Release Date: July 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Naturgy Energy Group SA (GASNF, Financial) achieved strong financial results with an EBITDA of EUR2.8 billion and net income of EUR1 billion, matching historical record highs.
- Net debt declined to EUR11.8 billion from EUR12.1 billion, reinforcing the company's balance sheet strength.
- The company secured a definitive price agreement with Sonatrach for 2024, ensuring competitive procurement prices.
- Higher installed renewable capacity and a reduction in OpEx despite increased activity and a larger asset base.
- Naturgy Energy Group SA (GASNF) demonstrated efficient operational and risk management, contributing to business resilience in a competitive scenario.
Negative Points
- Energy management activities, including gas and LNG procurement, experienced significant margin contraction compared to previous years.
- Lower energy prices in the first half of 2024, particularly in gas and Spanish electricity, created a more challenging energy scenario.
- FX movements had a negative impact of EUR108 million, with depreciation most acute in Argentina and to a lesser extent in Chile.
- Cost of net financial debt increased slightly to 4% due to a higher average cost of gross financial debt.
- Gas networks in Spain experienced a remuneration adjustment and lower demand in the residential segment due to mild temperatures.
Q & A Highlights
Q: Could we update any developments on Project Gemini and whether or not management is still considering its implementation?
A: The strategic plan will be updated by year-end. Currently, there are no positive conditions for executing Project Gemini. The future plan will be disclosed when ready. - Francisco Reynes Massanet, Executive Chairman of the Board, CEO
Q: Is the recent shareholder discussions and potential decor discussions going to have an influence on the preparation of the new strategic plan?
A: The company continues to work independently of shareholder discussions. Shareholders will be involved in the strategic plan through their Board representatives. - Francisco Reynes Massanet, Executive Chairman of the Board, CEO
Q: Does the guidance for year-end include the renegotiation of the gas contract with Sonatrach? Are there any expected one-offs for the second half of the year? Will there be an increase in dividend distribution?
A: The guidance includes the Sonatrach agreement. The dividend policy has a floor, but changes are up to the shareholders and the Board. - Francisco Reynes Massanet, Executive Chairman of the Board, CEO
A: The first half figures reflect the Sonatrach price agreement. LNG prices are expected to align with forward curves, and 100% of LNG volumes are sold or hedged for 2024. - Rita Ruiz de Alda, Head of Control
Q: Can we detail the impact of the judicial ruling on the social subsidies collection obtained during the first half of the year?
A: The ruling amounts to around EUR16 million, similar to the previous year. - Manuel Garcia Cobaleda, Secretary General, Non-Member Secretary of the Board of Directors
Q: What is the amount of tax equity instruments in the balance sheet as of 1H, and do we expect this amount to increase?
A: The first half of 2024 includes EUR120 million related to the first solar plant in the US. No further recognition is expected until 2025. - Rita Ruiz de Alda, Head of Control
A: As we continue investing in the US, the tax equity portion is expected to increase. - Steven Fernandez, Director - Financial Markets
Q: Can we detail any progress in discussions with the regulator for electricity networks or gas distribution in Spain?
A: The consultation process for electricity networks is ongoing, with expected developments in financial remuneration, investment caps, and unitary costs reflecting inflation. - Rita Ruiz de Alda, Head of Control
Q: What is the reason behind the reduction in gross margins for gas distribution networks in Spain?
A: The reduction is due to remuneration adjustments in the regulatory framework and lower residential demand affected by mild temperatures. - Rita Ruiz de Alda, Head of Control
Q: What are the main drivers for the strong performance in LatAm distribution networks?
A: Drivers include tariff updates in Argentina and Panama, better performance in Chile gas, and the positive impact from the TGN litigation. - Rita Ruiz de Alda, Head of Control
Q: Can we comment on the rationale for continuing to install solar PV assets in Spain despite recent trends around cannibalization?
A: Naturgy maintains a strict capital discipline and a selective growth approach. The diversified generation mix and balanced position between marginal generation and fixed price clients mitigate the impact of cannibalization. - Rita Ruiz de Alda, Head of Control
Q: Can we expand on the progress in the biomethane space in Spain and the outlook going forward?
A: Biomethane is a key part of the decarbonization strategy. The commissioning of new plants is ongoing, and it will be a significant growth factor in the 2025-2030 strategic plan. - Francisco Reynes Massanet, Executive Chairman of the Board, CEO
Q: Can we comment on the supply margin evolution, its drivers, and sustainability?
A: Electricity margins are supported by fixed price contracts and higher marginal production. Gas margins are sustained by a diversified supply portfolio and competitive contracts. The integrated model helps mitigate price fluctuations. - Rita Ruiz de Alda, Head of Control
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
