Edp Renewables Sa U/Adr

Good afternoon. We welcome you to the EDP Renewables first quarter 2025 results presentation conference call. During the presentation, all participants will be on a listen-only mode. There will be an opportunity to ask questions after the presentation. If you wish to ask a question during the Q&A session, you may do so by pressing the Start key followed by 5 on your telephone keypad. If you're experiencing any difficulty listening to the conference at any time, please make sure you have your headset fully plugged in Or alternatively, please try calling from a different device. And now I'll hand the conference over to Mr. Miguel Piana, head of IR and ESG. Please go ahead, sir.

Good afternoon, everyone, and thank you for joining us for EDPR first quarter 2025 results conference call. Today we have with us our CEO, Miguel Suel Andrade, and our CFO, Rui Teixeira. They will present an overview of the financial performance for the first quarter and also provide guidelines for the full year outlook. Following the presentation, there will be an opportunity for a Q&A session. Questions can be submitted through the conference chat or over the phone. The call is set to run for 60 minutes. With that, I now hand over to Miguel Suelendran.

Thank you, Miguel. Good afternoon, everyone. I guess I'd like to start off just by giving a brief word on the blackout last week, which is obviously a highly exceptional and impactful event. event for Portugal and Spain. And I really want to take this opportunity to both recognize and also congratulate the great work done by the EDP and the EREDIS teams, the distribution business teams in Portugal and Spain, and for the really swift and efficient restoring of the energy to the customer. So, as I said, this is really an unprecedented event. No one can ever really fully simulate this. I believe the teams reacted very well in difficult circumstances. As you know, the root cause of the event is still under evaluation. However, I think it's safe to say that this incident really highlights the importance of ensuring the robustness, reliability and adaptability of the electricity system. This includes continuing investment in grid infrastructure, energy storage and other flexibility sources, and also advanced control and frequency response mechanisms, including ancillary services. I think it's very clear for us and I think for most people in the sector that renewable energy will play a crucial role in the energy system of both the present and the future. And so the energy transition is happening and the increased penetration of renewables must be accompanied by an increased sophistication of the electricity system to create a system that is clean, reliable, and affordable. And I think that's a good starting point to move over and talk about our first quarter 2025 and give a brief update on our business performance. So I turn over two slides before and talk about just... A quick summary. First, I think there's solid first quarter results for EDP renewals. They were supported by capacity expansion, operational efficiency. I'll talk a bit more about that later on. Installed capacity reached 19 gigawatts, 19.3 gigawatts. Reflects a 17% increase year on year. Net additions of 2.8 gigawatts, including 3.4 gigawatts of gross additions and around half a gigawatt of asset rotations. So we're talking about almost 20 gigawatts of wind, solar, and batteries. And I think this gives us a scale and the corresponding economies of scale that very few other renewable companies have. Electricity generation grew 10% year on year, totaling around 10.9 terawatt hours, benefiting from renewable resources that was around 1% above the long-term average. This compares to around minus 2% in the first quarter of last year. Onshore wind. remains our primary assets. It represents 82% of our generation. And we had good wind resource in the US and in Brazil, certainly compared to last year. But we had a very weak quarter of wind in Europe. It was, in fact, the weakest quarter in the last 86 years. So this is relevant when we also talk about the average selling price for EDPR as a whole. Pricing dynamics. We saw an average selling price decrease of around 5% year-on-year. So it was around 57 euros per megawatt hour. And as I mentioned, it was impacted by lower prices in Europe and South America, although it was partially offset by better price performance in North America. On the cost side, I think impressive numbers, core OPEX per average megawatt in operation decreased 9% year-on-year. That's reflecting an improved efficiency and very strong cost control measures. Excluding asset rotation gains, our underlying recurring EBITDA saw a 20% increase year-on-year, so that's significant. And it highlights a really strong business execution. So overall, recurring EBITDA reached around 477 million euros, around 5% up versus last year. Finally, recurring net income reached 66 million euros, 44 million more than last year, excluding the asset rotation gains we had last year. That underscores GDPR's profitable growth despite market challenges. If you look at slide five and then take a step back and just talk a little bit more about our premium existing asset base. We've got a very strong position with high quality diversified asset base. Our installed capacity, as I mentioned, 19.3 gigawatts, almost 19 gigawatts, primarily focused on North America and Europe. These two regions represent around 85% of our global footprint. Looking at our technology mix, Onshore wind, as I say, is the main pillar and 80% of our asset generation base, then around 20% of solar. Contracted profile also remaining robust, talking about 70% of our portfolio secured on the long-term agreements, averaging around 11 years of remaining maturity. I think this gives us good stability and predictability for our operations moving forward. So beyond our existing capacity, we remain well positioned for future growth opportunities. And I think this diversified strategy, we're also reinforcing our commitment to sustainable development and long-term value creation for the shareholders. If you look at slide six, I'm talking about delivery of the two gigawatts for 2025. So we're very focused on disciplined execution, making sure we've got delivering on time and on budget. For this year, we have clear visibility on the delivery of the two gigawatts of new capacity with all projects already under construction and approximately 70% scheduled for commissioning in the fourth quarter. If we break this down by region and technology, so US and Europe will have about 80% of the total additions. So we'll keep this sort of balanced strategy across geographies. In terms of generation mix, talking about approximately two thirds of a new capacity will come from solar and storage. So that reinforcing our diversification. In North America, around 80% of new installations will focus on solar and storage. And in Europe, it will be a combination of solar and wind projects too. And we're deploying that in markets like Italy, Germany, and France. So as I say, all projects actively progressing, scheduled for completion by the end of 2025, with most of them coming in towards the end of the year. And really strong focus here on just making sure we're delivering them on time and on budget. And I think we have good reason to believe that that will be the case. given the stage of progress that we've seen on the projects. On slide seven, talking about supply chain, because I know this is something that comes up often in discussions with investors and with many of you on the call. So taking a step back, since our, as you know, we had issues in the US a couple of years ago with the supply chain, we completely reconfigured our procurement strategy to focus on the supply chain, making sure it was more resilient given the trade dynamics. And so we've prioritized domestically manufactured equipment, particularly in the U.S., and I think we've developed strong relationships and partnerships with the U.S.-based suppliers. And this really helps us mitigate the risks associated with the import tariffs over the last couple of weeks. So for 2025 and 26 secure capacity, we've already ensured that we have the infrastructure to keep the projects on track. Most of the equipment is either already in the US or not subject to tariffs, either because they're domestically made or because they're specifically exempt. So we've done a relatively detailed analysis based on the information that we have at the moment. So looking in terms of financial impact, we're estimating the tariffs have a relatively immaterial impact on our revenues and secure capacity. I mean, talking about less than $25 million around 1% of capex for these projects. And they're mostly related to non-major components imported mainly from either Europe, Canada, or Mexico. So I think having looked at where the tariffs are and sort of, I think it was really important that we did this restructuring of the supply chain a couple of years ago too, so that we can go through this time of uncertainty with much lower risk. Talking about the IRA. So the tax credits framework, that's a key pillar for our investment strategy. We have more than 1.5 gigawatts of projects secured under safe harbor agreements. We've protected our developments from changes to legislation with this safe harbor. Also, and I think I'd mentioned this on previous calls, new PPAs under negotiation, we are including clauses for changes to the IRA and potential tariff impact. So we see continued resilient PPA demand, good pricing levels across the markets, we see strong support coming from regulated utilities and corporate entities that are demanding good PPAs and renewable energy either because they're reshoring manufacturing or building new data centers, electrifying installations. I think all of this is contributing to strong demand. So given these dynamics, we think that there will be reasonable flexibility in the market to adjust to prices depending on any changes to the ROA, which are done. At the same time, we're also leveraging our U.S. supply chain. As I said, given the procurement adjustments that we did in the past, we have flexibility. We've mitigated the impact from import duties and tariffs. We've got a multi-year agreement with First Solar. It was announced back in March of 2023, and that gives us access to U.S.-manufactured solar modules. And so it gives us good confidence on our project pipeline for 2016 and 2017. So given all of this, I think EDPR remains well positioned to capture growth opportunities in the U.S. market while maintaining financial discipline and supply chain resilience in the years ahead. If we move on to slide eight, I'd just like to give a word on electrification needs. First, just to say the global energy landscape, it really continues to evolve very quickly. But one thing is very clear. There is Electrification is at the center of this transformation. I think we're seeing that very clearly. In the US, we're seeing growing demand for power. There have been various reports coming out even more recently talking about this demand. And this is requiring accelerated renewable development despite the current market uncertainties. Renewables, and this has also been discussed, it's really the only technology that's ready to meet this demand today. I mean, talk about other technologies, Most of them you're talking about 2030, 2035 and beyond. Truth is, if you want power delivered, 25, 26, 27, I mean, you're talking about solar, you're talking about wind, you're talking about battery storage. These are immediate solutions. And some of the other conventional alternatives are still a way away in the decade of 2030s. That's in the US. In Europe, electrification continues to be a top priority. It's been reinforced by the European Commission mandate, and particularly given energy independence and reducing the dependency on gas. So I think there will be a strong push for industrialization and energy security. You've had strategic plans like the Clean Industrial Deal. You've had things like the Affordable Energy Action Plan, all of this driving decarbonization. They've set up targets. we continue to see electrification rates continue to increase. We're estimating around 32% by 2030 and around 100 gigawatts of renewable energy annually until then. So definitely also progress here in Europe. We still think that the issue is not at the European macro level. It's very much more at the country level, where you still need some regulatory action to drive further investment. But all in all, I think we strongly believe that renewables and storage remain critical technologies for satisfying this electricity demand, both in the short and the medium term, and to reinforce security of supply and autonomy. With that, let's move on to slide nine and talk about gross investment. So we're estimating for 25 gross investment at around 3 billion. That includes financial investments relating to ocean winds. Most of this obviously is directed towards capacity expansion and portfolio optimization. We will have a decline in the payables to fixed asset suppliers in line with a decrease of construction activities. A big part of our investment strategy is the asset rotation program. As you know, we're expecting to generate around 2 billion in proceeds throughout the year. So that's helping finance this gross investment. We're expecting proceeds of around 1 billion from tax equity. That's obviously also an important point. I'm sure we can then talk about that as well. We also expect a stronger year-on-year organic cash flow driven by operational efficiency and revenue growth. So that will also provide further support for investment execution. So a combination of all of these things make us believe that we'll have a good growth over the next couple of quarters. Disciplines, keeping net debt at a stable level of approximately $8 billion by year-end. And obviously there will be, you know, fluctuation on a quarterly basis, but by year end, we think that we'll have it around $8 billion. As we move forward, the focus is clearly on balancing growth and financial resilience, the balance sheet, and just keeping a robust investment framework for the following years. And on that, I talk about Site 10, just on the asset rotation. I think sitting here today, 8th of May, saying that we're feeling good about the asset rotation program. It's progressing well. We've had solid demand in the various different regions, despite the prevailing high interest rate environment. So to be honest, we're feeling pretty confident about this. We secured already around $0.2 billion in proceeds from asset rotation transactions already. We have some additional processes which are advancing, and we expect to be able to announce them this summer, some of them even in a much shorter term. The remaining transactions will be finalized then towards the second half of 2025. Overall, we are also planning to sell some 49% stakes in some cases, more in the US, in Europe, we'll be keeping sort of the 100% stakes. In terms of asset rotation gains, we're expecting a contribution of around 0.1 billion this year. Let's say 2025 includes some high CapEx assets, but we'll also be selling some minority 49% stakes that will optimize our investment profile. And they'll also have some specific balance sheets and advantages for that. So all in all, I think feeling good about asset rotation program, seeing strong demand and good pricing. So I think that's certainly a positive note there. For 2025 guidance. So our recurring EBITDA guidance for 2025 is, We're going, as of today, at around 1.9 billion euros. That includes approximately 1.1 billion asset rotation gains. In terms of generation, we're talking about 41 to 43 terawatt hours expected for the year. This compares with 36.6 in 2024. And obviously, this growth is driven by increased capacity. Renewable resources seem to be more normalized. Basically in terms of volume, that's our base case at the moment. Average selling price, we're expecting it at around 55 euros per megawatt hour, slightly lower than the 57 euros per megawatt hour in the first quarter. And that's assuming lower European wholesale prices. We're also assuming a Forex at around 1.1 euros to dollar. So obviously there's been some devaluation in the dollar more recently. And so we had around 1.05 in the first quarter, but we're assuming sort of for the year at 1.10. Regarding net debt, we're, as I mentioned earlier, assuming around 8 billion for the end of the year, 3 billion in gross investments offset by the 2 billion in asset rotations and 1 billion in tax equity financing. I mean, simplistically, that's how we're looking at it. Moving forward, very strong commitment to cashflow discipline, executing growth strategy, leveraging our scale, leveraging our competitive advantages in the different markets, and just making sure that we'll deliver our 2025 targets successfully. And with that, I'd hand over to Hui to walk you through the first quarter financial results. Thanks.