Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- E.ON SE (ENAKF, Financial) achieved an EBITDA of EUR6.7 billion and an adjusted net income of EUR2.2 billion for the first nine months, aligning with expectations and covering 75% of the full-year guidance midpoint.
- Investment-driven earnings growth and operational execution are key growth drivers, with planned investments increasing by 20% year-over-year.
- The company has a solid economic net debt position, providing a strong foundation for current and future investment plans.
- E.ON SE (ENAKF) confirmed its full-year guidance, with strong performance in the Energy Networks and Energy Retail segments.
- The company maintains a healthy balance sheet, focusing on organic growth opportunities and rewarding shareholders with a growing dividend.
Negative Points
- Adjusted EBITDA reduced by EUR1.1 billion due to positive timing and one-off impacts in 2023.
- The Energy Infrastructure Solutions segment is expected to be in the lower half of the guidance range due to lower district heating and cooling volumes driven by warmer weather.
- Economic net debt is expected to be slightly above EUR41 billion by year-end, influenced by interest rate movements affecting pension provisions.
- The company faces potential regulatory challenges and uncertainties, including the outcome of a court case regarding network returns.
- There are concerns about potential impacts from political changes, such as the German elections, on investment plans and regulatory conditions.
Q & A Highlights
Q: How might the recent election impact E.ON's CapEx plans, and could a CDU-led government support higher CapEx and hybrid fees?
A: Nadia Jakobi, CFO, stated that E.ON sees room for growth within the current national development plan for grids, and a CDU-led government could support higher CapEx through subsidizing grid fees. The CDU's proposals include increasing returns for grids to support the energy transition.
Q: Is it technically feasible to bring back nuclear power in Germany, and would E.ON be interested in operating nuclear assets?
A: Nadia Jakobi emphasized that there is no economically sensible way to bring back nuclear plants, even if technically possible. E.ON stands by its previous statements that reviving nuclear power is not feasible.
Q: What is E.ON's view on the appropriate rate of return for German networks, and what is the status of the court case with the regulator?
A: Nadia Jakobi mentioned that E.ON adheres to strict value creation criteria, requiring a surplus over the pretax cost of capital. The court case is expected to conclude in 2025, with no updates since the last call.
Q: How is E.ON managing supply chain challenges amid increased CapEx for networks?
A: Nadia Jakobi explained that E.ON has secured supplies through long-term agreements and standardization, ensuring no bottlenecks for their build-out plans. They have diversified their supplier portfolio and provided long-term visibility to suppliers.
Q: What are the implications of a potential slowdown in renewables build-out on E.ON's future CapEx plans?
A: Nadia Jakobi stated that E.ON's CapEx plans remain intact, supported by EU climate targets. The grid build-out is necessary to follow the renewables ramp-up, and E.ON is confident in its investment program.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
