Endesa profits dip on lower asset sales
Porto, 28 July (Argus) — Spanish utility Endesa, a unit of Italy's Enel, has seen its profits fall in the first half of this year despite a stronger operating performance, because of low asset sales.
The company is planning to shed more assets as it seeks to reduce a net debt burden of over €19bn, equivalent to a gearing ratio of 88.5pc. The gearing ratio was nearly 100pc at the beginning of this year.
Net profit for the first half was down by 6.3pc to €2.12bn from a year earlier, although earnings before interest, taxes, depreciation and amortisation (Ebitda) grew by 3.1pc to €3.85bn.
Endesa's power generation fell by over 12pc to 61.75TWh, although electricity sales were 2.2pc up at 85.77TWh. Revenue from power sales in the core Iberian markets was up by more than 70pc owing to higher sales in the liberalised segment of these markets.
Endesa and other Spanish utilities have been hit by the tariff deficit — the accumulated difference between the cost of buying power, particularly renewables at inflated feed-in tariffs, and the regulated tariff at which power can be sold. The deficit is around €18bn, according to energy regulator CNE, of which Endesa says its share is €1.4bn.
Company chief executive Andrea Brentan noted the government's cancellation of planned regulated tariff increases for power consumers from 1 July, and said that this “goes in the opposite direction of the royal decree 6/2009, which has clearly established a path to reduce the tariff deficit”.
The government plans to allow utilities to recoup some of their losses by securitising the deficit from September this year.
On Spain's plans to support the domestic coal industry by instituting feed-in tariffs for generators that use Spanish hard coal rather than cheaper imports, Brentan said passage of the law is subject to EU approval, and that discussion of the issue at the European level has been postponed to September.
Endesa plans to continue to sell assets, including 80pc of its Spanish gas distribution and transmission network, with binding offers expected by September. The company is also seeking to divest what it regards as non-core assets in Latin America, including Chilean services company Cam and communications group Synapsis.
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