EDP (EDP) H2 2017 earnings summary

Executive summary

• FY17 EBITDA rose 6% to €3.99bn, including ~€0.5bn of non-recurring gains; recurring EBITDA fell 5% to €3.52bn, chiefly due to Iberian drought.

• Net profit rose 16% to €1.11bn, while recurring net profit declined 8% to €845m; portfolio diversification, renewables growth, Brazil performance and cost savings helped offset adverse conditions.

Financial highlights

• Recurring EBITDA of €3.52bn was below the €3.5–3.6bn guidance range; recurring net profit of €845m was below the €850–900m range, while net debt of €13.9bn beat €14.0–14.5bn guidance.

• Net interest costs fell 13% to €664m; average debt cost declined from 4.4% to 4.1%.

• OPEX IV generated €141m of savings in 2017, 26% above target; comparable Iberian operating costs fell 1% and Brazil costs fell 1.5% in real terms.

Outlook and guidance

• 2018 consensus expectations were considered achievable, including recurring net profit of €850m; net debt was expected below the €14.2bn consensus and modestly below FY17, with net debt/EBITDA at 3.5x.

• 2018 financial costs were forecast at ~€600m and the tax rate slightly below 20%; the 2018 OPEX IV savings target was €190m.

• Secured 3.1GW of renewables projects for 2018 and following years, including 0.8GW under construction for 2018 commissioning.

• Proposed FY17 dividend was €0.19/share, subject to shareholder approval; €0.19/share was set as a firm floor, with potential growth as the business grows.