Endesa S.A. (ELE.MC) Q1 2026 Earnings Call Transcript
Bullish Regulated Electric 28.82B Spain
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Endesa posted solid 2025 results with above-target EBITDA and NOI, announced a generous dividend and expanding buybacks, and laid out a 2026-2028 plan centered on grid investment, regulated earnings visibility, and cost efficiency.
⭐ Key Highlights
EBITDA and net ordinary income exceed guidance
2025 EBITDA reached EUR 5.8B, above the upper end of guidance; net ordinary income EUR 2.3B, 18% YoY growth and exceeding targets.
Significant capital allocation and shareholder returns
Proposed dividend of EUR 1.58 per share for 2025, 20% higher YoY, and ~EUR 2.0B of share buybacks with a new tranche approved through July 2026.
Strategic plan 2026-2028 emphasizes grid investment and regulated/contracted earnings
EUR 10.6B investment plan focused >50% on networks; ~85% of EBITDA expected from regulated/contracted assets; EPS growth targeted at ~5% per year.
Savings and efficiency program to drive margin
Fixed cost reductions targeted at ~EUR 300M with AI/digitalization driving productivity; OpEx efficiency contributing to margin resilience.
Almaraz extension and hydro normalization scenarios
Assumes Almaraz extension (3 TWh uplift in 2028) with net positive but modest margin impact; hydro output expected to normalize after strong 2025.
✔Positive Signals
- EBITDA and NOI beat guidance and raised confidence in execution
- Dividend per share up to EUR 1.58 with strong buyback progress
- Scale-up of network investments (EUR 5.5B in networks) and higher RAB growth
- High visibility due to regulated/contracted earnings base (~85% of EBITDA)
- Clear cost-cutting and productivity program supporting margins
✖Negative Signals
- Churn in the retail customers remains elevated and is a risk to margin
- Reliance on regulatory approvals (e.g., higher grid capex limits) for investment plan
- Some sensitivity to pool and gas prices; guidance embeds assumptions on Almaraz extension
- Execution risk on large CapEx program and timely ramp of new capacity
- Hydro and wind/solar volume fluctuations could impact generation margins
📊Financial Results
- 2025 EBITDA EUR 5.8B, up ~9% YoY; net ordinary income EUR 2.3B, above guidance
- FFO reached EUR 4.1B; cash conversion above target (70% achieved vs plan) and ~EUR 10.1B net debt, with improved cost of debt (average 3.3%)
- Dividend policy updated to a minimum 70% payout of net ordinary income; DPS growth targeted ~4% on average through 2027
🔮Future Guidance
- EBITDA target for 2026-2028 expected to grow at ~4% CAGR to EUR 6.2-6.5B by 2028
- Net ordinary income projected to EUR 2.5-2.6B by 2028; dividend policy maintains 70% payout with 4% DPS CAGR
- Capex plan of EUR 10.6B over 2026-2028, with ~80% of capex feeding into RAB and grid reinforcements
- EPS growth around 5% per year; FFO/EBITDA target ~78%; net debt to EBITDA rising to ~2.3x by 2028
- Dividend and buyback execution to continue through 2027, with optionality for additional shareholder remuneration
💡Interesting Insights
- Data center opportunity is being pursued via bundled grid+renewables solutions near centers to provide baseload-like reliability while managing grid constraints
Detailed Analysis
AI-generated summary of Endesa S.A. earnings call transcript.
Endesa delivered 2025 results ahead of guidance, with EBITDA at EUR 5.8B and net ordinary income at EUR 2.3B, driven by strong cash generation and disciplined execution. The company proposed a EUR 1.58 per share dividend (over 5% yield) and advanced a EUR 2B share buyback, of which a new EUR 0.5B tranche was approved through mid-2026. The 2026-2028 strategic plan pivots on a EUR 10.6B investment program, over 50% in networks, and aims for around 85% of EBITDA from regulated or contracted assets, with EPS growth of ~5% per year and FFO/EBITDA around 78%. A broad efficiency drive (fixed costs down ~10%) and AI-enabled productivity improvements underpin margin resilience. Assumptions include Almaraz extension (3 TWh uplift in 2028) and hydro normalization, with a long-term commitment to grid expansion to support Spain’s electrification and decarbonization goals. The plan envisions stronger visibility and stable returns, potential M&A and storage opportunities, and a higher dividend trajectory anchored to net ordinary income.
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