Endesa, S.A. (ELEZF) Q4 2022 Earnings Call Transcript

Endesa, S.A. (OTCPK:ELEZF) Q4 2022 Earnings Conference Call February 24, 2023 4:00 AM ET

Company Participants

Mar Martinez - IR

Jose Bogas - CEO

Marco Palermo - CFO

Conference Call Participants

Alberto Gandolfi - Goldman Sachs

José Ruiz - Barclays

Manuel Palomo - BNP Paribas Exane

Jorge Guimarães - JB Capital Markets

Robert Pulleyn - Morgan Stanley

Javier Garrido - JPMorgan

Javier Suarez - Mediobanca

Jorge Alonso - Societe Generale

Mar Martinez

Good morning, ladies and gentlemen, and invited to nan 2022 Results Presentation, which will beryllium hosted by our CEO, Jose Bogas; and our precocious appointed CFO, Marco Palermo. Following nan presentation, we will person nan accustomed Q&A convention unfastened to those connected connected nan telephone and connected nan web.

Thank you. And now fto maine manus complete to Jose Bogas.

Jose Bogas

Okay. Thank you, Mar, and bully morning, everybody. Let's commencement pinch immoderate cardinal considerations for nan period. 2022 was marked by an unprecedented power situation aft nan Russian onslaught connected Ukraine 1 twelvemonth ago, whose implications person acold exceeded nan European scope. The persistency and extent of nan imbalance costs successful nan state market, and consequently, nan precocious energy prices led nan European Union to create a group of coordinated emergency measures for each nan personnel authorities successful bid to mitigate its consequences.

In parallel, nan wide deterioration of nan worldwide macro discourse has been a benignant of awesome concern, which drove downward reviews connected nan main economical capacity estimates. Against this analyzable backdrop, nan sound capacity of our integrated strategy, coupled pinch a last committedness to decarbonization being nan only semipermanent solution is clear grounds of our resiliency to flooded marketplace headwinds.

Net mean income exceeded nan apical scope of nan updated guidance provided backmost successful our November 2022 Capital Market Day, which allows america to propose nan distribution of a gross dividend of €1.585 per share, [6%] higher than our past estimate for support astatine nan adjacent General Shareholder Meeting.

Moving to nan slide, nan adjacent slide. Before diving much profoundly into specifications and capacity of nan period, fto maine remark connected nan target delivery. As antecedently noted, we greatly exceeded our business scheme target for EBITDA and nett mean income. EBITDA like-for-like reached €5.3 billion, expanding by 29% versus nan first target group successful Capital Market Day 2021. While nett mean income roseate by 33% versus nan aforesaid reference, reaching €2.4 billion, becoming astir €1.6 per stock of gross DPS.

On generation, we person further strengthened our position successful renewables, adding much than 900 megawatts of caller capacity, attaining a full of 9.3 gigawatt astatine nan year-end. Let maine besides item nan bully improvement of nan powerfulness free business wherever our competitory commercialized strategy has allowed america to summation our customer guidelines reaching adjacent to 7 cardinal customers, that is 0.9 cardinal betterment year-on-year.

Investment successful grid were successful statement pinch past year, implying a last regulatory plus guidelines of €11.5 billion. We invested much than €2.3 cardinal successful nan period, an summation of 8% versus past year, and representing nan largest magnitude ever. Out of this total, 76% is aligned to nan European Union Taxonomy criteria owed to nan important publication to ambiance alteration mitigation.

On Slide #4, we elaborate nan main move of nan marketplace discourse shaping nan ground of 2022 results. Full twelvemonth accumulated mainland request fell by 2.9% compared to nan erstwhile twelvemonth aft a definite betterment successful nan antagonistic inclination since by mid-year and particularly successful nan 4th quarter, truthful a driblet successful request owed to nan mixed effect of grounds precocious prices, power redeeming measures and an abnormally mild winter.

Endesa's mainland request decreased to a lesser grade by 1.1% contempt nan coagulated capacity of Service conception expanding by 4.6%, chiefly hampered by simplification successful Residential depletion owed to nan already aforementioned redeeming measures and nan economical recession driving business request down.

Gas marketplace swings person beyond immoderate uncertainty being nan main facet down nan European power situation successful 2022, which peaked during nan summertime pinch historically precocious state prices. Since then, European state references person travel down sharply to level adjacent to September 2021. The main logic of these partial normalization are warmer than expected 4th fourth and precocious renewable contribution, coupled pinch higher levels of wintertime state retention expanding nan readiness of further inexpensive gas.

Against this background, Iberian mean excavation value reached an mean of €168 per megawatt hour, 50% up year-on-year. The implementation of nan headdress connected state for energy prices since June besides contributed to this abatement, allowing a very favorable comparison pinch astir European power market. In immoderate case, 2022 remains arsenic nan astir costly twelvemonth successful nan Spanish energy market.

Last twelvemonth was very apt nan astir prolific successful position of -- for reaching regulatory improvement and initiative. In Slide #5, we summarized nan main outcomes some astatine European and Spanish level. The European Commission has continued to instrumentality a bid of impermanent emergency measures to intervene successful nan power market. In Spain, nan authorities approved astir nan twelvemonth a number of Royal Decree-Law, redeeming an utmost array of measures chiefly aimed astatine offsetting precocious power prices and protecting susceptible customers.

The past of them yet successful unit past January 1, 2023 being nan 1.2% bonzer levy connected liberalized revenues. Regarding nan ineligible action, arsenic we see this levy to beryllium discriminatory and unjustified, we person conscionable revenge an entreaty earlier nan Audience National against it. It should besides beryllium taken into relationship that Endesa is among nan apical 5 taxation payer successful nan Spain, and nan full taxation publication accrued by 28% compared to fiscal twelvemonth 2021.

Moreover, among nan respective initiatives besides successful discussion, backmost successful September, nan President of nan European Union Commission promised a wide and heavy betterment connected nan energy marketplace to decouple nan power of state connected nan value of energy fixed nan terrible value volatility complete nan past year. Certainly, sloppy of nan last attack of nan European Commission and nan Spanish government, nan main privilege of immoderate early betterment of nan wholesale marketplace creation should beryllium to guarantee information of supply, affordable power for customers and nan correct value signals to guarantee nan required finance successful renewables and grids.

Focusing connected nan advancement we made successful renewables connected Slide #6. Despite past twelvemonth being marked by reliable constraint successful nan assemblage logistics chain, we made immoderate accomplishment successful our decarbonization commitments, bringing into cognition much than 900 megawatts of renewables. Additionally, we person 100 megawatts already built and pending to commencement cognition successful nan coming months. Mainland renewable capacity is now 11% higher than successful 2021, while CO2-free sources now represent 71% of our installed capacity.

We are successful nan process of closing down As Pontes nan past mainland ember works successful which Group 1 and 2 are presently functioning alternatively pending nan last closure authorization. Total mainland output reached 52.4 terawatt hours, 13% higher than erstwhile year, 73 of which came from owed to non-emitting sources.

Year-to-date output fig consolidates nan little hydro readiness suffered chiefly successful nan first semester. In that context, nan summation successful upwind and star accumulation owed to nan introduction of caller capacity, together pinch nan betterment of thermal output, chiefly CCGTs and nuclear, much than offset nan driblet of hydro production.

In nan adjacent slide, arsenic of December, nan renewable pipeline -- and I americium connected Slide #7. The renewable pipeline reached 90 gigawatts supporting our maturation ambitions to accelerate renewable deployment. Mature pipeline is now worthy astir 18 gigawatts, retired of which 8 gigawatts are ESO-awarded relationship points. We beforehand nan gradual incorporation of power retention technologies successful our task arsenic it is becoming progressively evident that they are a very important instrumentality to supply short-term retention and elasticity services, frankincense reducing nan unpredictability successful nan strategy and improving nan ratio of nan power mix.

Mature successful -- mature and successful execution task pinch COD, that is COD aliases commercialized cognition date, 2023 to 2025 are capable to screen by 2x our capacity deployment for 2025 pinch astir 30% of target additions already addressed. Finally, it is worthy mentioning that we person met nan January 25th ministry deadline to get nan basal situation effect declaration permits without immoderate meaningful effect connected our projects.

In Power Retail, we proceed expanding nan liberalized customer base, leveraging connected our successful commercialized strategy, and we are connected Slide #8. The peculiar value discourse seen past twelvemonth accrued nan entreaty of our commercialized offers, preventing rising volatility, peculiarly compared to scale clients' bill. This resulted successful a singular summation successful our liberalized customer guidelines during nan past 12 months, wherever we added astir 0.9 cardinal caller clients.

Therefore, liberalized income grew by 4% versus erstwhile year. By segment, income to liberalized residential customers person much than offset nan alteration to waste to -- successful income to B2B. Remarkable operative capacity besides astatine Endesa X level wherever E-home contracts and charging points grew by 18% and 47% respectively. Our electrical mobility brand, Endesa X Way, maintains a coagulated activity position successful Iberia, achieving nan largest web of nationalist and backstage recharging points.

On Slide #9. As you tin spot successful nan first graph, free income included without -- wrong our integrated separator amounted to 76 terawatt hours, positive 4%, pinch a beardown maturation -- wrong a beardown maturation successful scale sales, while fixed value volumes decreased by 8% to 51 terawatt hours. It should beryllium noted that our inframarginal output reached 39 terawatt hour, insufficient to screen fixed value demand. The bully improvement of our free powerfulness income came together pinch a sound capacity of nan free powerfulness separator that reached €42 per megawatt hour, 31% supra erstwhile twelvemonth contempt nan analyzable and challenging marketplace and value scenario.

This chiefly resulted from nan beardown summation successful CCGT's output attained an important separator improvement. The renewable regulated output sold to spot marketplace and nan proviso separator that is beneath €8 per megawatt hr compared to nan -- astir €10 per megawatt hr achieved past twelvemonth arsenic a consequence of nan higher ancillary work cost.

Regarding guardant sales, 98% of our 2023 from marginal output and 85% for 2024 has already been hedged astatine nan €65 per megawatt hr guidelines load value reference group successful nan bilateral statement betwixt our procreation and proviso subsidiary.

Our attraction connected nan state business, and we are connected Slide #10. Total state income somewhat decreased by 3% owed to a request contraction resulting from nan economical slowdown, precocious state prices and depletion simplification measures, which was partially offset by very beardown income to our CCGTs. Gas unitary margin, including wholesale, unit and CCGTs activity recovered from nan erstwhile year's abnormally debased level to astir €6 per megawatt hr successful 2022.

The affirmative improvement of nan wholesale business particularly successful nan 2nd half, owed to nan opportunities arising from little unit request that we were capable to waste successful nan wholesale market. To nan contrary, unit business separator decreased, chiefly driven by nan already referred to lower-than-expected state request particularly from business customers affected by nan precocious value context. Volumes hedged of our sourcing statement came to 70% and 32% for 2023 and 2024, respectively.

Moving to operative accomplishment connected networks, and I'm now connected Slide #11. Distributed power stood astatine 132 terawatt hours, up by 1%. Our effort to amended value and ratio resulted successful losses successful statement pinch past year, while clip of interruption was trim by a sound 11% contempt suffering immoderate outpouring upwind conditions during nan year. Regulated plus guidelines decreased by 2% arsenic caller finance during 2022 were not capable to compensate for nan regulated amortization. In this end, we must tie attraction to nan request of ensuring a unchangeable regulatory framework, allowing for nan precocious superior deployment required for nan nett zero transformation.

And now I will manus complete to Marco, who will item nan financial results.

Marco Palermo

Thank you, Pepe, and bully greeting to everybody. On nan economical results connected Slide 13. Reported EBITDA accrued by 30% while EBITDA like-for-like rises by 25%, excluding nan superior summation obtained from nan Endesa X Way transaction. Net mean income was up by 26% year-on-year, amounting to €2.4 billion, not considering nan nett effect of Endesa X Way transaction, not considering nan impairment booked successful some years and different insignificant impacts. Reported costs from cognition amounted to €1.7 billion. This fig was powerfully affected by nan summation successful nan regulatory moving superior during nan play by €1.5 billion. Once we portion retired from this effect some years, nan FFO would person reached €3.2 billion, 26% higher than nan adjusted FFO successful 2021.

Moving to nan elaborate study of nan play connected Slide 14. We invested astir €2.3 billion, it's an 8% much than successful erstwhile twelvemonth focused connected decarbonization and networks, being 76% of these investments aligned to Taxonomy. When it comes to EBITDA like-for-like, it reached €5.327 billion. It's 25% vis-a-vis afloat twelvemonth 2021. The main drivers are fundamentally procreation and proviso EBITDA that showed an betterment of 57%, chiefly acknowledgment to nan outstanding capacity of nan state business some from nan precocious CCGT publication and nan state wholesale business.

This was partially compensated by nary recurrence impacting renewables and by little proviso results. Distribution EBITDA declined by 13% to €1.703 billion. Within nan non-recurrent effects successful summation to those recorded successful nan 9 months 2022, we person booked €113 cardinal related to regulated renewable plants.

Moving into nan EBITDA improvement of procreation and supply, and we are now connected Chart 15. Despite nan beardown volatility, our liberalized business portfolio strategy has successfully flooded marketplace headwinds. EBITDA like-for-like lands astatine astir €3.6 billion, expanding much than €1.5 cardinal excluding nan nett effect of non-recurrence.

If we spell to free power, contributed positively pinch €841 million. Mainly acknowledgment to, first, nan procreation separator description chiefly owed to higher thermal separator expanding by €0.5 cardinal mostly owed to higher CCGTs activity and nan summation successful revenues from renewable regulated output sold to spot market, this for astir €200 million; past second, nan deterioration of proviso separator that has dropped by €130 million, chiefly affected by higher ancillary services and vessel costs, resulting successful a unitary separator good beneath erstwhile twelvemonth reference arsenic commented before; and third, finally, a affirmative publication from short position guidance successful statement to erstwhile years.

If you spell to nan building artifact of Endesa X margin, location was a affirmative improvement pinch €27 million. And past nan past greenish building block, that is others, location were affirmative effects of €780 million, including betterment successful state business by astir €480 million, supported by nan affirmative improvement of wholesale activity arsenic mentioned earlier and astir €300 million, chiefly from trading. Non-mainland separator improved astir €60 million, chiefly acknowledgment to erstwhile year's resettlement. Finally, fixed costs improvement was negatively impacted by nan inflationary discourse and higher activity.

On Slide 16. Distribution EBITDA dropped by 13% to €1.7 billion, chiefly affected by little gross margin, impacted by nan update of nan regulatory remuneration for 2017 to 2019 successful accordance pinch nan ministerial bid issued past August by astir €180 cardinal and past minus €40 cardinal owed to erstwhile twelvemonth resettlements and others. Finally, fixed costs summation affected by CPI and attraction costs.

On nan P&L improvement from EBITDA to nett mean income, we spell connected Slide 17. Net mean income came successful adjacent to €2.4 billion, up by 26% year-on-year connected nan backmost of nan dynamics commented astatine nan EBITDA level. D&A is down by €444 cardinal year-on-year, explained by positive €587 cardinal of variety successful impairments minus €106 cardinal of higher amortization based connected investments summation arsenic good arsenic activated customers acquisition costs. The bad indebtedness was somewhat accrued -- bad indebtedness somewhat increased, representing now 0.46% of full revenues that is beneath humanities trend.

Net financial charges accrued chiefly arsenic a consequence of precocious liking payments nett effect for minus €100 cardinal and a higher indebtedness financing costs owed to nan summation connected nan mean gross indebtedness contempt nan little cost. This was partially offset by nan affirmative update of workforce simplification plans provisions. Rising income taxes by astir €400 million, chiefly driven by amended economical results and summation of nan effective taxation complaint to 25.6%. Minorities accrued by €33 million.

Moving to nan rate travel connected Chart 18. The FFO improvement came successful €1.7 cardinal positive, beneath nan rate generated past year. Net moving superior was adjacent to minus €2.9 billion, powerfully affected by nan €1.5 cardinal of nan regulatory moving superior increase, astir of it successful nan non-mainland business owed to regulatory settlements astatine humanities substance costs acold beneath existent market. Apart from this effect, antagonistic moving superior amounts to minus €1.3 billion, chiefly arsenic a consequence of nan logical improvement of nan business dynamics successful a discourse of higher prices, which has led to an summation successful nan measurement of nett equilibrium of receivables. FFO would person amounted to €3.2 billion, that is simply a 26% increase, nett of nan regulatory moving superior effect, which we dream should normalize complete 2023.

I will now move connected nan indebtedness improvement that is successful Chart #19. Actual nett indebtedness stood astatine €10.9 billion, expanding by €2.1 cardinal versus erstwhile year. The main operating moving parts described successful nan floor plan are nan following: location is simply a affirmative FFO for €1.7 billion, arsenic already commented; €2.4 cardinal of cash-based CapEx; and €1.5 cardinal of dividends paid corresponding to 2021 results. As mentioned before, regulatory moving superior stands astatine €2.3 billion, almost tripling 2021 fig driven by non-mainland pending compensation. Despite nan caller rising progression successful liking rates, nan costs of our indebtedness remained astatine still very competitory level, moreover little than successful 2021, reaching 1.4%.

Gross indebtedness accrued arsenic a consequence of nan already mentioned dynamics connected nan nett indebtedness being additionally expanded by nan emergence of financial guarantees required for nan commodity financial hedging contracts. Let maine punctual you that these derivative contracts are utilized to hedge margins for our autochthonal portfolio successful some powerfulness and state that are intelligibly not speculative. Moreover, collateral requirements are temporary. In fact, since September nan fig has notably dropped, reaching €6.7 cardinal owed to nan gradual diminution successful commodity prices aft nan 3rd 4th peak. And to date, nan magnitude of collaterals is moreover lower.

Regarding nan in installments metrics, and I'm now connected Chart 20. We person put successful spot a number of financial initiatives to fortify nan liquidity position, reaching levels we find sufficiently comfortable some successful nan short and successful nan mean term. Current liquidity position amounts to €9.2 cardinal pinch maturities averaging 3.2 years, and nan fixed complaint gross indebtedness correspond 58% erstwhile excluding nan collaterals. Despite nan nett indebtedness summation by €2.1 cardinal on nan period, nan leverage measured arsenic nett indebtedness to EBITDA ratio somewhat decreased to 2x from nan 2.1x successful 2021 astatine patient levels and good beneath nan manufacture average. Adjusted FFO to nett indebtedness ratio accrued by 1 percent constituent reaching 30%.

When it comes to nan specifications of nan sustainable finance connected Slide 21. Throughout nan year, we closed sustainable-linked financial transaction for an aggregate magnitude adjacent to €14 billion. The astir singular transaction is nan summation successful nan limit of our "SDG 7 - Euro Commercial Paper Programme" that went from €4 cardinal to €5 billion. Additionally, our 2024 extremity has been group for nan greenhouse state emanation KPI related to nan simplification of Scope 1 emanation successful immoderate of our financial transactions. We person besides issued an innovative information confirming in installments line, linking invoiced discounts to suppliers' sustainable performance. As a result, sustainable finance now represents 64% of our gross debt, supra nan first 2023 target and gradually approaching our 87% target successful 2025.

Let maine now manus complete to Pepe for nan last conclusions.

Jose Bogas

Okay. Thank you, Marco. Our accomplishment generated important worth creation for our shareholders. Considering a 70% payout of nett mean income successful 2022, nan Board of Directors has proposed, taxable to General Shareholders' Meeting approval, a full gross DPS costs of €1.585 per share. This dividend is expected to beryllium paid successful July 2023 successful a azygous payment. This dividend is importantly supra nan first guidance committed to successful nan business scheme 2022 to 2024 and correspond an summation of 10% versus erstwhile year.

Progress successful our operations is reflected successful our target for nan period, and I'm connected Slide #25. As shown passim this presentation, we tin beryllium proud of succeeding erstwhile again successful beating nan target we group for 2022, taking into relationship nan challenging marketplace conditions marked by grounds precocious commodity and energy prices. After this group of results, which has been perfectly extraordinary, we expect to retrieve nan maturation way pinch 8% EBITDA and 80% nett mean income CAGR by 2025.

For nan twelvemonth 2023, we maintained nan target scope announced successful nan Capital Market Day, assuming a return to nan maturation way from a much normalized twelvemonth specified arsenic 2021, considering nan bonzer marketplace circumstances we person faced successful 2022.

More specifically, we foresee an EBITDA of €4.4 cardinal to €4.7 billion, a 5% emergence versus 2021 aliases 10% if nan effect of nan 1.2% levy successful 2023 is removed. This levy implies an further taxation load of much than 15% of nan nett mean income.

Lastly, successful position of gross CapEx, it must beryllium taken into relationship that Endesa plays a basal domiciled successful nine by guaranteeing information of supply, which is why we will proceed to put adjacent to €9 cardinal successful Spain complete nan adjacent 3 years some for decarbonization and to amended nan competitory connection to our customers.

And now immoderate closing remarks earlier nan Q&A. The resiliency of our indebtedness proven integrated business exemplary has allowed america to successfully flooded 1 of nan much challenging discourse successful caller years some successful position of marketplace volatility and regulatory intervention. We proceed to clasp and pull caller customers, leveraging connected a successful commercialized strategy based connected a scope of products and services that protect them from value spikes. We invested €2.3 billion, a historically precocious amount, 8% much than nan erstwhile year, having announced for 2023 a further 20% increase, a clear objection of our committedness to power modulation process successful bid to foster power independency and little energy prices.

Finally, we would for illustration to item nan visible betterment successful shareholder remuneration pinch a 10% summation successful DPS compared to nan erstwhile twelvemonth and an outstanding dividend output of astir 9%.

This concludes our afloat twelvemonth 2022 results presentation, and I deliberation we tin now unfastened nan Q&A session.

Mar Martinez

Many thanks, Pepe. And Marco, we are now unfastened to reply immoderate questions you whitethorn have.

Question-and-Answer Session

Operator

[Operator Instructions]

Mar Martinez

First mobility comes from Alberto Gandolfi from Goldman Sachs.

Alberto Gandolfi

Welcome, Marco. I person three, please, if you don't mind. The first 2 are a small bigger image manufacture and nan 3rd 1 is circumstantial connected your numbers. So nan first 1 is, tin you show america what are you seeing regarding consequence to nan U.S. IRA successful Europe, what I would telephone nan Europe IRA? We are seeing Germany proceeding astatine nan precocious pace, precocious velocity pinch authorities connected accumulation taxation credits, supporting incremental renewables. Spain has sped up nan approval, astatine slightest biology support of permits. What are you seeing successful Spain? And really could this authorities connected a one, two, three-year ground beryllium adjuvant to you and to your business?

The 2nd is we are opening to spot a spot of a divided successful Europe erstwhile it comes to a powerfulness marketplace betterment amongst countries for illustration Spain that are suggesting fundamentally to bilateralize almost full merit order, almost; and different regions for illustration Germany, for instance, that are suggesting to support a merit order, to support an hourly competitory merchant market. What do you deliberation is going to hap connected powerfulness marketplace reform? Are we going to person a standstill business pinch nary existent outcome? Do you deliberation countries will person nan expertise to flex a small spot truthful each state will person a somewhat different approach? Or are we going to instrumentality pinch nan marginal pricing strategy pinch nan existent value caps, possibly for nan foreseeable future?

And nan constituent number 3 is nan mobility connected nan situation connected supply. If I americium not mistaken, successful Q4, you generated -- you delivered €340 cardinal of proviso clients unit EBITDA. Can I inquire you if this is correct and really overmuch would this beryllium recurring? So I don't cognize really overmuch state wholesale possibly -- I wouldn't telephone it one-off, but really overmuch of this comes from state wholesale possibly doesn't repeat? Or by contrast, is this nan due tally complaint we should now beryllium reasoning for 2023? So you're going to present much than €300 million, €350 million, whatever, successful Q1 this year.

Jose Bogas

Okay. Thank you, Alberto. And I will effort to reply nan 2 first questions and past I will springiness nan 3rd to Marco. With respect of nan alleged European IRA, I should opportunity that nan Europe needs for judge a operation of renewables and low-carbon power sources to ensure, connected nan 1 hand, nan power independence, and connected nan different hand, nan debased energy prices. Sweet robust European consequence to guarantee nan champion model conditions should beryllium done to promote nan remainder -- nan renewable power and debar nan spread betwixt Europe and nan United States successful position of competitiveness. That is thing that is based connected nan competitiveness of nan different -- and nan attractiveness of nan different regions, Europe versus nan United States.

If I'm right, nan European Union will talk this scheme on nan first quarter. So specifications truthful acold are limited, but I'm judge that nan scheme successful position easing regularisation connected taxation credit, boosting authorities aid. This is thing that we request to do because we are surviving successful a world world successful which we should return attraction astir really we could spell up pinch our scheme of decarbonization without -- pinch nan aforesaid devices of different regions, I would say. So we really observe this initiative, and we will beryllium expecting nan consequence of that.

With respect to nan 2nd question, that is nan structural betterment of nan European market, I should opportunity that this structural betterment was needed earlier this power crisis. The power modulation and nan existent power script require a caller marketplace design. As I person said, this caller marketplace creation is thing that we request erstwhile to nan power crisis.

The result of nan betterment is uncertain. Let maine opportunity that it is simply a very analyzable subject. Within that -- this betterment should beryllium based connected communal sense, that is supporting and encouraging nan committedness of nan main confederation pinch beardown collaboration, public-private collaboration and should beryllium aligned for judge pinch nan nonsubjective of decarbonization. But it is simply a very analyzable subject, analyzable taxable because successful my opinion, we should support nan marginal pricing that we person coming astatine slightest successful nan short word and besides successful nan agelong term, but we request conscionable to summation nan semipermanent contraction that we don't have.

But it's not only a mobility of nan European Commission. It's besides a mobility of nan personnel states successful which location are galore restrictions for this semipermanent contract. Indeed, this regularisation successful nan semipermanent statement should beryllium removed, successful my opinion, for nan mini customer. Things that are not allowed successful galore countries today, you cognize that you should beryllium obliged to renewal for nan statement pinch a mini customer each year. Well, location are galore things.

On nan different hand, really to really widen and summation nan PPAs contract, it's really to execute pinch nan alleged contractor differences. In immoderate case, we deliberation that this should beryllium done successful voluntary measures, trying to trim arsenic overmuch arsenic imaginable nan involution of nan marketplace having an unfastened and free market. And you're right, location are galore different positions betwixt different countries and personnel states.

What I besides inquire is conscionable to effort to forestall a fragmentation of nan market. The worst point would beryllium that nan European Union decided conscionable to springiness a wide guidelines and past nan countries will spell profoundly successful different rules. I deliberation that would beryllium a beardown mistake. So nan European Commission and nan different countries should effort to activity to get a communal statement for nan marketplace successful nan future.

And now, Marco, do you want?

Marco Palermo

Thank you, Pepe, and [foreign language] Alberto. So basically, convey you for nan question. You're right, Alberto. We person been on nan 2022. If you look astatine nan supply, of course, we person been suffering a spot during nan first mates of quarters. Then successful nan summer, we started to someway summation besides value and construe nan summation successful -- besides to our customers. And therefore, that's why nan fig that you spot successful nan 4th quarter, it's astir apt a bully proxy of what we are seeing successful 2023, truthful thing successful nan scope of €300 million. It's thing that you should astir apt expect for nan remainder of nan quarters, astatine slightest what we are readying correct now for 2023.

Mar Martinez

Next mobility comes from José Ruiz from Barclays.

José Ruiz

I person two. The first 1 is regarding Slide 7. I would for illustration to corroborate that I understand what you're saying there. Are you implying an installation complaint of renewables for nan play 2023 to '25 of 3.3 gigas per year? I'm conscionable dividing 10 gigas divided by 3 years. And secondly, you person beaten nan 2022 guidance you gave successful nan Capital Markets Day. And I was wondering, I cognize it's a small spot early, but if location is immoderate anticipation of besides beating nan 2023 net guidance.

Jose Bogas

Okay. Thank you, Jose Ruiz. First of all, our committedness and our forecast for nan deployment of renewable during nan play 2023 to 2025 is 4.4 gigawatt. That is nan correct figure.

With respect to nan 2nd mobility talking astir nan guidance, well, arsenic you person said, it is simply a small spot early. We support nan guidance communicated successful nan past Capital Markets Day assuming nan normalization of nan marketplace from nan bonzer discourse state that benefited 2022 results and assuming besides nan effect of nan 1.2% revenues levy, nan betterment aliases nan return to nan maturation way from a much normalized twelvemonth specified arsenic 2021.

For sure, we will beryllium obliged to negociate different issues aliases taxable successful nan business that will originate for sure, because we are successful a very analyzable and challenging marketplace today. You should return into relationship that we are reasoning that these bonzer results based connected gas. And if you want nan CCGTs capacity owed to nan very precocious output that we person had pinch a very bully 1 cognition successful our CCGTs, and besides nan state wholesale discourse that person fixed america nan anticipation to waste state to this marketplace pinch bonzer results. So location are galore things. It's a small spot early, but we support and proceed our guidance. For sure, we will activity conscionable to amended these results.

Mar Martinez

Okay. Many thanks, Jose. We move now to nan adjacent analyst, Manuel Palomo from Exane BNP.

Manuel Palomo

Welcome, Marco. Three questions from my side. Number 1 is connected M&A. I wondered whether you could please update america connected nan improvement of nan imaginable waste of state contracts aliases state clients that was announced by Enel successful past November presentation. That would beryllium nan number one.

Second 1 is connected nan views astir nan integrated margins and proviso for nan adjacent year. We've seen a monolithic summation successful nan integrated separator successful '22 to 42-megawatt hour, a alteration successful nan proviso separator to beneath 8 according to nan presentation. And I was wondering whether you could springiness america any, well, immoderate position astir what you deliberation we will spot by nan extremity of nan twelvemonth 2023.

And nan past 1 is simply a spot connected nan dividend. The dividend that you are proposing is adjacent to €1.59 per share. And if I return nan midrange of nan 2023 guidance and according to nan 70% payout ratio, this would mean that by 2023 aliases successful 2023, we would spot a important diminution successful nan dividend, astir 50%. I besides spot that your equilibrium expanse is very healthy, beneath 2x nett debt-to-EBITDA. So I wonderment whether you person immoderate scheme to astatine slightest partially offset nan cliff successful nan dividend?

Jose Bogas

Thank you, Manuel. Marco, could you please reply nan question.

Marco Palermo

[Foreign language], Manuel, truthful convey you very much. Let's commencement pinch nan first one, that is nan easy 1 connected nan M&A. On nan M&A side, we didn't moreover commencement really pinch our dialogues, logic besides being that nan marketplace has been very volatile. Now astir apt what we are seeing is simply a fewer weeks pinch little volatility. And astir apt pinch this environment, it could beryllium nan bully situation conscionable to commencement talking and knowing whether that could beryllium taxable willing successful speech pinch us. But for nan clip being, we are really astatine nan beginning. So location is -- it didn't moreover commencement actually.

On mobility #2, connected nan integrated separator and connected proviso and really connected guidelines 2023, you're right, location was -- location has been an increase. You've seen it astatine Page #9 successful our free powerfulness unitary margin. What we spot for 2023 is that we're assured we could support this level moreover earlier we imporve it a bit. And I would opportunity that this besides use really moreover much to nan proviso margin. We person been suffering, arsenic you tin spot successful Chart #9 this year, but we judge that successful 2023 we tin spell backmost to thing akin to 2021, astir apt besides location a spot better.

So -- and connected mobility #3, yes, you're right. There is -- location will beryllium a important decline, but it's -- I cognize that it's difficult. But here, if you look astatine humanities nan trends of nan results of this company, what is really someway unusual is consequence of 2022. If you return and look astatine nan historical results, this -- nan 2023, we are someway guiding you now is 2023, location is still an summation erstwhile compared to a twelvemonth for illustration 2021.

Of course, it's only a 5% increase. But because you person to return into relationship nan levy connected nan revenues, that we are suffering someway and that will suffer adjacent -- this twelvemonth and adjacent year. If you neutralize that, would beryllium an summation of 10%. So I mean, for nan clip being, that is our target.

Mar Martinez

Okay. Next mobility comes from Jorge Guimarães from JB Capital.

Jorge Guimarães

I would inquire you if you tin elaborate a spot connected nan improvement of moving superior successful Q4 2022 because apparently it deteriorated somewhat against nan September '22 figure, and not only for nan regulatory moving capital, besides for normal moving capital. So if you tin elaborate, namely successful nan discourse wherever earthy worldly costs person travel down. And nan 2nd 1 would beryllium if you tin springiness america immoderate ray astir nan improvement of nan collaterals aliases guarantees, nan €6.7 cardinal worth that you mentioned successful nan presentation. Just you told america that it's going down, but if you tin beryllium a small much circumstantial connected that. So those would beryllium nan 2 questions.

Jose Bogas

Okay. Thank you, Jorge. Marco will answer, but fto maine opportunity erstwhile you talk astir nan [Graviton] from September successful nan moving capital, it is owed chiefly to nan regulatory moving capital. And that is owed to nan nickname of nan mid state prices successful nan state -- for illustration nan state value reference for nan island. In position of nan collateral also, what we said is that during nan twelvemonth 2023 and nan twelvemonth 2024, we will spot a alteration of these collaterals. And connected apical of that, what we person seen is simply a simplification successful prices. So nan simplification of nan collaterals are higher than nan ones that we forestall previously. But successful immoderate case, Marco will spell deeper successful these questions.

Marco Palermo

Thank you, Pepe, and [foreign language] Jorge. So let's commencement pinch nan moving superior successful 2022. Here, I mean, we painted nan 2 blocks, because we really judge that it's paramount value that you person a look astatine both. The regulatory moving capital, of course, is benignant of astonishing. It's a very large number and it's someway impacting us. It is thing that came clear astatine nan extremity of past twelvemonth successful December. So I mean, that's why it is there. And we dream that this will someway resoluteness on nan year. When you spell to nan remaining, to nan remainder and to nan different building block, to nan remainder of nan moving capital, I would opportunity that, that is simply a consequence of nan logical improvement of nan business dynamics because we person higher prices.

If you look astatine our revenues, it's a very important twelvemonth successful position of our revenues. And this, of course, pinch higher prices, leads besides to an summation successful nan measurement of nett equilibrium of receivables. So I mean, someway this is thing that goes pinch nan travel of nan business. The much -- and pinch immoderate time, you spot prices someway dropping and nan much of this will someway squeeze.

When it comes to collaterals, you retrieve that successful nan 3rd 4th past year, they were astatine apical high. We closed 2022 pinch this €6.7 billion. The number now, what we were expecting was a alteration successful this number of short of €0.5 cardinal per period that what we are really seeing it's thing much than that. That is someway starring america coming to thing adjacent to €4.5 billion, moreover person to €4 billion, I would say.

And why so? For what I was saying before, really what we are experiencing is simply a little volatility, and this little volatility is somehow, not only nan price, someway impacting nan petition of collaterals. So someway nan business seems unlocking faster than we thought.

Mar Martinez

Thank you, Jorge. We person now Robert Pulleyn from Morgan Stanley.

Robert Pulleyn

I person 1 question, conscionable a follow-up connected nan remark astir collateral and moving capital. Would you beryllium consenting to springiness a guidance connected nett indebtedness by nan extremity of nan twelvemonth fixed nan comments you conscionable gave astir those 2 large moving parts?

Marco Palermo

So connected guidelines connected adjacent twelvemonth connected nan nett debt, I mean, what we are seeing, it's an increase. Why so? There are things that are facts. I mean, we cognize that location are higher rate taxes. We said astir this levy. We cognize that location will beryllium besides a higher financial payment. There will beryllium higher rate CapEx because of our -- you person seen our scheme of CapEx for adjacent year. And location will beryllium besides an summation successful nan dividend and costs because of nan -- of what we are someway communicated to you.

So each of this is someway starring to an summation successful nett debt. Then, of course, location is this 1.5 of regulatory moving superior that we person to spot really this would evolve. So I mean, if it is -- if location are bully news that, that will beryllium affirmative news for us. And past we person besides to spot successful nan different rate components of nan EBITDA on nan year, depending besides connected really things evolve. So we expect an summation because of immoderate facts, but past we person to spot what hap connected nan regulatory side.

Mar Martinez

Thank you, Rob. We person now Javier Garrido from JPMorgan.

Javier Garrido

I deliberation I person conscionable 2 questions left. First 1 is 1 constituent you person not mentioned astir nan guidance for 2023, which is nan guidance of nan short procreation position. What are you assuming successful your guidance for that? What publication from this guidance and nan short position are you assuming whether you spot upside to that presumption aliases not?

And past nan 2nd mobility connected nan islands. While we hold for our moving superior normalization -- aliases really 2 things, firstly, what should beryllium successful nan publication of nan islands successful 2023 now that you person sewage this authorities ruling that products that reference to nan mid-gas? And secondly, if you could supply immoderate indication, I cognize it's difficult, but an denotation connected erstwhile you tin spot nan moving superior normalizing peculiarly successful a discourse wherever commodity prices are now lower, whether that could thief you besides to spot normalization of regulatory moving superior successful nan islands?

Jose Bogas

Okay. Let maine springiness you immoderate colour to this mobility and past Marco will answer. The short position, well, we person not considered short position successful our business plan. We reached thing for illustration €200 cardinal successful nan twelvemonth 2022. And it is existent that it's going to beryllium an opportunity successful nan early for america because we are a small spot short and prices are going down. So that intends that possibly that will springiness america -- aliases we consciousness comfortable pinch this position for nan twelvemonth of 2023. And pinch respect to nan land and nan moving capital, I would opportunity that what we are expecting successful nan twelvemonth 2023, first of all, is our results very akin to nan 1 that we person obtained this twelvemonth 2023, possibly a small spot little conscionable because we person had immoderate benignant of resettlements -- affirmative settlements successful nan twelvemonth 2022.

And nan moving superior normalization, fto maine say, we started nan twelvemonth 2022 with, if I'm right, thing astir €700 cardinal to €800 million. And we person reached €2.3 1000 successful nan twelvemonth 2022. That is perfectly an abnormal situation. That -- it's owed to a immense hold successful nan settlements of nan regulator, and connected nan different hand, nan summation of prices, not nan update of these prices by nan regulator pinch nan colony based connected humanities prices. So I don't know. It's going to beryllium thing that depends connected nan regulator. But we, for sure, pushed to get nan correct settlements arsenic speedy arsenic possible.

And Marco, do you want conscionable to...

Marco Palermo

No, I conjecture location is thing other really to add. You did it very well.

Mar Martinez

Thank you. Next mobility comes from Javier Suarez from Mediobanca.

Javier Suarez

A follow-up mobility connected nan moving capital, nan moving superior thing. Again, connected nan regulatory moving capital, evidently location is an summation that is important and is related to nan deficiency of colony for nan non-mainland operations. So what do you deliberation is simply a reasonable expectations successful people's mind? Is that nan anticipation that this is going to beryllium recovered successful 2023? Or do you deliberation that nan play to retrieve that €1.5 cardinal is going to beryllium a longer play of time? That would beryllium helpful.

The 2nd mobility is besides connected nan moving capital. The remainder moving capital, nan point that you specify arsenic remainder moving superior this €1.3 billion. Is it a adjacent presumption to make that location is going to beryllium a simplification this year, a important simplification because of nan little request to finance gas-related collateral? And if so, really do you spot that number evolving and beryllium by nan year-end?

Then nan 3rd mobility that I person is connected nan improvement of nan powerfulness market, nan electricity-free powerfulness marketplace wherever nan institution has shown a important summation successful nan number of clients, positive 15%. The mobility for you is tin you thief america to understand nan move connected caller contracting and accusation for your profitability successful 2023 and '24? And past nan last mobility is connected nan levy, nan 1.2% Spanish levy. If you tin punctual america your -- what do you see successful your guidance for 2023 and '24?

Jose Bogas

Okay. Javier, I will effort to reply nan third, nan 4th mobility and past Marco will reply nan first questions. With respect to nan 1.2 bonzer levy, fto maine opportunity that our presumption was thing astir €250 cardinal for nan twelvemonth 2023, astir €300 cardinal for nan twelvemonth 2024. Having said that, nan updated estimate for 2023 effect is thing astir €200 cardinal alternatively of €250 million. In immoderate case, fto maine elaborate a small spot much successful this. Well, we will spot what happen. As you know, we see this levy to beryllium contrary successful our sentiment to nan proviso of nan European regulation. And possibly successful -- besides successful our opinion, it is unfair, successful my opinion, taxing revenues and not bonzer profit. So well, we will spot what happens. And successful immoderate case, going to nan constituent of your question, we are expecting now €200 cardinal successful nan twelvemonth 2023. And now Marco, if you want to...

Marco Palermo

Thank you, Pepe. [Foreign language], Javier. So let's spell backmost to nan moving capital, nan first 1 connected nan regulatory. There, I mean, nan banal of regulatory moving superior correct now, it's €2.3 billion. It is fundamentally astir of it aliases almost it related to islands. So it's an important banal of moving capital. It's very difficult to make an presumption connected this, astatine slightest to cognize what will happen. What we are seeing is that actually, this is nan stock. There was this summation of 1.5. This is nan banal and that's it. But we, of course, will activity to retrieve astatine slightest portion of it. But for nan clip being, that is what it is.

On nan remaining constituent of nan moving capital, you were correctly referring to nan truth that it looks for illustration location are events that are astir apt pushing this number down: connected 1 side, nan improvement of nan business that we are foreseeing these first fewer months; nan different side, nan simplification connected collaterals. So yes, location are someway inputs that could spot these numbers someway squeezing, but -- and I mean, let's spot really nan remainder of nan twelvemonth would evolve.

Regarding nan 3rd one, that is nan caller clients. Actually, you've seen we had almost 1 cardinal of caller clients. And arsenic you person seen astir apt successful our business plan, we foreseeing moreover expanding this number on nan period, different 400,000.

Now what are nan implications of these caller clients? Actually, you have, connected 1 side, you person a higher CapEx because of nan costs of acquired. So you person besides immoderate impacts connected nan D&A, connected nan amortization of this CapEx. But of course, you person besides affirmative effect connected margins. Those are free powerfulness marketplace clients and location is -- location could beryllium a higher separator there. So those are really nan effect that you will see. We are seeing a normalization successful this acquisition of clients, moreover though what we are seeing for these first fewer months, it's a positive, but of course, nan marketplace is continuously changing. So we do spot a normalization and not connected nan aforesaid level that we person knowledgeable successful 2022 that were really extraordinary.

Mar Martinez

Okay. And now we person nan past group of questions that travel from Jorge Alonso from Societe Generale.

Jorge Alonso

I mean, I person conscionable a mates of questions left. It's much related to nan state and perchance to person immoderate state trading activity arsenic good successful 2023. If you still spot nan request of state to stay anemic and leaving immoderate state readiness for imaginable opportunistic transactions. I cognize that location nan prices that astir apt are not nan ones seen past year, but you ne'er cognize what's going to hap successful nan remainder of nan year. So conscionable to spot if location is imaginable room to spot again immoderate upside connected nan state trading.

And nan different mobility is related to nan -- your position astir nan installation of star capacity successful Spain successful nan coming years pursuing nan magnitude of biology permits that nan cardinal authorities and section administrators person granted recently. If you spot things tin alteration and accelerate aliases for financing reasons aliases PPA marketplace conditions, you do not spot an acceleration of installations.

Jose Bogas

Thank you, Jorge. Let maine reply and past I will springiness nan connection to Marco conscionable to spell heavy connected nan question. First, pinch respect to nan imaginable upside successful nan state marketplace and nan state trading, you should return into relationship that nan prices successful this twelvemonth 2023 are little than nan ones successful nan twelvemonth 2022. So that opportunity is little than nan 1 that we person successful nan erstwhile year.

On nan different hand, we judge that this state marketplace will proceed being weak. So that intends that we will have, successful my opinion, immoderate benignant of opportunities that perfectly not comparable pinch nan erstwhile year. With respect to nan 2nd question, you are right. If I'm right, it has been approved, thing for illustration 55 gigawatts that should beryllium put into cognition earlier June 2025. That is almost, fto maine say, impossible. I mean, it's intolerable because if I'm correct again, this twelvemonth -- past year, 2022, we person to summation astatine nan level of nan Spanish market, 5-point something, 5.5, let's say, gigawatt. We person deployed that successful this twelvemonth 2022.

So if we want conscionable to really fulfill nan dates that we person now astatine nan level of nan Spanish energy system, it could beryllium needed conscionable to deploy, let's say, 20 gigawatt each twelvemonth nan adjacent 2.5 years. So that is important. I don't cognize if that is going to hap successful nan future.

Let maine springiness you different figure. We person coming installed capacity, wind, solar, thing astir 50 gigawatts that we person been building during a very agelong play of time. And now we person to add, let's say, nan aforesaid magnitude successful 2.5 years. So I don't cognize what could happen. But I deliberation that it could beryllium imaginable to guidelines nan day aliases we will spot what happened. But it's very, very difficult and unthinkable situation. We will spot what happened. And Marco, if you want...

Marco Palermo

Thank you, Pepe. Again, connected nan state trading. So basically, there, Jorge, Pepe was right. There is simply a overmuch little value correct now and little volatility, truthful little chances. Now that said, you were correct besides connected nan trends. We still do spot a inclination successful clients to effort to prevention connected state and truthful besides successful consumptions. This intends that this could free state for different uses. Now this prices doesn't look truthful interesting. We person to spot what will hap successful nan early erstwhile astir apt nan retention beryllium filled again. So there, I conjecture that if location will beryllium chances and spikes and volatility, we will astir apt beryllium fresh conscionable to drawback them.

Mar Martinez

Okay. Thank you, Jorge. We are done pinch nan questions from nan call, and we person conscionable 1 pending mobility received from nan web. That is, by erstwhile do you expect nan levy rolling connected nan 1.2% taxation levy connected revenues? And really assured are you astir nan outcome?

Marco Palermo

Well, I conjecture that connected nan levy, nan existent news location is that, of course, together pinch each nan different utilities and actors, I mean, we person decided conscionable to spell against it. We judge -- we do judge that this is thing that it's unfair, and we do judge that we person chances to triumph this. But I mean, nan timing for this, it's -- of course, we each cognize besides what nan effect of this could be. But I mean, connected nan timing, it's difficult to say.

Mar Martinez

Okay. This was nan very past mobility of nan call. And conscionable to opportunity convey you for your participation. And arsenic always, we are unfastened to reply immoderate questions you whitethorn person done IR department. Thank you very much. Have a bully day.