Endesa's First Quarter Profits Drop 50.8% Amid Windfall Tax Impact and Plunging Power Prices

Spanish utility Endesa SA reported a substantial decline in net ordinary profit for the first quarter of 2024, with profits plummeting by 50.8% year-on-year to EUR 292 million (USD 313.8m). This decrease marks a continuation of stagnation attributed to Spain’s 1.2% windfall tax on energy revenues. According to Endesa's statement on Wednesday, the January-March quarter witnessed a notable drop in power prices, with prices in the pool nosediving by 53% to EUR 45/MWh. This decline was primarily attributed to high renewables production, particularly from hydro sources, coupled with weak demand. In light of these challenging market conditions, Endesa's quarterly EBITDA fell by 26.2% to EUR 1.08 billion, exacerbating the impact of the windfall tax on the company's bottom line. Endesa noted that renewables contributed EUR 247 million to the total EBITDA for the quarter, compared to EUR 219 million in the same period last year. The utility also reported a significant decrease in revenues, which dipped by 26.1% to EUR 5.55 billion for the quarter. Despite the challenging economic landscape, Endesa maintained a stable level of total capex for the quarter, amounting to EUR 412 million, consistent with the previous year. Notably, a substantial portion of this investment—45%—was allocated to grids, with an additional 26% directed towards renewables, aligning with Endesa’s selective investment strategy. Endesa confirmed that its sale of a minority stake in an operational solar portfolio is nearing completion, with the company divesting 49% of the portfolio. In terms of renewables capacity, Endesa saw growth in its installed capacity on the Iberian mainland, reaching 9,997 MW by the end of the first quarter. This growth was attributed to the addition of over 700 MW in the preceding 12 months. When accounting for wind and solar installations on the Spanish islands, Endesa's total gross installed renewables capacity surpasses 10,000 MW. Renewables generated 5,017 GWh of electricity during the quarter, marking a significant increase of 27.3% compared to the previous year.