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01/11 03:09
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Edenor shows strong financial performance with a 97% revenue increase and improved EBITDA, driven by tariff adjustments. The positive outlook is supported by a stable credit rating and strategic investments in energy transition. However, regulatory risks and economic conditions in Argentina pose challenges. Lack of shareholder return plans and unclear CapEx allocation limit upside potential. Overall, the positive financial metrics and strategic initiatives are likely to result in a stock price increase of 2% to 8% over the next two weeks.
EBITDA ARS207.3 billion, up from negative ARS63.5 billion in Q4 2023; improvement due to tariff increases and monthly adjustments averaging 4%.
Revenue ARS517.1 billion, up 97% year-over-year; growth driven by February 2024 tariff adjustment of 319% and subsequent monthly adjustments.
Distribution Margin ARS219.5 billion, up 126% year-over-year; increase attributed to tariff adjustments, partially offset by lower sales volumes.
Net Earnings ARS18.2 billion, up 23% year-over-year; driven by improved operating results and lower financial expenses.
Capital Expenditures (CapEx) ARS389.2 billion, up 45% from 2023; investment aimed at meeting rising demand and improving service quality.
Net Financial Expenses ARS31.2 billion, down from ARS192 billion in Q4 2023; reduction due to lower interest payments and reduced FX effects.
Sales Volume 5,175 gigawatts, down 1.6% year-over-year; decline attributed to economic effects on demand in commercial and industrial segments.
Energy Losses 15.2% for the full-year, up from 14.1% in 2023; focus on reducing losses remains a priority.
Market Positioning: Edenor holds a leading 20% market share in the electricity distribution sector in Argentina.
EBITDA Improvement: EBITDA for the full-year 2024 resulted in a profit of ARS207.3 billion, reflecting a sharp improvement due to tariff increases.
Capital Expenditures: Capital expenditures for 2024 were ARS389.2 billion, up 45% from 2023, aimed at meeting rising demand and improving service quality.
Energy Losses Reduction: Energy losses for the full-year were 15.2%, a modest increase from 14.1% in 2023, with ongoing efforts to combat inefficiencies.
Client Base Growth: Edenor's client base reached 3.34 million, a 1% growth compared to Q4 2023, due to an increase in residential and small commercial clients.
Tariff Review Process: The five-year tariff review process for 2025-2029 is in its final stages, expected to enhance financial performance and growth opportunities.
Debt Profile Improvement: Edenor successfully returned to international markets with a $184 million issuance, improving its debt profile and credit ratings.
Investment in Non-Regulated Business: Edenor is focused on growth opportunities in non-regulated segments such as energy generation and storage through its subsidiary Edenor Bay.
Regulatory Risks: The ongoing five-year tariff review process for 2025-2029 is crucial, with potential impacts on financial performance. The ENRE's proposed WACC of 6.22% is contested by Edenor, which argues for a higher rate of 8.20%-8.27%, indicating regulatory uncertainty.
Economic Factors: General economic conditions in Argentina could affect future results, with inflation adjustments impacting tariffs and operational costs.
Supply Chain Challenges: The company is negotiating a payment plan for additional amounts due to CAMMESA, indicating potential cash flow challenges related to energy purchase costs.
Competitive Pressures: The energy sector is undergoing deregulation, which may increase competition and affect market share and pricing strategies.
Debt Management: Edenor's debt profile has improved, but the company must manage its financial obligations carefully, with $417 million in total debt and $55 million due in 2025.
Subsidy Reductions: The national government's plan to gradually reduce energy subsidies could impact revenue from low and medium-income clients, affecting overall profitability.
Operational Risks: Energy losses remain a concern at 15.2%, with ongoing efforts needed to reduce inefficiencies and irregularities in the distribution network.
Tariff Review Process: The five-year tariff review process for 2025 to 2029 is well advanced, with a public hearing held on February 27, 2025, and the final tariff scheme expected to be announced by March 31, 2025.
Debt Issuance: In October 2024, Edenor issued $184 million in Class 7 notes with a 9.75% coupon, improving its debt profile and credit ratings.
Investment Program: Edenor is committed to a strong investment program to improve service quality and reduce non-technical losses, with capital expenditures for 2024 at ARS389.2 billion, a 45% increase from 2023.
Energy Transition Opportunities: Edenor is focused on future growth opportunities in energy generation, storage, and critical minerals through its subsidiary, Edenor Bay.
Revenue Expectations: Sales rose 97% year-to-year in Q4 2024 to ARS517.1 billion, driven by tariff adjustments.
EBITDA Projections: EBITDA for the full-year 2024 was ARS207.3 billion, with expectations for further improvement following the tariff review.
Net Income: Net income for Q4 2024 was ARS18.2 billion, reflecting improved operating results and lower financial expenses.
Credit Ratings Outlook: Edenor's credit ratings have improved, with upgrades from S&P, Moody's, and Fitch, indicating a stable outlook.
Shareholder Return Plan: The company has not announced any specific share buyback program or dividend program during the call.
Despite a strong EBITDA growth and improved tariff adjustments, there are concerns about economic instability, currency risks, and unclear management responses to debt-related queries. The Q&A section revealed management's hesitance to provide clarity on regulatory matters, which may lead to investor caution. Additionally, the slight revenue growth and energy sales volume decline could temper optimism. Thus, the overall sentiment remains neutral.
The earnings call summary shows strong financial metrics with a significant EBITDA increase and revenue growth, which is positive. However, there are concerns about regulatory uncertainties, high energy losses, and economic conditions in Argentina, which are negative. The absence of Q&A insights and no mention of shareholder returns further neutralizes the sentiment. The company's financial improvements are offset by potential risks, leading to a neutral prediction for stock price movement.
Despite strong financial performance with significant EBITDA and revenue growth, the lack of clarity in management's responses during the Q&A, particularly regarding future EBITDA, free cash flow, and dividend policy, creates uncertainty. The absence of a shareholder return plan and potential financial strain from debt further contribute to a neutral outlook. However, the tariff adjustments and improved credit ratings are positive factors, balancing the overall sentiment. The market reaction is likely to remain within a neutral range, as investors await more definitive guidance and strategic clarity.
Edenor shows strong financial performance with a 97% revenue increase and improved EBITDA, driven by tariff adjustments. The positive outlook is supported by a stable credit rating and strategic investments in energy transition. However, regulatory risks and economic conditions in Argentina pose challenges. Lack of shareholder return plans and unclear CapEx allocation limit upside potential. Overall, the positive financial metrics and strategic initiatives are likely to result in a stock price increase of 2% to 8% over the next two weeks.
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