EDP's profits drop by 74% to €297 million in the first nine months of 2018
Net income fell by 74% to €297 million due to an extraordinary €285m provision in Portugal, for alleged overcompensation of CMECs (Contractual Equilibrium Maintenance Cost agreements), and also due to an extraordinary €558m gain last year on the sale of Naturgás in Spain.
Portugal's impact in overall net results has dropped to only 6%, compared to 19% in the same period last year. It should also be noted that EDP Brasil contributes with 81% growth in local currency. As for EBITDA, regulatory changes implemented in Portugal in the 2nd half of 2017 and the final CMEC adjustment explain a €169m decrease in the first nine months of 2018.
Recurring EBITDA dropped by 6% to €2.428 million, reflecting the negative foreign exchange impact of 6%. Excluding this impact, EBITDA remained stable compared to 9M17, with the following effects:
- EBITDA dropped by 3% in Portugal, where the improvement in hydroelectric conditions was not sufficient to mitigate the strong impact of regulatory cuts in Portugal, which have affected both the production segment (CMEC revenue decrease; taxes and levies increase) and the distribution segment (14% cut in regulated revenues under the regulatory review for 2018-2020).
- EDP España's EBITDA has risen by 8%, benefiting from increased hydroelectric production and improved operating conditions in the Iberian electricity market.
- EDP Renováveis' EBITDA dropped by 12% due to poor wind conditions, particularly in 3Q18, when wind resources stood 11% below the long-term average, reaching a 6-year minimum. EDP Renováveis' EBITDA was also influenced by a decrease in the revenue/renewable MWh ratio, and by the negative foreign exchange impact of the depreciation of the USD against the EUR.
- EDP Brasil's EBITDA increased by 19% in local currency, backed by a good operating performance in all business areas, most notably by a sustained reduction of commercial distribution losses, above-contract availability at Pecém TPP, and an adequate power management strategy.
Net debt increased from €13.9 billion in December 2017 to €14.5 billion in September 2018, while the average cost of debt dropped from 4.1% in 9M2017 to 3.7% in 9M2018.
The impact of renewable energies continues to rise, validating EDP's focus on clean technologies. The generation mix reached 74% in terms of installed renewable capacity (+0.5GW wind and solar). As for production, the impact of renewable energies increased by 11pp in year-on-year terms to 66%, benefiting from the expansion of the portfolio and the restoration of hydraulicity in the Iberian Peninsula.
The number of customer contracts grew by 6,000 over the last 12 months, to a total of 11.4 million, reflecting our commitment to customer satisfaction, service quality, and greater engagement.
See the detailed EDP Group Results.