ERG sees mixed results in H1 2024, maintains full-year outlook

Italian wind and solar power producer ERG SpA (BIT:ERG) on Friday reported a lower net profit, but nice EBITDA growth for the first half of 2024, and maintained guidance for the full year despite mixed results.

The company posted an adjusted net profit of EUR 106 million (USD 116m) for the first semester, marking a decrease of 8% year-on-year. The bottom line is attributed to factors such as higher amortisation, depreciation and financial expenses related to the consolidation of new assets, and a higher tax rate due to the elimination of the so-called aid for economic growth (ACE) tax benefit in Italy.

Rising electricity sales volumes, driven by higher installed capacity, enabled ERG to generate EBITDA of EUR 281 million, or 4% more compared to the January-June period a year earlier.

“The volume effect, however, was largely eroded by the lower sales figures, in a context of sharply falling market prices for electricity in the countries in which the group operates compared to the particularly high values recorded in the same quarter of 2023,” commented CEO Paolo Merli.

Adjusted operating profit stood at EUR 154 million, down by 3%, while net financial indebtedness before IFRS 16 rose to EUR 1.91 billion at the end of June from EUR 1.45 billion at end-December 2023.

The reporting period was marked by ERG’s arrival in the US market, enabled by the acquisition of a 75% stake in a 317-MW solar and wind portfolio. ERG also highlighted its wind farm repowering efforts in Italy and the commissioning of a solar plant and a wind farm in France, a country the company considers its second-largest reference market.

Looking ahead, ERG confirms its guidance for 2024, targeting full-year EBITDA of EUR 520 million to EUR 580 million. The net financial indebtedness before IFRS 16 is expected to come down to a range between EUR 1.75 billion and EUR 1.85 billion, with investments reaching EUR 550 million to EUR 600 million.

“The development of our portfolio continues in line with the new Business Plan, with almost 500 MW of installed capacity entering into service during the period. That will become 600 MW by the end of the year, with the completion of 3 wind farms under construction in Italy, France and Germany,” Merli added.

(EUR 1.0 = USD 1.095)

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