Spain's Endesa bolsters three-year investment plan to $10 billion, focus on grids
Endesa to invest $10 billion through 2027, focusing on grids
Endesa may increase investments by up to 4 bln euros
Adjusted profit seen growing to up to 2.2 billion euros in 2027
Adds CEO comments, analysts' comments, share reaction in paragraph 3-7, 9, 10
By Pietro Lombardi
MADRID, Nov 19 (Reuters) -Spanish power utility Endesa ELE.MC said on Tuesday it will invest 9.6 billion euros ($10.16 billion) in the next three years, focusing on expanding and upgrading power networks while spending less on renewables.
The planned investments represent an increase of 8% over the 2024-2026 plan and the highest since 2014, Endesa said in a strategic update released a day after its parent Enel ENEI.MI presented its own plan.
And more could be in store, Chief Executive Jose Bogas told analysts in a call.
With net debt at 1.8 times core earnings, "it is clear that we still have an additional investment capacity," he said, estimating investments may grow by up to 4 billion euros under the right regulatory conditions.
If Spain wants to encourage investments in power networks, it has to improve returns on grid investments, review legal limits on how much energy companies can invest in power networks and streamline permitting, he said.
Endesa shares were up 0.7% in early afternoon trade, outperforming a 1.7% decline in the blue-chip IBEX 35 index, with analysts noting that the 2027 targets are above consensus.
Utilities like Enel and Iberdrola have shifted their strategy towards power networks in recent years, attracted by the stable and predictable returns they offer, while becoming more selective on new renewable projects.
Endesa's grids business will get roughly 4 billion euros, 45% more than in its previous plan. The company is reducing investments in renewables, where it will focus on hydro and wind power while reducing exposure to solar generation.
Given the current price environment, "solar doesn't get the remuneration that makes the investment attractive," he said.
The 3.7 billion euros earmarked for green energy includes the recent 1 billion euro acquisition of Acciona's hydro assets and the company will keep seeking partners interested in minority stakes in green assets, Bogas said.
Endesa expects an adjusted net profit of around 1.8 billion euros this year, slightly above its previous guidance, and up to 2.2 billion euros in 2027.
Core earnings - before interest, taxes, depreciation, and amortization - are seen at around 5.2 billion euros this year, growing to as much as 5.9 billion euros by the end of the plan.
The dividend policy, 70% of adjusted profit with a floor set at 1 euro per share, is extended to 2027.
For this year, investors can expect 1.2 euros a share, 20% more than for 2023 and 9% more than previously forecast.
($1 = 0.9446 euros)
Reporting by Pietro Lombardi, editing by Inti Landauro, David Evans and Susan Fenton
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