Enagas SA (ENGGF) Q3 2024 Earnings Call Highlights: Strategic Progress Amidst Regulatory Uncertainty

GuruFocus News
4 min read

In This Article:

  • Net Debt: Reduced to EUR 2.4 billion as of September 30, 2024.

  • After-Tax Profit (excluding asset rotation): EUR 233.5 million, up 7.8% year on year.

  • After-Tax Profit (including asset rotation): Negative EUR 130.2 million.

  • EBITDA: EUR 572.8 million, slightly higher than the same period in 2023.

  • Subsidiaries Contribution to EBITDA: EUR 142.8 million.

  • Cost of Gross Debt: Reduced from 2.8% at the start of the year to 2.7% as of September 30, 2024, with an expectation to decrease to 2.6% by year-end.

  • Fixed Rate Debt: 95% of gross debt at a fixed rate.

  • Industrial Demand Increase: 3.1% in the first nine months of 2024.

  • Cogeneration Demand Increase: 13% over previous months.

  • Year-End After-Tax Profit Target: Expected to be above EUR 218 million, excluding asset rotation impact.

  • Year-End EBITDA Target: Expected to be in the upper range of EUR 730 million to EUR 740 million.

  • Shareholder Remuneration: EUR 1 per share in 2024.

Release Date: October 22, 2024

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

Positive Points

  • Enagas SA (ENGGF) has successfully reduced its net debt to EUR 2.4 billion following the divestment of its stake in Tallgrass Energy.

  • The company has maintained a strong liquidity position and expects to close the year with net debt at approximately EUR 2.4 billion.

  • Enagas SA (ENGGF) has received credit rating upgrades from Standard & Poor's, Fitch, and Moody's, reflecting an improved risk profile.

  • The company is making significant progress in the development of green hydrogen infrastructure in Europe, with Spain positioned as a leading hub.

  • Enagas SA (ENGGF) has exceeded its core after-tax profit target for the first nine months of 2024, reaching EUR 233.5 million, up 7.8% year on year.

Negative Points

  • The company's after-tax profit, including the impact of asset rotation, was negative EUR 130.2 million.

  • There is uncertainty regarding the regulatory framework and remuneration rates for the upcoming period, which could impact future financial performance.

  • The GSP arbitration award in Peru has been delayed, creating uncertainty around its financial implications.

  • Enagas SA (ENGGF) faces potential challenges from the cancellation or suspension of hydrogen projects by other players, which could affect strategic ambitions.

  • The company anticipates a lower contribution from its subsidiaries in the fourth quarter, impacting overall financial performance.

Q & A Highlights

Q: Could you explain why the business plan update has been pushed back to the first quarter of 2025 and what visibility you hope to have by then? A: Arturo Gonzalo Aizpiri, CEO, explained that the delay is due to the need for more visibility on key parameters related to the regulatory framework and upcoming remuneration period. The CNMC's consultation on revising the financial remuneration rate is expected to provide significant insights. Additionally, institutional changes in the EU and Spain, including new leadership, are factors. The company also awaits the GSP arbitration award, which is crucial for the strategic update.

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