Encavis (ECV) Q2 2024 earnings summary

Executive summary

• H1 2024 results were significantly below the previous year, mainly due to lower energy prices and negative volume effects, but full-year 2024 guidance is confirmed.

• A major takeover by a KKR-led consortium (including Viessmann and Abacon) is underway, with 87.41% shareholder acceptance and expected closing in Q3 or Q4 2024.

• The new partnership aims to accelerate growth, targeting 7 GW installed capacity by 2027, up from the previous 5.8 GW target.

• The company is expanding its renewable energy portfolio with new solar and wind park acquisitions and major PPAs in Spain, Germany, and Denmark.

• All 2023 earnings were retained to fund growth, with no dividend paid for 2023.

Financial highlights

• H1 2024 operating revenue was €205.7m (down from €236.9m in H1 2023), mainly due to lower electricity prices and production.

• Adjusted operating EBITDA fell 20% to €120.7m; operating EBIT dropped 36% to €59.9m.

• Net income attributable to shareholders was -€2.1m (H1 2023: €32.2m); adjusted EPS was €0.03.

• Operating cash flow was €90.6m, down from €113.5m in H1 2023; equity ratio stood at 32.2% as of June 30, 2024.

• H1 2023 results benefited from a one-off €8.7m Dutch feed-in tariff payment.

Outlook and guidance

• 2024 guidance is confirmed, expecting only a slight decline in key metrics, based on standard weather and March 2024 power price curve assumptions.

• FY 2024 guidance: Net operating revenue >€460m, operating EBITDA >€300m, operating EBIT >€175m, operating cash flow >€260m.

• Guidance assumes 91% of revenue is fixed/hedged, with no further revenue skimming or uncompensated shutdowns.

• Management will reassess guidance if adverse weather or regulatory changes persist.

• Strategic focus remains on tripling generation capacity to 8 GW and increasing revenue to €800m by 2027.