Endesa first-quarter performance reflects solid gains in renewables and energy services
Endesa reported a first-quarter profit of 594 million euros in 2023, marking a 76% increase after the company paid a 208 million euro government tax aimed at extraordinary profits for electricity producers. A decline in gas prices over recent months contributed to a normalization in the energy market, helping the group leverage favorable conditions. Analysts from XTB described the results as a strong start to the year, noting that the company’s traditional and renewable generation portfolio grew by as much as 32%. The expansion of the charging network for electric vehicles also played a meaningful role, increasing charging points by 51% year over year and supporting higher profitability. Notably, 83% of Iberian Peninsula electricity output was greenhouse-gas-free, produced primarily from hydro, solar, and wind sources.
Over the twelve-month horizon, Endesa added about 900 megawatts of new renewable capacity, reaching a total of 9,300 MW at the end of March. Of the 1,100 MW of solar and wind capacity expected to be connected in 2023, all of it was already under construction. The company also grew its free-market customer base to 6.8 million by gaining roughly 480 thousand electricity customers versus the prior year’s end. Consequently, domestic sales rose by around 13%, underscoring a broader revenue uplift driven by both generation and customer expansion.
The January-March investment totaled 409 million euros, up 2% from the same period the previous year. Endesa reported selling 100% of its own generation output for 2023 and 87% for 2024 at a price of 65 euros per megawatt-hour, aligning with a strategy to secure stable prices for its core energy assets while still pursuing growth in renewable capacity and customer reach. The performance suggests a balanced mix of generation sources and prudent hedging actions that helped anchor profitability in a volatile market environment.
Losses due to illegal links
In its distribution segment, Endesa managed to cut average outage time by 12% year-over-year, bringing downtime to 12.9 minutes. While the reliability metrics improved, there was a slight uptick in losses tied to illegal connections in the power grid. The gas business unit posted a margin of 6 euros per megawatt-hour, and the client portfolio expanded by 6% from the prior March to reach 1.8 million customers. This mix of improvements and risks paints a nuanced picture of the quarter, with growth driven by renewables, a broader customer base, and the ongoing challenge of grid security and compliance.
From the perspective of XTB analysts, the first-quarter results signal a positive trajectory for net income and EBITDA when compared with the same period a year earlier. The gains in renewable energy generation, the addition of new renewable capacity, customer growth, and a more extensive charging-network footprint all contributed to the optimistic assessment. The company’s decision to sell its own production at favorable terms for 2023 and 2024 further supports a constructive outlook, even as the stock market reflected some caution with a slight decline in share price—about 1.5%—during the period. Analysts from the brokerage note a ceiling around 20.5 euros for certain price targets, with potential upside to 19.30 euros per share under specific scenarios, illustrating the range of investor expectations amid evolving market dynamics.
Overall, the quarter underscored Endesa’s strategic emphasis on renewable capacity expansion, customer diversification, and grid modernization. The integration of new solar and wind projects, together with the deployment of charging infrastructure for electric vehicles, aligns with broader energy transition goals while maintaining a focus on financial discipline and risk management amid fluctuating energy prices. The reported results reflect both the strength of the company’s asset mix and the ongoing importance of regulatory conditions in shaping profitability and market performance. The commentary from market analysts highlights a cautious yet hopeful sentiment, recognizing the potential for sustained growth in the renewables segment and the expanded energy services portfolio, even as near-term price movements and regulatory considerations continue to influence investor sentiment. [Source: XTB analysis and company disclosures]