The change in position of the European Central Bank (ECB), now favorable to applying the rate hike to contain inflation, it could also have had an impact on the electrical sector of the Old Continent. Since the beginning of the new financial year, the estimates of the market consensus on the profit 2022 fall 5% in the main groups.
And it is that the increase in interest rates and, therefore, in financing costs, will be reflected in the profits of companies. If we look at the data collected by FactSet at the start of the year -considering the top 41 utilities of Europe which have a minimum of 5 analysts in follow-up – the set of profits forecast for the entire sector was 44,299 million euros. Today, less than two months later, the figure is reduced to 42,062 million.
There is also a worsening forecasts for ebitda (earnings before interest, taxes, depreciation and amortization) over the course of 2022, but the drop is reduced to 2%. This implies that part of the deterioration in net profits could respond precisely to Lagarde’s new position.
At a general level, the electricity companies with a reduction in their forecasts have a higher degree of leverage, with some net debt/ebitda tall. In total, 73% of firms that worsen their forecasts have debt ratios above 4 times. This is the case of EDF (5.4 times), Veolia (5.1 times), Redes Energeticas Nacionais (6.6 times), Falck Renewables (4.1 times), EDP (4.8 times), Snam(6 times), Hera (4.8 times), Enagás (5.2 times) and Red Eléctrica (4 times), among others. However, the percentage of companies with a ratio greater than 4 times is reduced to 38% in companies that improve their forecasts.
Enagás and REE
In Spain, Enagás and Red Eléctrica are the groups in the sector that worsen their estimated profits the most for this year. In the case of the company specialized in gas infrastructures, the reduction is 1.1%, from 388 million euros to 383 million. Analysts expect that in the results of 2021, which will be presented next Tuesday, it will obtain 394 million (11% less than the previous year), in line with the results of September.
For Red Eléctrica, the data on the 2022 benefit is reduced by 1.4%, from the 687 million that were calculated on January 1 to 677 million. For the accounts of last year, which will be known next Wednesday, the market expects a result of 692 million, 11% more than in 2020.
Enagás and REE register the highest debt ratios among the main Spanish electricity companies
Both firms are the Spanish electricity companies with the highest net debt/ebitda: 5.2 times in the case of Enagás and 4 times if we talk about REE. On Iberdrola would be 3.7 times, for Endesa 1.3 and for Naturgy 3.6. The latter would not be affected by the rate hike so far this year, with a growth of 4% in the expected profits for the firm led by Reynés, 2% for Bogas and 1% in the case of Galán.
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