Q3 2026 EVN Earnings Call
Speaker #1: Good morning, ladies and gentlemen, and welcome to EVN's conference call for the first three-quarter of 2025-2026 financial year. The conference will be recorded. At this time, all participants have been placed on a listen-only mode.
Speaker #1: The floor will be open for questions following the presentation. Let me now turn the floor over to Alexandra Wittmann.
Speaker #2: Good morning, everybody, to EVN's conference call on the results for the first three quarters of our current financial year. The results we will present today are solid, and fully in line with the developments we reported for the year.
Speaker #2: Before we dive into the key financials and the segments, let me start with a few operational highlights. As in many parts of Europe, Austria experienced an exceptionally dry and extremely hot summer.
Speaker #2: As a result, hydrogeneration conditions were historically weak. In addition, the combination of heatwaves and reduced base load from hydrogeneration led to increased volatility in intraday power prices.
Speaker #2: The weather developments we have seen this year demonstrate the importance of diversification and flexibility in the energy sector. Against this backdrop, we remain focused on expanding our renewable generation portfolio and enhancing flexibility through battery storage solutions.
Speaker #2: These measures help us address the challenges associated with the transformation of the energy system: geopolitical uncertainties and climate-related effects. In our generation portfolio, wind power is a key complement to hydropower.
Speaker #2: The expansion of our wind fleet is progressing according to plan. By the end of June, our installed wind capacity has reached 570 megawatts, and we are currently working on the construction of several new projects.
Speaker #2: And our project pipeline until 2030 remains solid too. Just the other week, we received the Environmental Permit for the repowering of one of our wind farms.
Speaker #2: This project will increase installed capacity from 23 megawatts to 36 megawatts while reducing the number of turbines from 7 to 5, and increasing annual output by about 60%.
Speaker #2: Let me now turn to electrification and the increasing integration of energy and mobility. The acceptance and popularity of electric vehicles continues to grow steadily in Austria.
Speaker #2: By the end of July, the number of registered electric vehicles in Austria exceeded 300,000 for the first time. This is now a share of more than 5% of registered vehicles.
Speaker #2: Lower Austria remains the leading province with more than 62,000 registered electric vehicles. This development supports our strategy of positioning e-charging infrastructure as one of our core investment areas and we expect further growth in the years ahead.
Speaker #2: I would also like to remind you that EVN operates Drinking Water Infrastructure in Lower Austria. While this business is much smaller than our energy infrastructure operations, it represents an essential public service and an important part of our overall infrastructure portfolio.
Speaker #2: Around 650,000 customers in Lower Austria rely on our water supply services every day. Water infrastructure is also a key element of our investment program.
Speaker #2: We currently invest between 20 to 25 million euros by per year on average, and we have developed a long-term capex plan for this business.
Speaker #2: By 2055, we intend to invest a total approximately of 400 million euros in additional cross-regional transmission pipelines: water reservoirs and other drinking water infrastructure.
Speaker #2: Due to this year's heat and draft conditions, water sales volumes are expected to reach a new record level of around 33 million cubic meters, this once again underlines the importance of our long-term investment strategy and we remain convinced that our strategic focus prepares us for future requirements and customer needs.
Speaker #2: I can confirm that we are fully on track to implement this year's investment program. We plan to invest up to 1 billion euro annually up to 2030.
Speaker #2: The majority, around 80%, will be invested regionally in Lower Austria. Key areas include network infrastructure, renewable generation, battery storage, e-charging infrastructure, and drinking water supply.
Speaker #2: Now on the next slide, I will take you through the main financial developments in the reporting period. The overall picture and the key drivers were largely the same as those reported for the first quarter and the first half of the financial year.
Speaker #2: With that in mind, let me focus on some key developments. Our regulated network business in Austria continued to benefit from growth in the regulated asset base, and the resulting increase in tariffs.
Speaker #2: In addition, both the energy segment and the Southeast Europe segment delivered a strong performance. Within the energy segment, the normalization of earnings in the Austrian supply business continued as expected.
Speaker #2: On the other hand, earnings from renewable generation declined, reflecting lower electricity prices as well as reduced generation volumes from hydropower. Financial results improved due to the higher dividend contribution from Verbund.
Speaker #2: Please also keep in mind that the current financial year includes three positive one-off effects, which together amount to 52.5 million euros. Other operating income includes a positive effect of 10 million euros from the badwill associated with the acquisition of a fiber infrastructure company in December 2025.
Speaker #2: A further 10 million euro relates to the reversal of a provision for a tax audit following a favorable outcome for EVN, making the provision no longer necessary.
Speaker #2: Finally, group net result includes 32.5 million euros from discontinued operations which result from the sale and deconsolidation of the international project business. It includes the OCI recycling of foreign exchange effect, and valuations previously recorded in equity.
Speaker #2: Based on these developments, EBITDA and EBIT were up by roughly 5.3%. Group net results was 21% higher and stood at 525.1 million euros. We are amending the full-year guidance.
Speaker #2: Also, due to the before-mentioned positive non-cash and non-recurring effect, we now expect group net results to be within a range of 470 million to 490 million euros.
Speaker #2: Now let's move on to the next slide, which provides information regarding the group balance sheet structure. The sale of the international project business had a positive effect on EVN's net debt of 206 million euros in total.
Speaker #2: Thereof, 100 million euros was the purchase price, and 106 million euros was former inter-group financing which was assigned to Strabag. As a consequence, net debt declined to 942 million euros by end of June with a gearing of 14% by end of March.
Speaker #2: However, due to our high investments, which we'll total 1 billion euros for the financial year, net debt will again increase to about 1.2 million euros by the end of September.
Speaker #2: Our financial flexibility remains secured and solid, EVN holds contractually committed undrawn credit lines in the amount of 765 million euros. On the next slide, I will walk you through the developments in our segments.
Speaker #2: Since these are largely a continuation of the trends we have already discussed for the first two quarters, I will keep this section brief and will focus on the most relevant points.
Speaker #2: Let's start with the energy segment. Within the energy segment, the most notable development in the third quarter was the continued normalization of our equity consolidated supply company EVN KG.
Speaker #2: It contributed 38 million results as of end of June as compared to 1.5 million euros in the first three quarters of the previous year.
Speaker #2: The full-year result of EVN KG will largely depend on the further development of the market prices. Apart from that, the developments from the first half continued.
Speaker #2: Segment revenue declined due to the price effects in the marketing of own generation, whereas revenue in the heating business was supported by the cold temperatures during winter.
Speaker #2: All these developments led to an EBITDA of 110 million euros, compared to 84 million in the previous year. EBIT came in at 86 million euros.
Speaker #2: Let's turn to our generation segment. Electricity generation volumes in the segment declined by 7% year on year. While the commissioning of new wind parks and repowerings helped to offset a substantial share of the lower volumes resulting from below-average wind and water flows in Austria, the non-renewal of the reserve capacity contract for the Thais power plant by APT led to a significant decline in thermal generation.
Speaker #2: In addition to these volume effects, the lower prices for the marketing of generation resulted in declining revenue and earnings from electricity generation. Our equity accounted investee Verbund Inkraftwerke contributed lower earnings compared to the previous year, due to weaker water flows and lower market prices.
Speaker #2: In total, the segment EBITDA was down by 42% and stood at 76 million euros. EBIT amounted to 38 million euros. Next up is our networks segment.
Speaker #2: As already mentioned, the network segment showed a strong performance. In line with the Austrian regulation, segment results are reflecting the ongoing high investments in the network infrastructure and related RAP growth.
Speaker #2: Due to the higher tariffs, EBITDA was up by 21%, and the amounted to 348 million euros, and EBIT totaled 195 million euros. Finally, let's move on to the Southeast Europe segment.
Speaker #2: The segment had solid first nine months. This was supported by, among others, the absence of previous year's regulatory compensation factors in the Bulgarian grid business, as well as higher energy demand in North Macedonia due to colder weather.
Speaker #2: Segment EBITDA was up by 19% and amounted to 154 million euros. Segment EBIT was 80 million euros in the first three quarters. In April, we commissioned our first large battery storage facility, which is co-located with a PV plant.
Speaker #2: During summer, the battery was expanded from 20 to 40 megawatt hours, around one-third of our 300 megawatt battery storage target for 2030, is planned to be built in Bulgaria, and North Macedonia.
Speaker #2: Let me now continue with the development of our group cash flows. Gross cash flow was down by 1.6% year on year to 750 million euros.
Speaker #2: Positive factors, such as the higher dividend payment from Verbund, were unable to completely offset the correction of non-cash earnings component related to the de-consolidation of international project business.
Speaker #2: Cash flow from operating activities totaled 631 million euros. Working capital was influenced by an increase in trade receivables and a decline in trade liabilities, which were reduced by an increase in the liquidity commitment between EVN KG and EVN Group.
Speaker #2: Cash flow from investing activities amounted to minus 257 million euros, higher investments were contrasted by the proceeds from the sale of the international project business.
Speaker #2: The cash flow from financing activities was minus 230 million euros, and included scheduled repayments of loans, as well as our dividend payment for the 24, 25 financial year.
Speaker #2: The previous year included new financial liabilities of 225 million euros. The net change in cash and cash equivalents amounted to 144 million euros. With this, I have reached the end of today's presentation, and I would like to turn to the outlook.
Speaker #2: Let me repeat that we amend the guidance today. We expect group net results to be within a range of 470 million to 490 million euros, the lifting of the upper range also reflects the positive non-cash and non-recurring effects, which I had mentioned earlier in the call.
Speaker #2: Finally, I would like to invite you to our capital markets day, which we will host in London on the 1st of October. Preparations are already in full swing, and you can look forward to an insightful morning.
Speaker #2: Together with my two executive board colleagues and various EVN experts, we will share our perspectives on energy sector dynamics and the implications with a particular focus on our core markets, digital transformation, infrastructure trends, and EVN strategic positioning.
Speaker #2: In addition, we will provide an update on our medium-term financial ambitions, and following a Q&A session, you will have the opportunity to engage directly with our management team and all the experts.
Speaker #2: Don't miss the opportunity. Join us at Banking Hall in London. The event will begin at 9:30 AM, and concludes about noon. That's the end of our presentation, and we are looking forward to answering your questions if any.
Speaker #1: Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press star nine and pound key on your telephone keypad.
Speaker #1: If you would like to revoke your question, press star three and pound key. You can also use the dial-in function in the webcast and raise your hand if you would like to ask a question by phone.
Speaker #1: The first question is from Patrick Steiner, Odoo BHF. Please go ahead.
Speaker #3: Steiner speaking, Odoo BHF. Congratulations on the results. Two questions from my side. Firstly, the new full-year guidance implies quite a negative contribution for the fourth quarter in terms of net result.
Speaker #3: Minus 35 to minus 55. Can you elaborate on this a bit more? Why do you expect such a negative fourth quarter? That's the first question.
Speaker #3: And the second question is about the generation segment. We've seen 17.9% and 41.9% year-on-year development on revenue and on EBITDA. As you've explained already, it's driven by weak wind and water flows.
Speaker #3: Declining market prices offset by additional wind capacities. Can you give us some more details on how this 18% revenue decline year-on-year is split into pricing volume?
Speaker #3: I mean, we know that the electricity generation volume is minus 7% year-on-year, and also into the effect of additional capacities, which you have brought to light during the year.
Speaker #3: Thank you.
Speaker #2: Thank you, Patrick, for the questions. I start with question number one on the full-year guidance. As you know, in our business, there is a clear seasonal bias.
Speaker #2: We have seen this before. We have a significantly higher energy demand during the winter half-year, and consequently, especially our fourth quarter results during the summer traditionally differ from those of the rest of the year.
Speaker #2: Same situation we had last year. And on your second question on the wind and hydro conditions, if we let's say a little bit of a quantification, impact of volume versus price effect, I would say for hydro, the negative EBITDA effect was about 12 million euros.
Speaker #2: About half is volume effect. The other half is price effect. For wind, the explanation is different, as the commissioning of new wind parks compensated all of the negative volume, and even most of the price effect.
Speaker #2: Does that answer your questions, or?
Speaker #3: Yeah, yeah, yeah. That's very helpful. Thank you. Thank you very much. Yeah.
Speaker #2: Thank you.
Speaker #1: Just a quick reminder. If you would like to ask a question, please press star nine and pound key on your telephone keypad or use the dial-in function and raise your hand.
Speaker #1: The next question is from Emmanuelle Ojini from Kepler. The floor is yours.
Speaker #3: Hey, good morning. Thank you for the presentation. I have two questions. One is on the guidance. In the last conference call for H1 results, you guided for an almost flat EBITDA year-on-year.
Speaker #3: So I wonder if these outlook is confirmed. Or improved, considering the increase in the net profit guidance range. And the second question is on regulated networks in Austria.
Speaker #3: Regarding 27 moving parts, so next year, what are the what we should expect in terms of moving parts related to the regulatory framework, the allowed work, the tariff changes, et cetera.
Speaker #3: Thank you.
Speaker #2: Thank you. Emmanuelle, your two questions, starting with the EBITDA guidance. I think for we confirm the full-year for now, and I think it will all depend on the prices or on the development of the prices and the volumes.
Speaker #2: And on the second questions on the regulation, for the networks, I think the VAC we expect no changes we have the 4% for the existing RAP, and everything over 6% for the new.
Speaker #2: Investments. So there is no change to be expected.
Speaker #3: Thank you. Very clear.
Speaker #2: Thank you.
Speaker #1: Right now, there aren't any other questions in the line. I just repeat again, if you would like to ask a question, please press star nine and pound key on your telephone keypad or use the dial-in function in the webcast and raise your hand if you would like to ask a question.
Speaker #1: So there aren't any questions in the line. I'll thank you all for your questions and with that, I would like to hand over to your host, Alexandra Bittmann, for closing remarks.
Speaker #2: Thanks, everyone, for joining today's conference call. We will publish the results for the current financial year on Thursday, 17th of December. And I remind myself, pencil in our capital markets day in London on October 1st would be very happy to see all of you or at least some of you.
