Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Engie Energia Chile SA (XSGO:ECL, Financial) reported a significant 56% increase in EBITDA for the first half of 2024, reaching $294 million.
- The company successfully issued a 10-year $500 million green bond to fund CapEx and refinance short-term debt, reducing the net debt to EBITDA ratio to 3.9x.
- Engie Energia Chile SA (XSGO:ECL) has accelerated the implementation of battery energy storage systems (BESS), with a new project announced at the Tocopilla site, aiming for a total capacity of 370 megawatts.
- The company has seen a positive trend in sales, with a 6% increase in overall sales to customers, driven by an 11% increase in sales to regulated customers.
- Spot prices have decreased significantly, from an average of $87 per megawatt hour in 2023 to $62 in 2024, positively impacting the company's energy margin.
Negative Points
- Total revenues dropped by 22% to $934 million, primarily due to an 18% decrease in average realized prices.
- Engie Energia Chile SA (XSGO:ECL) experienced a 49% decrease in gas generation due to the absence of a tolling agreement with Keller.
- The company faced a 59% increase in energy purchases from the spot market, highlighting ongoing exposure to market volatility.
- Net debt increased by $158 million to $2.0 billion, driven by CapEx financing and accounts receivable buildup.
- The company is still working on monetizing $329 million in receivables under the PEC-3 program, which is crucial for liquidity and future investments.
Q & A Highlights
Q: Can you clarify the status of receivables under the PEC programs and when you expect to collect them? Also, how do the batteries work in terms of profitability?
A: PEC-1 and PEC-2 receivables have been fully monetized. For PEC-3, we have $329 million in receivables and expect to collect around $337 million by year-end, with the remainder in early 2025. Regarding batteries, we decide when to charge and discharge them, aiming to charge during low-cost solar hours and discharge during higher-cost non-solar hours, capturing an arbitrage opportunity. The IRR is enhanced by capacity remuneration, bringing the total to around $100 per megawatt hour.
Q: Are there any updates on your medium- to long-term commercial strategy, especially regarding new PPAs?
A: As we balance our portfolio, we are considering contracting our assets before 2033. Our market share is around 15%, and we are analyzing opportunities to maintain or grow this share, which could involve additional investments. While not imminent, we are preparing for future commercial activities.
Q: Could you comment on the LNG supply situation and any potential opportunities for gas commercialization? Also, are there any expected write-offs related to coal plants?
A: We missed an LNG cargo due to a hurricane, but the impact is minimal given current spot prices. Better hydrology could allow for gas imports from Argentina or LNG exports. We do not anticipate further write-offs for coal plants, as most impairments were completed in the past two years.
Q: What is the leverage target going forward, especially if you maintain market share?
A: Our leverage as of June includes PEC-2 monetization. With future EBITDA and CapEx, we aim to maintain leverage in the 4% to 4.5% range, as noted by rating agencies.
Q: The CapEx forecast has increased. Is this due to new projects or inflation?
A: The increase is due to the acceleration of existing projects, particularly in batteries, and not due to inflation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
