The Company does not expect interruptions in activity due to the outbreak and believes it will be possible to meet the strategic plan goals.
In a time of “enormous challenges”, EDP guarantees that the strategy or financial targets defined are not at stake. The company led by António Mexia tells ECO that there is no reason to expect interruptions in activity due to the Covid-19 outbreak.
“EDP is aware of the developments of this pandemic, but does not foresee changes to its strategic plan for 2020 due to the coronavirus outbreak,” says the company’s official source.
The 2019-2022 strategic plan, defined by EDP last year, points to strong growth targets, driven by investments of nine billion euros in renewables and infrastructure. To finance these investments, the company planned to release 4 billion euros in asset rotation, and 2 billion in sales (which were already closed last year).
In the 2019 Annual Report, the company had already identified several strategic challenges, including the transformation of the electricity sector, the decarbonisation of the economy or the competitive pressure of new technologies. It recalled that in 2019 the group experienced a year of “transition and change of cycle” marked by the end of the takeover bid launched by China Three Gorges and the new strategic plan.
For 2020, a year “marked by implementing ambitious objectives” of the strategic plan and “huge” strategic challenges was expected. At the end of the plan period, EDP expects to profit over 1 billion euros and reduce its net debt to 11.5 billion euros. But now, besides the challenges, there is the coronavirus outbreak, but EDP guarantees to be prepared.
Company wants to continue working (and creating value for shareholders)
In operational terms, the electric company is applying preventive measures such as the telework regime for as many employees as possible, the closure of half of EDP Comercial’s stores or the use of meter readings only on equipment outside the homes.
“These are just examples of the various preventive measures that EDP has implemented in order to adapt its teams and working methods in this exceptional context without compromising the employees protection, customers and partners, nor the normal operation of the company,” the source says.
The company leads by António Mexia does not foresee interruptions. “We maintain daily contact with our entire value chain, in terms of suppliers, and almost all have confirmed that they will meet commitments for the delivery of material and services, so we do not foresee interruptions in the company’s activity or the need to review, for now, the targets set.”
If the electric company does not anticipate what impact the outbreak may have on the results, there is a loss that is being felt immediately. Like all PSI-20 companies (and in line with the negative sentiment of the global stock markets), the price of EDP shares sank almost 35% between the historical maximum of 4.987 euros, recorded on February 19th, and the current 3.25 euros.
“We are witnessing a global stock market crash and no company is immune to it. Even so, the utilities sector has suffered less than the market average, with EDP being among the companies that have depreciated the least since the beginning of the year on the PSI-20. Regardless of this volatility in the capital markets, EDP continues to work as usual to add value for shareholders,” he adds.
The company does not comment, however, if it intends to change shareholder remuneration, as EDP Brasil did, which announced a cut for almost half of the dividend. For now, the company led by António Mexia plans to maintain the value of the dividend at 19 cents per share.