Revenue: EUR3 billion, a decline of 14% due to lower power prices. EBITDA: EUR1,123 million, a decrease of 13%. Net Profit: EUR357 million, down 32%. Net Debt: EUR4.1 billion, expected to be closer to EUR3.5 billion post-Endesa transaction. New Capacity Additions: 2 gigawatts added in 2024. Asset Rotation Proceeds: EUR1.3 billion achieved, targeting EUR3 billion for 2024-2025. EBITDA from Operations: EUR1.05 billion. EBITDA from Asset Rotation: EUR73 million. Generation Revenues: EUR1.6 billion, down 12%. Average Captured Price: EUR68.7 per megawatt hour, a decline of 20%. Consolidated Production: 23.8 terawatt hours, an increase of 11%. Investment Cash Flow: EUR1.2 billion net of proceeds from asset rotation. Dividend and Buyback Program: EUR0.4 billion distributed. Investment Grade Rating: Maintained at BBB-minus by Fitch and BBB-middle by DBRS.

Warning! GuruFocus has detected 6 Warning Signs with STU:5BP.

Release Date: February 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Corporacion Acciona Energias Renovables SA (STU:5BP) achieved a record EUR2.5 billion in revenue for 2024, with significant contributions from the infrastructure segment and Nordex. The company added 2 gigawatts of new capacity in 2024, surpassing its target of 1.7 gigawatts, marking a peak in its growth cycle. The energy asset rotation strategy was successful, generating EUR1.3 billion in proceeds at attractive valuations. Despite challenging market conditions in Spain, the company maintained its credit rating and avoided tax overruns or write-offs. Nordex showed a remarkable recovery with a 20% growth in its order book and improved profit margins, contributing positively to the company's overall performance.

Negative Points

The company faced a challenging market environment in Spain, which led to a revision of its EBITDA expectations. There were historically low prices and curtailments in the renewable energy market, particularly at the beginning of the year. The company's net debt stood at EUR4.1 billion, indicating a high level of leverage. The average captured price for electricity declined by 20% to EUR68.7 per megawatt hour, impacting generation revenues. The company had to moderate its CapEx for 2024-2025 by EUR500 million to reduce balance sheet pressure.

Q & A Highlights

Q: What is the company's stance on minority buyouts and equity swaps given the low trading levels of ACCIONA Energia? A: Jose Manuel Entrecanales Domecq, Executive Chairman of the Board, CEO, stated that while the current trading levels are disappointing, the company believes in its solid future and strategic consolidation. They are keeping options open, including the possibility of buying back their own stock due to its undervaluation. However, no significant changes are planned in the short run.

Story Continues

Q: What is the business outlook for ACCIONA Energia in the US market, especially concerning risks on the incentive and procurement sides? A: Rafael Alcala, CEO, noted that the US market represents 15-20% of their total activity. Despite current political rhetoric, demand is growing due to increased consumption from data centers. The company is constructing new battery facilities in Texas and has secured tax credits, seeing no special risks at present.

Q: Why not focus efforts on stronger geographies and exit markets like India and Southeast Asia? A: Jose Manuel Entrecanales Domecq explained that the company has a strong presence and success in these regions. They are being selective with investments, considering regulatory stability and expected returns. The strategy includes balancing the portfolio by reducing activity in saturated markets and focusing on high-demand regions with low renewables penetration.

Q: Can you provide details on the asset rotation strategy and its impact on EBITDA? A: Jose Entrecanales Carrion, CFO, stated that while specific transaction details are limited, they expect to announce some deals in the first half of the year. The impact on EBITDA will depend on timing and structure, with a rule of thumb being EUR1 million invested generally following industry standards.

Q: What are the main markets for adding 1.2 to 1.5 gigawatts of new capacity annually? A: Jose Manuel Entrecanales Domecq highlighted markets like Australia, the US, Canada, Latin America, Europe, India, South Africa, and Southeast Asia as key areas for growth. These regions offer significant potential due to low renewables penetration and strong demand.

Q: Why does the company need to continue rotating assets from 2026 onwards? A: Jose Manuel Entrecanales Domecq explained that asset rotation is necessary to maintain a healthy balance sheet and investment grade rating while taking advantage of new investment opportunities. The strategy allows for flexibility in adjusting rotation levels based on market conditions.

Q: Can you explain the gap between capital gains initially announced in hydro sales and what is expected to be booked in 2025? A: Jose Entrecanales Carrion clarified that the initial estimate included reversals of past impairments. The difference is due to closing price adjustments, tax, cash extracted during the interim period, and exceptional hydro performance increasing book value.

Q: What is the outlook for electricity prices in Spain? A: Jose Manuel Entrecanales Domecq expects prices to remain at EUR70 to EUR75 per megawatt in 2025, dropping to EUR55 to EUR60 in subsequent years. Gas prices are expected to remain at EUR40, dropping to EUR30 later, though geopolitical risks could affect these projections.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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