Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Redeia Corporacion SA (RDEIF) achieved a record investment level with CapEx exceeding 1 billion, marking a 34% increase from 2023.
• The company successfully integrated 98% of wind and solar output, maintaining low discharge levels, which are below European regulations.
• Redeia Corporacion SA (RDEIF) completed the divestment of Hispasat, strengthening its financial position and focusing on core regulated business.
• The company maintained a strong credit rating, supported by a diversified debt structure with 92% at fixed rates.
• Redeia Corporacion SA (RDEIF) is aligned with the European green agenda, achieving high scores in sustainability indices like the Dow Jones Sustainability Index.

Negative Points

• Revenues decreased by 12.4% due to the end of the useful life of pre-1998 assets, impacting financial performance.
• The sale of Hispasat resulted in a capital loss of 137 million, affecting net profit.
• The company faces uncertainty in regulatory changes, which could impact future financial returns and investment plans.
• Higher operating expenses were noted due to increased headcount and non-recurring costs from collective bargaining agreements.
• The geopolitical and economic environment remains volatile, posing challenges for future operations and strategic planning.

Q & A Highlights

• Warning! GuruFocus has detected 10 Warning Signs with RDEIF.

Q: Could you provide more details on the CapEx guidance for 2025 and beyond, and any hints about the planned calendar for the new strategy plan? A: The CapEx guidance of 1.4 billion for 2025 is ambitious and will require preliminary approval. We expect high levels of CapEx in the future, but the exact figures will depend on the new planning. We anticipate more details in the coming months, but currently, we don't have full visibility. (Respondent: Unidentified_1)

Q: With the sale of Hispasat and regulatory changes, how will your financial structure and credit rating be impacted? A: The Hispasat sale will positively impact our financial structure by reducing net financial debt by approximately 1 billion. This transaction lowers the group's risk profile, and we expect rating agencies to lower their financial ratio requirements, strengthening our credit rating. (Respondent: Unidentified_2)

Q: What are your expectations for the financial return on regulated assets, and are there any plans for further asset sales? A: We expect a minimum benchmark of about 7% for financial returns on regulated assets. Regarding asset sales, with the Hispasat sale, we've completed our strategy plan for asset rotation. We are not contemplating further divestments as we have sufficient drivers to support growth. (Respondent: Unidentified_1)

Q: How do you plan to finance the high CapEx levels, and what is your view on the National Energy Plan's targets? A: We have several financing options, including European subsidies, hybrid financial instruments, and support from the European Investment Bank. We are not considering a capital increase. Regarding the National Energy Plan, we are committed to meeting its targets, and our investments are aligned with achieving those goals. (Respondent: Unidentified_2)

Q: Can you provide more details on the expected commissioning and work in progress for the coming years? A: For 2025, we estimate a gross commissioning value of 1.1 billion, netted by 0.4 billion from European funds. Significant projects like the interconnection with France and storage in the Canary Islands will impact commissioning in 2027-2028. We have about 2.5 billion in ongoing works for transmission assets. (Respondent: Unidentified_2)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.