EDP (EDP) H2 2016 earnings summary

Executive summary

• 2016 EBITDA reached EUR 3,759m and net profit EUR 961m, exceeding revised guidance; recurring EBITDA grew 6% excluding one-offs.

• Recurring net profit rose 23% (+EUR 169m), while net debt fell 8%; 2016 results beat commitments above and below EBITDA.

Financial highlights

• EBITDA was supported by energy management, stronger Iberian hydro output and a 6% increase in average installed capacity.

• Net interest costs declined 14%, reflecting a 5% reduction in average debt and a 30 bps decrease in average debt cost.

• Net financial results declined 5% excluding one-offs; lower interest costs were partly offset by reduced regulatory-receivable income and capitalized interest.

• Net profit was EUR 961m; negative financial one-offs and positive tax one-offs largely offset at net profit level.

Outlook and guidance

• 2017 EBITDA outlook remained unchanged; management expressed confidence in consensus despite weak hydro conditions in early 2017.

• Iberian outlook includes more hydro capacity, competitive fuel procurement and hedged thermal margins; weaker hydro was expected to be partly offset by thermal generation.

• EDPR average installed capacity was expected to rise 7%–9%; Brazilian EBITDA growth was supported by the Escelsa review and expected real appreciation.

• 2017 average debt cost was revised to 4.3%; further decline of at least 10 bps was expected. The 4.2% 2018–2020 assumption was called conservative but not revised.

• 2017 targets included EUR 300m–EUR 400m lower debt, ~20% tax rate and a post-CMEC EBITDA decline of ~EUR 50m.