Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- EVN AG (WBO:EVN, Financial) reported a significant increase in renewable energy generation, with the share of renewable generation rising from 76% to 84% during the reporting period.
- The company is on track with its renewable generation capacity expansion, having completed the repowering of an eight-megawatt wind park and progressing with a new 22-megawatt wind park in Paasdorf.
- Financial results improved with a solid group net result of EUR479.6 million in the first nine months of the financial year.
- The company's financial flexibility remains solid, with contractually committed untapped credit limits amounting to EUR835 million.
- EVN AG (WBO:EVN) expects the result to be at the upper part of the previously communicated range of EUR420 million to EUR460 million, indicating a positive outlook for the financial year.
Negative Points
- Group revenue decreased by 13.9% year-on-year to EUR2.5 billion, primarily due to a decline in wholesale prices and reduced revenue from electricity generation in Southeast Europe.
- The energy supply business is still under pressure, with EVN AG (WBO:EVN) reporting a loss partly due to an impairment of natural gas inventories.
- Personal expenses increased by 16.8% compared to the prior year, reflecting a necessary increase in workforce and adjustments according to collective bargaining agreements.
- The network segment faced challenges with lower distribution volumes due to mild weather conditions and changing consumer behavior towards energy savings.
- The Southeast Europe segment experienced a decrease in revenue to EUR1 billion due to the downward trend in electricity prices and lower network tariffs in Bulgaria.
Q & A Highlights
Q: What is the expected investment level for the full year, and what were the main drivers behind the positive earnings contribution from EVN KG in Q3?
A: Stefan Szyszkowitz, CEO, stated that the expected investment level for the full year is around EUR900 million, which will also be the level for the upcoming years. The positive earnings contribution from EVN KG in Q3 was due to the seasonal nature of energy sales, which peak after the third quarter. However, a loss of around EUR100 million is expected for EVN KG by the end of the year, influenced by the value of derivatives and other factors.
Q: Can you provide details on the impact of derivatives valuation on EVN KG's results and the outlook for gas prices?
A: Stefan Szyszkowitz, CEO, explained that the derivatives valuation impact was around EUR100 million, split between operational losses and derivatives. Gas prices have increased slightly, which may reduce the impairment of gas stored for security of supply, but significant changes are not expected.
Q: What is the outlook for the energy segment and other segments?
A: Stefan Szyszkowitz, CEO, noted that the energy segment is facing challenges with lower prices and volumes. The grid network segment benefits from positive tariffs but lower volumes. The Southeast Europe segment will have an extraordinary result this year due to favorable regulatory conditions in Bulgaria, which will be adjusted next year. The environmental segment is impacted by an impairment from an arbitration decision.
Q: Why is the guidance range maintained despite de-risking in the first nine months?
A: Stefan Szyszkowitz, CEO, mentioned that the fourth quarter is traditionally the weakest due to lower sales in the summer, which justifies maintaining the current guidance range.
Q: What is the order backlog for the energy segment?
A: The order backlog details were not explicitly provided in the call, but the CEO emphasized ongoing investments in network infrastructure, renewable generation, and drinking water supplies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
