 87% of its own production for 2024 at a price of Euro 65 megawatt-hour, complying with current regulations.
- The strong management of the gas contract portfolio has boosted this business' unit margin to Euro 6/MWh while the customer portfolio has grown to 1.8 million, 6% up on the end of March 2022.
- Stability in the distribution business, with a reduction in average downtime by 12% year-on-year to 12.9 minutes, and a slight increase in losses caused by illegal connections to the electricity grid.
According to the company’s website press release on May 9, 2023, Endesa has kicked off 2023 positively thanks to the progressive stabilisation of the energy market in Iberia, mainly on account of the decrease in gas prices. The strengths and resilience of the vertically integrated business model, together with solid growth in renewable energy production and the combined cycle production margin, as well as the positive performance of commercial operations, complete the key pillars of the Euro 76 million growth in net ordinary income, to Euro 594 million.
The base of this growth is the strong performance of gross operating profit (EBITDA*) of 60% to Euro 1,462 million. The strong performance of the conventional and renewable generation businesses compared to the start of 2022 and the normalisation of the electricity and gas marketing business have also made it possible to cushion the impact of the 1.2% tax on Endesa's revenues. This tax comes to Euro 208 million for Endesa, bringing the effective tax rate in the quarter to 31%.
The return of market conditions to normal, with respect to the volatility in gas prices seen during the first quarter of 2022, has resulted in a 58% decrease in the average price of the Iberian wholesale market, to Euro 96/MWh. The average quarterly price of the Spanish wholesale gas index (PVB), meanwhile, dropped by 47% to Euro 52/MWh. It was thus adjusted to the Dutch TTF index, which saw its average price decrease by 46%, to Euro 53/MWh.
Mainland production between January to March grew by 4% year-on-year, to 13 TW/h, thanks to the 32% increase in renewable generation. The increase in solar, wind and hydroelectric offset the 8% and 4% reduction in thermal and nuclear production, respectively. A total of 83% of Endesa's mainland production in Spain and Portugal was emission-free in the first quarter and 71% of its generation mix is emissions free (compared to 69% a year ago).
Furthermore, all the new renewable plants that Endesa plans on connecting during the year, amounting to 1,100 MW, are under construction. At the end of March, wind, solar and hydroelectric power totalled 9,300 MW, 10% up on the same month in 2022.
Investments during the quarter grew by 2%, to Euro 409 million, with renewables and the distribution grid as the main target areas.
Return of electricity and gas supply to normal
The consolidation of the customer portfolio for the deregulated market, in particular domestic customers, has made it possible to improve the performance of the marketing business. In electricity, Endesa ended the quarter with 6.8 million deregulated electricity customers, up by 7% thanks to the positive performance of the domestic segment. Sales to retail customers grew to 6.2 TWh, from the total of 19.5 TWh of sales to customers in the company's deregulated market.
Endesa now covers 77% of the volume of sales to deregulated customers at a fixed price with emission-free generation sources (renewable and nuclear). The target set in the 2023-2025 strategic plan presented last November is to reach 95% by the end of the period.
Endesa's own electricity production is now 100% sold for 2023 and 87% for 2024, in both cases at Euro 65/MWh in compliance with Spanish regulations.
In terms of electric mobility, the company maintains its leadership in Spain in the network of charging stations, with 15,350 at the end of March, up by 51% year-on-year.
As for gas, volumes remain stable at 27 TWh compared to 2022, although the improvement in market conditions has allowed the unit margin to recover compared to the abnormally low unit margin seen the previous year: it stood at Euro 6/MWh compared to Euro 1/MWh in the first quarter of 2022. The customer base increased by 6% year-on-year to 1.8 million.
As regards the distribution business, the electricity that circulated through the company's grid remained the same: 33 TWh. The average downtime continues to be chopped, now to 12.9 minutes, thus improving service quality. The company continues to stress that medium and low voltage network infrastructures are a key asset in facilitating the transition towards clean electrification. It should also be noted that the increase in electricity fraud through illegal connections has led to a slight increase in total losses.
At the start of the year, José Bogas, CEO of Endesa, said the following:
"We have started 2023 by taking advantage of all the opportunities that a vertically integrated company business model, together with a successful management of multiple variables, provides us with. Despite these solid results, we forecast that the conditions of our conventional generation and gas businesses will return to normal over the course of the year, meaning we must not let our guard down in the coming months. Furthermore, 100% of the new renewable power to be launched during the year is now in execution. This confirms our forecasts for the whole of 2023. I would also like to place an emphasis on the recent approval, at our General Shareholders' Meeting, of the distribution of a dividend of Euro 1.585 per share, which represents a dividend yield of 9%."
Financial performance
Beyond the main figures on the income statement, Endesa has reported solid financial metrics for the January-March period. Specifically, the net financial debt/EBITDA leverage ratio remains at x2, the same as at year-end 2022. Gross debt dropped by 9% thanks to the return of gas prices to normal and the consequent reduction in demand for collateral. The average cost of liabilities stood at 2.8% in a context of rising interest rates.
Marco Palermo, Endesa's Chief Economic-Financial Officer, said the following to investors:
"Overall, Endesa closed financial operations worth Euro 1,250 million in the period and has signed new financial facilities with its parent company Enel for Euro 3 billion at last month's GSM. Furthermore, the promissory note programme is to be renewed for a maximum value of Euro 5 billion. The company's liquidity position stands at Euro 10.8 billion at the end of March."
Financial indicators
* Data as at 31st of December 2022.
Operating indicators
(1) Net sales to end customers.
(2) No own generation consumption.
About Endesa
Endesa is a leading 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 electricity 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. It is also the leading operator of charging points in Spain through Endesa X Way, a business line dedicated entirely 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-distribution 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.
