Release Date: September 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- EBITDA grew by 43% due to asset rotation, indicating strong operational efficiency.
- Significant CapEx deflation in modules and batteries, which could lead to cost savings.
- Acquisition of Repsol and Ibereólica, adding 1 gigawatt of solar capacity and enhancing hybridization potential.
- Strong pipeline growth with nearly 16 gigawatts of solar projects and a substantial increase in hybrid projects.
- Successful project financing for phases of Oasis Atacama, securing USD 345 million, showcasing strong financial management.
Negative Points
- Revenues decreased by 15% year-on-year, raising concerns about top-line growth.
- Net income dropped significantly to EUR 0.5 million from EUR 4 million in the previous year, primarily due to FX differences.
- Net debt increased to EUR 736 million, resulting in a leverage ratio of 6.6 times, which may raise concerns about financial stability.
- Production decreased by 4% due to the disposal of Peruvian wind assets, indicating potential operational challenges.
- Uncertainty around regulatory risks in Chile, particularly concerning PMGDs and capacity payments, which could impact future profitability.
Q & A Highlights
Q: Can you share the returns you expect with the expansion of the new Oasis Atacama project?
A: We expect project IRRs between 11% and 14% for Phases 1 through 4, with the potential for slightly higher returns due to lower CapEx. We believe the new phases will maintain or exceed these returns.
Q: What are your expectations for long-term prices, especially considering potential competition?
A: We anticipate that prices will stabilize in markets with high BESS penetration, like Chile, California, and Australia. However, we have secured PPAs that hedge 75% of our energy sales for the first 15 years, providing significant visibility and stability.
Q: Is there a risk that the Phase 1 COD of Oasis Atacama might slip into 2025?
A: We expect Phase 1 to be operational by the end of December 2024, with the possibility of the COD slipping by a few weeks. We are working to accelerate the COD for Phase 2 to Q2 2025.
Q: Can you provide an update on your EBITDA run rate in the medium term with the new PV portfolio in Chile?
A: While we cannot provide updated guidance now, the new project will significantly increase our EBITDA run rate. We plan to update our guidance in November.
Q: What is the current status of asset sales to finance your investment plan?
A: We are receiving strong interest in our assets, including unsolicited approaches for our portfolio in Colombia. We expect to announce asset sales before the end of the year.
Q: What is your target net debt level, considering the recent updates?
A: Our target for corporate covenant leverage is 3.5 times. Currently, we are at 2.9 times. M&A transactions will help reduce leverage quickly.
Q: Can you elaborate on the regulatory risks in Chile?
A: The proposed law affects only PMGDs and has no impact on capacity payments. We believe the impact on Grenergy will be limited, and the law may not pass due to the government's lack of majority in Congress.
Q: How are you managing the lower CapEx costs for storage and solar across the Oasis Atacama project?
A: We hedge our CapEx costs only when we have secured PPAs. We have fully hedged Phases 1 to 3 and are close to hedging Phase 4. We are working with major suppliers like BYD and CATL.
Q: What is the appetite for asset sales in the current market?
A: The appetite remains strong, with interest in our assets in Colombia and Spain. Lower interest rates are beneficial for our industry, and we expect to rotate some assets faster.
Q: Can you provide the split of the EUR128 million paid for the assets in Chile?
A: There is no specific split. The deal includes an operational project with an interconnection line of 1 gigawatt, ready to build and easily expandable.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
