Wednesday, December 8

Endesa will invest 22% more at the cost of higher profit and lower dividend

Endesa it will increase the volume of its investments until 2030 by 22 percent compared to its previous strategic plan, supported by forecasts of higher profits, and a lower payment of dividends.

If Wednesday was the Italian matrix of Endesa, Enel, who drew some guidelines for the company that will lead it to abandon gas in 2040Today it was the Spanish company itself that has detailed how it will face this challenge.

The energy company directed by José Bogas has sent this Thursday to the National Securities Market Commission (CNMV) the update your strategic plan for 2030, in which investments of 31,000 million euros are contemplated to accelerate the energy transition of the company.

Minutes before, however, Endesa too has made public before the CNMV its dividend policy until 2024, which contemplates a reduction in the percentage of profit distributed among its shareholders: it will drop from 100 percent to 80 percent in 2021, while from 2022 to 2024 it will be 70 percent.

An improvement in earnings that matches the dividend

The energy company will distribute a dividend of 0.5 gross euros per share to its shareholders this year, the payment of which will be made as of January 3, 2022

Despite the reduction in pay out predicted by Endesa Over the next few years, the board of directors expects shareholder compensation to “maximize” thanks to “a significant level of cash generation.”

In the company’s calculations reflected in its update of the strategic plan for 2030, it is estimated that the implicit dividend per share (DPA) for this year is approximately 1.3 euros with a pay out 80 percent, taking into account an ordinary net result of 1,700 million euros.

For the next three years, Endesa it projects that net profit to be 1,800, 1,900, and 2,000 million euros, so the reduction in the percentage of profit distributed among its shareholders would remain the same, with an implicit dividend yield of 6.6 percent.

At the market opening following the announcements, investors appeared to be satisfied with the proposals made by the Spanish company during its Capital Markets Day, taking it to a rise of 2.9 percent that left its share at 20.37 euros.

In Monday’s session, Endesa He already starred in a slight rise before the news of his matrix, Enel, of the advance of the group’s total decarbonization to 2040, which led the company led by José Bogas to close the day improving 0.89 percent.

Invest more to earn more

Endesa ensures that the growth of its EBITDA will be possible thanks to the investment effort and the recovery of the market context.

Therefore, based on the premise that to earn more you have to invest more, the company has indicated in its strategic plan that between 2022 and 2024 it will disburse 7,500 million euros in its objective of increasing its capacity in renewable energy and ending commercialization of gas in 2040.

During that process, Endesa projects that the net debt ratio will be reduced to 2.3 times in 2024, compared to 2.4 times in 2021, achieving an EBITDA of 4.7 billion euros and a net debt of 10.7 billion euros.

Ángel Pérez Llamazares, Income 4 analyst, explained in his analysis of the three major Spanish energy companies, who expected dividends from Endesa continue to “generate attractive returns, despite the high level of investment expected”, highlighting that these same plans “allow us to think about a significant increase in future results.”

Patricio Álvarez of Bloomberg Intelligence also noted that “profit could accelerate from 2022, driven by increased investment in renewables, a better integrated unit margin, cost efficiency, improved energy mix power generation and the increase in energy prices realized “.

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