Endesa (ELE) Status Update summary

Strategic and Regulatory Context

• Investment plan raised to €9.6 billion for 2025-2027, marking an 8% increase, with 80% focused on decarbonization and networks.

• Grid investment will rise by 45% to €4 billion, targeting NECP objectives, service quality, and digitalization, aiming to increase the regulated asset base to €12.1 billion by 2027.

• Energy transition in Spain is accelerating, with ambitious 2030 climate targets and €308 billion national investment planned, 28% above the previous plan.

• Regulatory improvements, including a targeted 7.5% WACC and increased investment caps, are essential for enabling higher grid investment.

• Data centers and industrial electrification are expected to drive significant new electricity demand, with grid connection requests sufficient to meet 2030 targets.

Investment and Capital Allocation

• €3.7 billion will be allocated to renewables, focusing on hydro and wind, including a major hydro asset acquisition and a total renewable capacity target of 13.1 GW by 2027.

• No new non-mainland capacity investment is planned until regulatory clarity is achieved.

• Additional investment capacity of €3-4 billion exists, contingent on regulatory signals and market opportunities.

• M&A is not a core lever but remains an option if attractive opportunities arise.

• Partnership models in renewables provide capital flexibility, with limited impact on minorities.

Financial Outlook and Performance

• 2024 expected to close above forecast with €1.8 billion ordinary net profit and €5.2 billion EBITDA, at the upper end of previous guidance.

• By 2027, targets include EBITDA up to €5.9 billion (+4% CAGR), ordinary net profit up to €2.2 billion (+7% CAGR), and net debt between €10-11 billion, reflecting increased investment and dividend payments.

• Grid EBITDA is expected to increase by 16%, driven by higher investment and regulatory improvements.

• Generation and supply EBITDA will rise by 12%, supported by a better customer mix and increased renewables.

• Opex remains stable, absorbing inflation and growth through efficiency and digitalization.