The CEO of Endesa, José Bogas, gave one of lime and another of sand to the Spanish Government during the presentation of 2022 results, and that the group convinced this Friday that it has appealed before the National Court. The positive, that the chief executive of Endesa supports the continuation of the ‘Iberian Exception’, backing the request of the ministry led by Teresa Ribera.
Bogas justified the filing of the appeal, among other reasons, due to the disadvantageous position that the sector in Spain faces compared to its European competitors, who do not bear this tax and which weakens the power companies to face investments, for example, in renewables, when seeking to promote the use of renewables.
“We believe in Europe and we believe that all European agents should have the same rules and that the money that we will generate should be focused on renewables, on strengthening the network… and any reduction that they make to us is detrimental to these circumstances and puts us at a disadvantage” he said during his speech. “If the European utilities do not have this ballast, they will grow more and we will grow months”, she reflected.
Even so, Endesa has advanced that it will increase the volume of investments by 20% throughout this year, despite the fact that net profit is expected to fall back to the range of 1,400-1,500 million, affected in part by this extraordinary tax and investment effort.
From the numbers of 2022, when the company earned 2,400 million, Bogas quantified the benefit achieved by the company due to the increase in gas prices at 1,000 million euros (half from the sale of gas to the wholesale market due to having strong reserves ) and said that it would be more reasonable for the rate, when applied, to be applied to profits and not to income.
In this sense, it quantified the benefit that Endesa had stopped earning due to the application of the ‘Iberian Exception’ at 6,000 million, which, however, supported its continuity due to these price levels and market volatility. Bogas believes that this mechanism should be incorporated in a homogeneous way in Europe, although with a different reference to the 180 euros that have been raised.
Regarding the reform of the European electricity market, the CEO of Endesa insisted that it was already necessary before the crisis in Ukraine and that there are very important points that must be reviewed, such as, for example, long-term contracts, or APP. He recalled that Spain is a leader in this type of agreement.
Regarding the debate on whether to extend the life of nuclear plants, Bogas explained that Endesa did not propose another scenario to that of the Government and that it valued the consultation process that had been opened very positively. However, he said that if the goal was to conserve energy supplies, the life of these facilities would probably have to be extended.
Energy faced record investments of 2,343 million in 2022, which represents 8% more than the previous year, as explained by the company in a statement. By 2023, he anticipates that the effort will be even greater and that he plans to “break his record again by investing 20% more”. In total, between 2023 and 2025, it is expected to invest more than 8,000 million euros in gross terms.
Re-election of directors
Coinciding with the presentation of results, Endesa has communicated to the supervisor the proposal to the shareholders’ meeting to renew several directors. Specifically, the re-election of Juan Sánchez-Calero Guilarte, Ignacio Garralda and Francisco Lacerda as independent directors and of Alberto de Paoli as proprietary director.
In parallel, it has also released the remuneration report. José Bogas’s reached 2,472 million euros, compared to 2,128 in 2021. However, the remuneration is lower than that of 2020, when he received 2,813 million. The increase in Bogas’ remuneration over the past year, of 16.17%, was, however, less than the 26 percent of ordinary profit, which the company takes as a reference to remunerate the shareholder. The increase in total benefits was more significant, reaching 77%, after standing at 2,541 million, sustained by revenue growth.
This context also allowed it to achieve a gross operating profit (ebitda) of 5,300 million; a level that the energy company could not reach again until 2025. According to the estimates provided to the market this Friday, Endesa expects this magnitude to be at the level of 4,400-4,700 million this year; and that scales up to 4,900-5,200 million in 2024 and to 5,200-5,500 million a year later. This exercise ends the current strategic plan.
Regarding the dividend, Endesa will pay a total of 1,585 euros per share, foreseeably in July, a level that is at the top of the objectives presented during Investor Day in November 2021. Bogas specified that it was “6% higher than its latest estimate”, during the presentation of results, and “10% more than last year”. In fact, the company exceeded all the goals shared in its analyst meeting two years ago by 2022.
