Enagas SA (ENGGF) Q2 2024 Earnings Call Highlights: Strategic Divestments and Green Hydrogen Focus

GuruFocus News
4 min read

In This Article:

  • EBITDA: EUR385.7 million, up 3.7% year-on-year.

  • Recurring After-Tax Profit: EUR148 million, excluding the impact of the 2024 asset rotation.

  • Net Profit: Increased by 10% without considering the impact of the Morelos gas pipeline sale last year.

  • After-Tax Profit Including Tallgrass Sale: Minus EUR210.8 million, incorporating an expected capital loss of approximately EUR360 million.

  • Subsidiaries Contribution to EBITDA: EUR102.1 million, a 14.3% increase.

  • Debt Reduction: Year-end debt expected to be reduced to roughly EUR2.4 billion.

  • Dividend for 2024: EUR1 per share.

  • Dividend for 2023: EUR1.74 per share, fully paid out in July.

  • Net Debt at Year-End 2024: Expected to be around EUR2.4 billion.

  • EBITDA Forecast for 2024: Between EUR730 million and EUR740 million.

  • Cost of Debt: Reduced from 2.8% to 2.6% in 2024.

  • Industrial Demand Growth: 3.2% increase over the first six months of 2024.

  • Total Demand Change: 7.2% decrease year-on-year.

Release Date: July 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Enagas SA (ENGGF) has successfully divested its 30.2% stake in Tallgrass Energy for $1.1 billion, strengthening its balance sheet and reducing debt by approximately EUR2.4 billion.

  • The company is strategically positioned to invest in green hydrogen infrastructure, with significant progress in major hydrogen projects selected as European Projects of Common Interest.

  • Enagas SA (ENGGF) has maintained a strong financial performance, with EBITDA up 3.7% year-on-year and a 10% increase in net profit excluding asset sales.

  • The company's efficiency plan has effectively controlled operating expenses, keeping them in line with strategic goals.

  • Enagas SA (ENGGF) has received positive recognition from rating agencies, with Fitch upgrading its rating from BBB to BBB+ and Moody's raising its outlook to positive.

Negative Points

  • The sale of the Tallgrass stake resulted in an expected capital loss of approximately EUR360 million, impacting after-tax profit negatively.

  • Total demand for gas in the first half of 2024 decreased by 7.2% year-on-year, primarily due to increased renewable energy contributions and high winter temperatures.

  • The arbitration proceedings in Peru remain unresolved, with uncertainty around the timing and outcome of the award.

  • The company's future dividend sustainability beyond 2026 is contingent on maintaining a payout ratio of around 40%, with potential fluctuations in financial performance.

  • There is uncertainty regarding the approval and content of the 2023-2030 National Energy and Climate Plan, which could impact future investment strategies.

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