ERG (ERG) Q3 2024 earnings summary

Executive summary

• Nine-month adjusted EBITDA reached €390 million, up from €375 million year-over-year, driven by new wind and solar capacity and full consolidation of the U.S. portfolio as of April 1st.

• Adjusted net profit for nine months was €130 million, down from €149 million year-over-year, due to higher depreciation, financial charges, and a higher tax rate following the cancellation of some fiscal benefits in Italy.

• Energy production rose to 5,111 GWh in nine months, a 21% increase, mainly from new assets.

• Significant international expansion with new wind farms in France and Germany, and U.S. solar and wind acquisitions.

• Board approved a new buyback program of €23 million (about €0.15 per share), as an advance on the announced remuneration policy, in response to financial strength and stock weakness.

Financial highlights

• Adjusted EBITDA for Q3 2024 was €109 million, up from €105 million in Q3 2023, mainly due to new asset contributions.

• Q3 adjusted net profit was €25 million, down from €34 million in Q3 2023.

• Net financial position at end-September stood at €1,888 million, up from €1,445 million at end-2023, reflecting investments, buybacks, dividends, and other cash flows.

• Nine-month capex reached €500 million, up from €377 million in 9M 2023, with major investments in the U.S. and France.

• Q3 amortization and depreciation rose to €66 million, reflecting new assets.

Outlook and guidance

• 2024 EBITDA guidance narrowed to €520–560 million, with capex guidance at €550–600 million; net financial position for year-end 2024 guided at €1,750–1,850 million.

• For 2025, full-year contribution expected from new assets, higher hedging prices (>70% hedged at >€90/MWh), and a likely increase in Italian green incentives to around €60/MWh.

• Management views consensus 2025 EBITDA of €600 million as reasonable, assuming normalized wind conditions and new project contributions.

• Wind EBITDA in Italy expected to rise due to GRIN incentive and new capacity, partly offset by lower market prices and volumes.

• Wind EBITDA abroad expected to decrease due to lower prices and output, despite new U.S. and French assets.