Release Date: December 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Grenergy Renovables SA (XMAD:GRE, Financial) is undergoing a significant transformation, focusing on hybrid PV and storage projects, which is expected to enhance value creation.
- The company has signed a strategic agreement with CATL, a world leader in battery storage, ensuring a reliable supply for future projects.
- Grenergy's CapEx has increased significantly, indicating strong investment in growth, with a focus on projects like Oasis Atacama.
- The company has achieved 100% of its ESG targets for the third quarter, maintaining a top ranking in sustainability ratings.
- Grenergy is expanding its geographical diversification, with significant growth expected in Europe and the US, enhancing its global footprint.
Negative Points
- Revenues declined by 21% year-on-year, primarily due to the disposal of assets and lower energy prices.
- EBITDA decreased significantly from the previous year, impacted by the absence of large asset disposals like those in 2023.
- Net debt has increased to EUR 975 million, with a high leverage ratio, though the company expects to reduce this through asset rotations.
- The company faces challenges in the US market due to regulatory uncertainties and potential trade issues affecting solar and battery imports.
- Merchant prices have been low, particularly in Spain and Chile, affecting revenue from energy sales.
Q & A Highlights
Q: Can you detail which assets are you negotiating for potential deals before year-end, and what is your central scenario for Oasis Atacama?
A: We have several options for asset rotation, including opportunities in Colombia, Argentina, and Mexico. For Oasis Atacama, we are considering selling a minority stake or even a full phase, given the strong market interest. We expect to have more news in the coming weeks. Regarding governance, it affects a small portion of our debt, and we are confident in managing it effectively.
Q: How confident are you in deploying batteries in Spain given grid congestion, and what are your views on Germany as a market for batteries?
A: Hybridization can address grid congestion, and we see Spain as a promising market for hybrid plants. We are optimistic about Germany, viewing it as a key market for standalone battery projects. We are building a strong portfolio in Germany, UK, Italy, and Spain, and expect significant opportunities there.
Q: What are your expectations for CapEx in Q4 and into 2025, and are your longer-term EBITDA targets still in place?
A: We are on track with our CapEx guidance of €2.6 billion from 2023 to 2026, with significant execution expected in Q4. We remain committed to our EBITDA targets and will update our guidance in early 2025, potentially reflecting higher returns due to CapEx reductions.
Q: Is the consensus EBITDA target of over €100 million for 2024 realistic given your nine-month results?
A: The consensus is reasonable, considering our energy EBITDA and potential M&A deals before year-end. The final figure will depend on the completion of these transactions.
Q: How do you view the US market post-election, and will it affect your development strategy there?
A: The US remains a key market for us, with significant opportunities in both regulated and non-regulated areas. We are monitoring potential changes in the IRA and trade policies, particularly regarding battery imports, but remain optimistic about the market's growth.
Q: Are you on track with your asset rotation strategy, and does it include Oasis Atacama?
A: We are on track with our asset rotation targets, having achieved €350 million out of the €600 million expected over four years. Oasis Atacama was not initially included, but we are open to exploring opportunities there as well.
Q: What is the status of Oasis Atacama Phase 1, and when do you expect it to be fully operational?
A: Phase 1 is on track for mechanical completion by year-end, with revenue generation expected in Q1 2025 and full COD in Q2. We are executing phases efficiently and foresee no delays.
Q: Could PMGD projects in Chile be part of your asset rotation strategy?
A: Yes, PMGD projects in Chile are candidates for rotation. We have a remaining portfolio of approximately 200 MW, which presents attractive opportunities for asset rotation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
