Spain's Endesa focuses on grid investments under new three-year plans
In a Tuesday strategy update, Endesa said it would 'increase investments in power network upgrades, primarily, and 'boost shareholder returns in the next three to four years based on increasing earnings. The massive blackout in Spain and Portugal that occurred on April 28, last year, has highlighted the necessity of spending more on the grid. However, utilities are also calling for higher guaranteed returns.
Endesa announced that it would invest 10,6 billion euros (12,5 billion dollars) until 2028. 5.5 billion euro will be used to build and upgrade power networks. This is a 40% increase.
Spending Increases by 10% in Total
Endesa’s new plan calls for a 10% investment increase compared to its previous three-year strategic plan. Endesa announced that it would reduce its investments in renewables by around 20%, to 3 billion euros. This comes a day after Enel's plan was presented.
Endesa announced that it would adopt a more "selective" approach to renewables, and will increase the role of wind and power storage projects.
Dividends will be increased by at least 4% per year, starting from 1.58 euros per share in 2025. Minimum payout is 70% of adjusted profit.
The plan does allow for flexibility to spend an additional 5 billion euros. In an analyst's call, CEO Jose Bogas stated that the money could be "selectively" allocated to several strategic priorities. This includes paying shareholders more and M&A if opportunities arise.
Dividend growth is expected to be in line with the increase in core profits. The earnings?before taxes, depreciation and amortisation? were forecast to be between 6.2 and 6.5 billion euros by?2028. This is up from 5.8?billion euro in 2025. The 2028 guidance from UBS and RBC was above market expectations, according to analysts.
The blue-chip index was down 0.6%, but shares of?Endesa were up 6.7%.
The adjusted net profit is expected to increase to between 2.5 billion and 2.6 billion euro from 2.3 billion?euros in the previous year.
Endesa reported that its adjusted net profit rose 18% last year to 2,35 billion euros, while EBITDA grew 9% to 5,76 billion euros. Both were above the company's target.
It is expected that this year's adjusted net profit will be between 2.3 and 2.4 billion euro, with EBITDA at 5.8 to 6.1 billion euros.
(source: Reuters)
