Endesa’s first-half results jump by 23% to EUR 956 million
Spain’s largest global power utility surpassed forecasts with a 23% increase in first-half net profits to EUR 956 million, on the back of strong growth in Europe and Latin America and tariff deficits.
Contributing factors to the company’s improved performance include growth in business across Europe, which represented a net profit increase of 78.4% to EUR 182 million, due to strong growth in production and sales and strengthened by the consolidation of French unit Snet.
Sustained growth in production and sales in Latin America also fuelled Endesa’s turnover growth, amid the area’s continued economic recovery. Total profit in Latin America soared by 200%, to yield EUR 114 million in revenue.
More controversially, tariff deficits – which reimburse utilities for the difference between production costs and regulated tariffs – have been an integral factor in Endesa’s successful results, the utility said. Without this revenue net profit for its company would have fallen by 32% year-on-year. Endesa has received EUR 660 million this year as a result of tariff deficits, the company added.
The utility has, however, overcome various domestic obstacles to produce such a high net revenue, such as high production costs due to soaring oil, gas and coal prices, a drought that has undermined hydroelectric production and maintenance at several nuclear power plants. Despite these setbacks, Endesa saw a rise of 27% in net income to EUR 679 million in its home markets of Spain and Portugal. Endesa also reported that its distribution market has grown by 7.1%.
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