Endesa’s Profit Plunges as LNG Ruling Nips Dividend Outlook in Spain

Spain's Endesa Faces Profit and Dividend Cut Following LNG Ruling

Endesa Unplugged: Power Utility Cuts Profit and Dividend Outlook, Power Upgrades to Take Center Stage

Madrid, Nov 23 (ANBLE) – Move over rock stars, because Spanish power utility Endesa (ELE.MC) is stealing the show with its latest announcement. Brace yourselves, ladies and gentlemen, as we witness a power play that will make your hair stand on end!

Endesa, well-known for illuminating millions of homes and businesses, has just revealed that it will be investing a staggering 8.9 billion euros ($9.71 billion) through 2026. Yes, you read that correctly – billion with a “B”. And here’s the twist: this mega-investment puts the spotlight on grids. That’s right, folks, grids – the unsung heroes of the electricity world.

But first, let’s address the elephant in the room. Remember that time Endesa had a little run-in over a long-term liquefied natural gas (LNG) supply contract with Qatar? Well, that tussle resulted in a painful bill of $570 million following an arbitration hearing. Ouch. So be prepared for a slight tweak in Endesa’s profit and dividend projections.

According to their new and improved guidance, Endesa’s adjusted profit, which excludes one-off items and has a direct impact on dividend calculations, is now expected to be 1.1 billion euros this year. Looking ahead, they anticipate a range of 1.6 billion to 1.7 billion euros in 2024, which is slightly lower than their previous estimate. But fear not, my friends! Endesa has big aspirations for 2026, aiming for a colossal 2.2 billion to 2.3 billion euros.

Now, let’s talk dividends, shall we? Endesa has introduced a dividend floor of 1 euro per share (you’re welcome, dividend lovers). And let’s not forget their 70% payout policy. Mark your calendars, folks, because 2024 is shaping up to deliver a dividend of 1.1 euro per share, just a tad under their previous forecast.

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Now, let’s shift our gaze to the market. As news of these updates circulated, Endesa’s shares took a minor tumble, down 2.3% at 8:30 AM GMT. In comparison, the wider index remained largely unchanged. But fret not, investors – it’s all part of the electrifying journey.

Speaking of journeys, let’s dive into the investment plan itself. Endesa has slightly upped the ante from their previous plan, increasing their planned investments to 8.9 billion euros from 8.6 billion euros. Where will these funds flow? Well, my friends, the lion’s share, around 200 million euros, will be channeled into grids. Ah, grids – the unsung heroes I mentioned earlier. They may not be as glamorous as renewables, but they offer predictably stable returns.

In total, 2.8 billion euros will be dedicated to strengthening the grid business. But fear not, renewable enthusiasts, as Endesa will maintain its commitment to renewables, with stable investments of 4.3 billion euros. So, it’s a win-win for both the grid geeks and the renewable romantics.

Hold on tight, because we’re not done. Endesa’s parent company, Enel (ENEI.MI), recently unveiled its own master plan. And guess what? It aligns perfectly with Endesa’s vision. Both companies are putting a greater focus on power grids, unleashing the full potential of electricity infrastructure. Looks like grids are the new rock stars, my friends.

The shift towards grid dominance seems to be a trend among energy giants in Europe. With interest rates soaring and debt costs on the rise, some companies are taking a more cautious approach when it comes to renewable energy projects. Take it from the executive chairman of Iberdrola (IBE.MC), who recently announced that their company will be more selective in its investments. Even BP (BP.L) and Naturgy (NTGY.MC) have scaled back their plans for renewables this year. It seems like everyone’s catching grid fever!

But wait, there’s more! Endesa has some additional tricks up its sleeve. This strategic update not only fuels their investment plans but also expects to generate roughly 3 billion euros from partnerships and asset sales. That’s right – they’re turning assets into cash and cutting their net debt by a shocking 20% over the next three years. Now, that’s what I call a clever power move!

So, my electrifying readers, with all this talk of grids, investments, and dividends, I have no doubt you’re itching to jump into the conversation. What’s your take on this powerful performance by Endesa? Do you see grids as the unsung heroes of the electricity world? Or are you a die-hard supporter of renewables? Share your thoughts below and let’s ignite a spark of discussion!

($1 = 0.9168 euros)

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