Resilience. Throughout 2014, in times of presentation of quarterly results, the president of EDP, Antonio Mexia, was highlighting the company’s ability to offset negative impacts with cost control and competent management. And so again made this Tuesday in the presentation of the annual results of 2014, the profit of the electrical grew 4%, to 1040 million euros was s lightly higher than expected by financial analysts. It was the year that a “higher waters, good management and cost control” managed to absorb negative effects as “the regulatory costs and greater impact of taxes,” said Mexia, quoted by Lusa agency.
Earnings before interest, taxes, depreciation and amortization (EBITDA) of EDP improved only 1% to 3642 million. The results were penalizing foreign exchange impacts, extreme drought in Brazil and regulatory measures on the Iberian Peninsula. Gross margin fell 2% to 5367 million.
According to the statement issued by EDP in Spain, changes in the regulatory framework for wind farms and lower market prices did shrink EBITDA at EUR 75 million.
In Brazil, the devaluation of the Real against the Euro took EUR 55 million to the accounts and the results were still affected by more expensive electricity costs resulting from extreme drought, which had a negative impact of 121 million euros. Still, the EDP Brazil’s contribution to the group’s EBITDA rose 3% (+ EUR 18 million).
It is that besides the sale of assets in Brazil, unlike what happened with Spain, regulatory changes had a positive impact of EUR 64 million, allowing the company to “the accounting recognition of future receipts of regulated activity.”
The 2014 accounts also reflect capital gains from the sale of assets . In Spain, in 2013, the sale of gas transmission assets had resulted in a gain of EUR 56 million, while in 2014, the sale to CTG 50% of the capital of Jari dams / Waterfall-Cauldron, Brazil, had a positive effect of 131 million euros.
Last year EDP’s operating costs fell 6% from 2013 to 1450 million euros. The global investment group reached approximately 1800 million (less 20% compared to 2013 and will continue to fall until 2017). According to the company, the investment expansion totaled 1249 million euros, essentially new hydro and wind capacity.
Net debt remained at around 17 billion (with a decrease of EUR 41 million) although the company has highlighted the reduction of debt as a priority. Currently, the net debt / EBITDA ratio is 4.7 times, but the commitment of the EDP is to have a three times EBITDA ratio in 2017.
In a press conference Tuesday, António Mexia admitted that the company can go to the market to raise money to take advantage of lower interest rates. “We are considering going to the market with an issue to ten years,” said the manager, who revealed that the operation should be performed by the end of the first half, in an amount not less than EUR 750 million.
“What is clear is that interest rates are now well below the average cost of financing, currently at 2%,” said António Mexia, noting that the issue will come a time when the credit rating agencies Moody’s and Fitch returned to assign ratings of investment grade (investment grade) to EDP, while the Standard & amp; Poor’s improved the Outlook (perspective of evolution) to positive.
EDP (which will propose to shareholders a dividend of 0.185 euros) said still have paid EUR 311 million in taxes in 2014, with an effective rate of 19%, and other 61 million euros to the extraordinary contribution of the energy sector, which will be repeated in 2015. About this contribution, Mexia noted that EDP accepts the assumption that it is a contribution “temporary and limited in time” and “in the context of aid effort to the Portuguese economy, regardless of the legal and legal questions” it raises.
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