The company performed well in the first six months of 2022, but profits fell 11% to €306 million. Extreme drought penalised operations in Portugal.
EDP – Energias de Portugal posted a net profit of €306 million in the first half of 2022, a decrease of 11% compared to the same period last year.
The results “were marked by the positive performance of renewables and networks in Brazil. This result was strongly penalized by the extreme drought in Portugal in a context of high electricity prices in the wholesale market, resulting in a -€111m loss in Portugal in 1H22,” reads the statement released this Wednesday via the Securities and Exchange Commission (CMVM) website.
Recurring EBITDA increased 19% to €1,944 million in the first six months, a rise of 13%, when excluding the exchange rate variations. To reach this number the electricity company relied on a “strong contribution” from EDP Renováveis and Redes in Brazil. EDP Renováveis published its results on Wednesday and posted an 87% jump in profits.
Iberia recurring EBITDA in Hydro Generation, Client Solutions and Energy Management decreased fell 62% to €126 million, “mainly impacted by the largest drought in decades, combined by high wholesale electricity prices that generated a -2.8 TWh deviation in hydro production vs. average,” explains the company.
Hydro EBITDA in Iberia fell by €300 million year-on-year, penalised by weak hydro resources in Portugal, 66% below average. Hydro business in Brazil surpassed the previous year’s result, with a growth of 29% to €93 million, taking into account the recovery of the 2021 hydro crisis in Brazil.
Recurrent EBITDA in the electricity networks segment showed a “strong growth” of 25% to 732 million, “mainly driven by Brazil Networks (+70%).”
Net financial costs rose €130 million to 385 million, with the average cost of debt increasing to 4.5%, reflecting the 140 basis points (bps) increase in the cost of debt, mainly from Brazil. The average cost of debt excluding debt denominated in Brazilian Real (15% of consolidated debt) increased by only 30 bps to 2.7%.
In the first six months of the year, net debt totalled €14.2 billion, “mainly impacted by the acceleration of investment,” but also by the appreciation of the Brazilian Real and the US Dollar. Investment increased 23% to 1.7 billion, of which 97% in renewable energy and electricity networks. In renewable energies, in the last 12 months, EDP installed 2.5 gigawatts of capacity, and 75% of electricity production was originated from renewable energies, “despite the increase in thermal generation that mitigated the lower hydro output,” said the company.