Red Eléctrica cuts its profit by 13% in 2020 after provisioning 122 million for Hispasat
The Red Eléctrica Group obtained a net profit of 621.2 million euros in 2020, which represents a drop of 13.1% compared to the previous year, after provisioning for an impairment of Hispasat assets amounting to 122.3 million, as reported this Wednesday by the company to the National Securities Market Commission (CNMV). In recurring terms, without considering this provision, last year’s net result would be 703.0 million euros, 1.8% lower than in 2019.
The network operator highlighted that the year has been marked by the application of the new regulatory parameters to transport activity in Spain, which has caused a drop in the turnover associated with the regulated business of close to 200 million euros.
Likewise, it has been affected by the covid-19 health crisis, which has not affected the continuity of operations of the group’s companies and its consequences have not had significant impacts except for satellite activity, with these provisions for 122.3 million euros.
The turnover in 2020 of the group chaired by Beatriz Corredor reached 1,985.8 million euros, which reflects lower transport income in Spain due to the new remuneration parameters established by the National Commission of Markets and Competition (CNMC) , partially offset by the higher remuneration from the operation of the system in Spain and the increase in telecommunications activity, thanks to the incorporation of Hispasat, which contributed 155 million in the year.
The gross operating profit (Ebitda) stood at 1,568.5 million euros at the end of 2020, 1% below that obtained in 2019. This figure includes 118.8 million euros from Hispasat. Likewise, 50% of the results of the Chilean electricity transmission companies TEN and the Brazilian Argo are included in Ebitda as results of investee companies, for a total amount of 25.3 million euros.
Throughout 2020, the Red Eléctrica Group invested a total of 895 million euros, of which 383 million were allocated to the development of the transmission network in Spain. Meanwhile, the company’s net financial debt at the end of the fiscal year was 6,113.3 million euros, a figure slightly higher than that existing at December 31, 2019.
Investments of 4,400 million euros until 2025
Red Eléctrica de España (REE) plans to invest a total of 4,400 million euros between 2021 and 2025, of which 3,300 million, 75%, will be used for the energy transition. This is reflected in the new 2021-2025 Strategic Plan of the company presented this Wednesday by the president and CEO of the Group, Beatriz Corredor and Roberto García Merino.
Among the investments aimed at the energy transition, the development of the necessary infrastructure of the transmission network, included in the Planning proposal 21-26, stands out especially, reaching more than 2,800 million euros. Along with this, REE will promote the increase in energy storage capacity, as a tool at the service of the operation of the system, with an investment of 411 million euros that will allow a greater integration of renewables and at the same time provide more security to the electrical system .
In addition, the company will continue to prepare to operate in an increasingly complex and more integrated system in Europe, investing 92 million euros to do so.
Another of the group’s strategic lines is the consolidation of its international business. The company is present in Peru, Chile and Brazil, countries where it contemplates an investment of 225 million euros. With this investment, it pursues the consolidation and organic growth of the electricity business in these three countries, strengthening its presence there and seeking new business opportunities. REE foresees that the consolidation of international activity will bring annual Ebitda growth of around 6% until 2025.
Regarding the telecommunications business, it contemplates investments that reach 620 million euros for the development of satellite infrastructures, through Hispasat, and another 115 million for the fiber optic business and the deployment of 5G mobile network infrastructures in the field of the Group’s assets. According to the plan, Hispasat’s future is to consolidate its traditional video business in the regions where it maintains a leadership position, initiating a transformation to cover the new market needs, based on universal connectivity as a pillar of the digitalization of economic sectors, mobility and data transmission, as the main growth vectors.
This change represents an evolution of the company towards the provision of services. In this sense, the company plans to develop new verticals associated with air and maritime connectivity, digitization of the primary sector, data analytics, as well as obtaining greater exposure to resilient markets such as institutional or governmental services in the civil sphere. With this, he expects an improvement in Hispasat’s annualized Ebitda of more than 5% in the period.
Finally, the company maintains the dividend commitment until 2022 in one euro to place it at at least 0.80 euros from that date, to accompany the heavy investments planned.