Endesa launches the first quarter report for 2017 with revenues of 7,1% compared to the same period of 2016, growing but also with a clear reduction in margins and a 26% drop in profit for the period. On the Madrid Stock Exchange, the stock fell by 2,9 percent against an Ibex 35 and a Stoxx Europe Utilities slightly above parity.
The press release released by Endesa, controlled by Enel with 70,1% of the capital, specifies that quarterly revenues reached 5,22 billion while Ebitda fell to 702 million (-12,4%) and Ebit to 340 million (-27,4% year on year).
Net financial debt increased from 4,94 billion at the end of 2016 to 5,5 billion as at 31 March 2017. The positive operating cash flows (536 million) were in fact completely absorbed by investments and by the advance payment in January on the 2016 dividend, equal to €0,7/share for a total dividend of €741 million (the balance of €0,633/share will be paid in July).
What led to this sharp drop in earnings in the first quarter? José Bogas, CEO of Endesa, specified that “the drop in net profit took shape in an extremely complex scenario, where there was a sharp peak in electricity demand in the first weeks of the year”. To cope with this, Endesa had to get the more expensive thermoelectric plants back on track given the simultaneous reduction in hydro and wind renewables. "This situation has led to an exceptional increase in wholesale prices which has had a negative impact on the company's purchasing." "The stability of the regulated businesses - he continued - which contained fixed costs and the acquisition of 100% of Enel Green Power España mitigated the extraordinary negative impact which will gradually normalize and which we expect will decrease over the course of the year" . To these factors was added the payment of the interim dividend in January.
Endesa, on an annual basis, accounts for approximately 20-25% of the Ebitda of the Enel group, which presents its first half-year report for 2017 next Friday. The weight of Endesa on a quarterly basis is more difficult to quantify, as it is precisely affected by period variables .
