Endesa reported a net profit of 338 million euros for the first quarter, representing a 31.2% decrease from the same period last year, when net income reached 491 million euros. The decline was influenced by extraordinary effects tied to a CO2 rights decision. Excluding those effects, Endesa would have earned 297 million euros in the first quarter of the prior year, implying a 14% year-over-year growth for the first three months of this year. Despite sector volatility, the electricity company led by José Bogas reaffirmed its year-end targets: 1,800 million euros in net income and 4,100 million euros in EBITDA.
The company noted that the period January-March 2021 included a positive net impact of 194 million euros. Specifically, the internalization of free CO2 emission rights allocated under the National Emissions Rights Allocation Plan (PNA) did not create a statutory obligation to bear costs for Endesa; rather, it reflected the company’s right to collect compensation as a producer for the reduction in its fee.
In terms of revenue, Endesa invoiced 7,596 million euros in the first quarter, up 59.1% from the previous year (4,774 million euros). Operating costs rose 70.9% to 7,107 million euros, a figure that includes a 213% surge in wholesale energy purchase prices. Electricity sales climbed 57.7% to 5.264 million euros, with 3,029 million euros coming from sales in the Spanish liberalized market, up 62.2% from the same period in 2021, and 961 million euros from sales at regulated prices, a 77% increase. Gas sales grew 138.6% to 1.596 million euros.
On its own behalf, EBITDA stood at 914 million euros at the end of March, down 10% from the same period in 2021. The figure was affected again by the extraordinary results recorded last year, including 188 million euros linked to a CO2 rights-related court decision. Excluding this unusual item, EBITDA would have shown a 10% growth.
The combination of market volatility in raw materials and the rise in regulatory items awaiting collection weighed on working capital, constraining the funds needed to finance ongoing operations. This resulted in negative operating cash flow of 476 million euros. Cash outflows for investments totaling 533 million euros and dividend payments of 529 million euros supported a rise in net debt to 10,334 million euros at the end of the quarter. The financing cost remained at historically low levels, around 1%, which was half a percentage point below the level seen at the end of 2021.
Russia-Ukraine conflict
Early in the year, elevated raw material prices, especially for natural gas which was roughly 350% higher than in the first quarter of 2021, impacted the market. Wholesale electricity prices averaged 229 euros in Spain, 232 euros in France, 249 euros in Italy, and 238 euros in the United Kingdom from January to March. By the end of March, Endesa reported selling its entire owned energy—nuclear, hydroelectric, and unregulated renewables—for the current year, and 82% of its capacity for 2023 was already spoken for.
The company also highlighted that its Iberian market footprint continued to expand, with customer numbers in Spain and Portugal rising by 13% in the free market over the previous twelve months, adding 800,000 new customers for a total of 6.4 million.
Endesa noted that there were no counterparties likely to be affected by sanctions, and the company did not hold formal gas supply contracts with Russia. This arrangement helps ensure gas supply stability and, indirectly, the continuity of nuclear fuel orders from Russia through ENUSA, with production orders routed to other regions as needed.
Renewable power
On the renewables front, about 90% of the planned capacity for 2022 was already in operation or in the execution phase, and around 70% was slated for completion in 2023. The renewables program includes roughly half of the 2022-2024 strategic target and aims to add about 8,000 MW in advanced administrative processing. All of this focus centers on Spain and Portugal.
In the first quarter, Portugal marked two notable milestones in new renewable capacity. The first was the award of the Pego interconnection license, a project in which Endesa will participate with a 600 million euro investment to co-develop 365 MW of photovoltaic capacity, 264 MW of wind, and 168 MW of batteries. A 500 kW electrolyzer to produce green hydrogen will leverage some capacity to connect to the grid after the Pego coal plant was shut down in November. The second milestone was Endesa’s first floating photovoltaic project, to be paired with 43.5 MW of solar, 48 MW of wind, and 48 MW of batteries at the Alto Rabagão reservoir.