Endesa Sa Madrid

Hello, good evening everyone. Today's first quarter 2026 results presentation will be led by our newly appointed CEO, Jan Armani, whom we warmly welcome today, together with the CFO, Marco Palermo. Before we start, let me remind you that after the presentation, we will have the usual keynote session. Thank you, and now let me hand over to Mr. Armani.

Thank you very much, Mar, for your kind welcome. I've only recently taken up the role of CEO, and I would like to ask you the indulgence for a brief settling in period. For this reason, during the Q&A session, I will take slightly a secondary role, giving the floor to our CFO that will answer questions. to all your questions professionally. Thank you very much for the understanding. The quarter delivered solid financial results, with the BDA growing 14% and net income rising 24%. The performance was primarily driven by the distribution business, which continues to to demonstrate its strength supported by effective and disciplined management of our grid and in the environment of the new regulatory framework. Once again, the period highlights the resilience of Endesa liberalized business model. Despite the environment shaped by the geopolitical uncertainty, the ongoing volatility of the energy markets Our strategy has enabled us to deliver consistent and robust results. Finally, the portal highlights the strategic importance of a well-diversified energy mix where renewables and nuclear generation, along with demand electrification, remain a key to strengthening the energy independence and ensuring price stability. These pillars are essential not only for the energy transition but also for increasing the resilience and the reliability of the systems and would add to contribute to the growth of Spain as a country. The strong operational and financial execution provides the necessary visibility and the confidence to confirm the full year guidance. With that, I will turn to the operational and financial developments of the period. On slide four, let me briefly comment on the operational evolution during the quarter. Starting with generation, the total output increased by 8% year on year, reaching more than 14 terawatt hours. The performance was primarily driven by higher renewable production, which was 18% compared to first quarter last year. Hydro output increased 13%, benefiting from very favorable rainfall conditions during the period, while our reservoirs stand at record levels. At the same time, wind and solar output grew 24%. Supported both by both higher installed capacity and solid resources conditions. Nuclear output was slightly lower, reflecting the scheduled reflowing outages. Overall, degeneration from not emitting technologies, including nuclear, accounted for approximately 87% of total peninsular production. At the same time, CCCT generation was materially higher, benefiting from the increased demand for backup services for the TSO. Meanwhile, the sales slightly decreased by 5% to 18 terawatt hours, mainly driven by lower index volumes on Iberia, mostly B2B customers, more exposed to market uncertainties and fixed price sales remain stable instead. Finally, the number of free power customers grew by 3% year-on-year to 6.4 million, including the contribution of Energia Collettiva, which added just about 300,000 customers annually. on power portfolio from the market perspective I'm now on slide 5 the current geopolitical tensions around the Strait of Hormuz have once again placed the energy market on the forefront of the debate while the distribution of commodity supply routes is certainly affected by affecting the global markets as far as gas is concerned. Strong US LNG flows into Europe have limited the impact if you see it on quarterly pricing levels compared to last year. TTF spot price averaged around 40 euro per megawatt hours in first quarter this year, representing 15% decline year on year. At the same time, the CO2 prices reached 76 euro per ton, up 4%. This evolution is not particularly linked to the energy crisis, but more into structural factors linked to the progressive tightening of EU ETS mechanism. and the introduction of the carbon border adjustment mechanism, the CBAM. As a result, the average variant pool price in the first quarter stood at 44 euros per megawatt hours, down 48% year on year. This notwithstanding the conditions, the crisis conditions on the commodities. These comparatively low price levels has helped to contain the power bills, absorbing the impact of exceptionally high ancillary services costs driven by the TSO-reinforced operation in dispatching since April 2025 blackout. From a cross-country perspective, Spain's average price remains very competitive when compared to main European economies, underscoring the reduced exposure to volatile prices thanks to the high share of renewable energy sources and a reliable nuclear fleet that contributes to reduced exposure. On slide six, we reviewed the demand evolution trends. Electricity demand at the start of the year keeps showing a growth trend consistent with the previous quarters. On adjusted basis, mainline demand grew around 1% year-on-year. which compares to 1.7% demand increase in these areas, mainly leveraged on a steady contribution from services, business, and residential consumption. The weak performance of industrial sector appears linked mainly to the uncertainty on the geopolitical scenario. In this context, the high level of network congestions across all major distribution nodes remain the critical concern for the future. As of April's last available figures, Spanish power grids saturation reached 90%, which largely hinders the connections of all these new demand vectors. It is clear that to unlock the potential that contains the total cost of energy, grid bottlenecks and inefficient system operations should be solved. Therefore efforts must be focused on providing comprehensive framework to foster required investments in distribution for network security and voltage management. I will now hand over to Marco for differential results.

Thank you. Thank you Gianni. So turning to slide eight. you can see the solid financial performance delivered in the first quarter of 2026. EBTDA reached €1.6 billion, representing a 14% year-on-year increase, like Gianni was mentioning, while net income amounted to €0.7 billion, up a strong 24% compared to last year. Net debt increased by €0.5 billion to €10.6 billion, with the net financial debt to EBITDA ratio remaining stable at 1.8 times. Moving now to slide 9, if we now focus on the main drivers behind the strong financial performance, EBITDA reached €1.6 billion, up 14% year-on-year, supported by, first, the network's EBITDA increase by 45%, representing approximately 200 million euro, mainly supported by the new regulatory framework and the effect of positive previous year resettlements from the update of some remuneration parameters. Generation and supply, EVTDA remained almost flat, driven by, on one side, stable renewables EVTDA, reflecting better volumes in the quarter, offset by the negative price effect from lower references. On the other side, flat customer EBITDA with resilience in gas business and power margin stability, although impacted by higher than expected ancillary services costs, as we commented before. And lastly, in conventional generation, EBITDA was almost flat, with the normalization of gas management margin offset by progress on the efficiency plan. Now on slide 10. These dynamics are reflected in the performance of our integrated power and gas unitary margins. The pre-power margin amounted to 54 EUR per hour, remaining flat year on year, despite higher ancillary services costs. Meanwhile, the gas unitary margin stood at 10 euro per megawatt hour, broadly in line with expectation, as it began to normalize from the exceptionally strong levels recorded last year. Moving now to slide 11, further below EBTDA, net ordinary income came in at 0.7 billion euro, 24% up versus the first quarter of 2025. reflecting strong operational performance and improving the net ordinary income to EBITDA conversion ratio to 44%. DNA remained flat at €0.6 billion as the lower bad debt offsets the increased amortization linked to higher investments. Financial results, almost flat year-on-year. lower cost of debt on one side that offsets the increase in average gross debt. And finally, the effective tax rate stood at around 20.5%. Turning to the next slide, I'm on page 12 now. Cash generation remains strong, with funds from operations standing at 1 billion euro and a cash conversion ratio of 65% FFO to BTDA. Over the period, net financial debt increased by €0.5 billion, up to €10.6 billion. This reflects dividend payments of €0.5 billion, together with the execution of the share-buy-back program, which generated a cash outflow of around €300 million. Gross financial debt rose by €1.2 billion, while the average cost of debt improved to 3.1%. And now I hand over to Gianni for the closing remarks.