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Enel's Resilient Q1 Performance Bolsters 2025 Guidance Amid Regional Challenges

Charles HayesThursday, May 8, 2025 12:17 pm ET

8min read

Enel Group has confirmed its 2025 financial guidance following a resilient first-quarter performance in both its Latin American operations (Enel Américas) and Spanish subsidiary, Endesa. Despite mixed results in Latin America due to currency volatility and divestitures, strong growth in Spain and strategic asset sales have positioned the company to meet its targets. Here’s a breakdown of the key drivers and implications for investors.

Latin America: Navigating Currency Headwinds and Strategic Divestitures

Enel Américas reported Q1 2025 revenues of US$3.28 billion, a 2.8% year-on-year decline, primarily driven by currency devaluation in Brazil and Colombia. However, Argentina’s regulated distribution business saw revenue growth through tariff indexation, offsetting some regional pressures.

EBITDA fell 6.5% to US$1.007 billion, but excluding a US$126 million currency impact in Brazil, EBITDA would have grown 5% due to operational improvements in Colombia’s hydropower and Argentina’s regulated tariffs.

Key regional breakdown:
Brazil: EBITDA dropped 20% to US$509 million due to real devaluation.
Colombia: EBITDA rose 5.5% to US$414 million on higher hydraulic generation.
Central America: EBITDA surged 18% to US$56 million.

Net income fell 31.7% to US$245 million, reflecting the loss of contributions from sold Peruvian assets (distribution and generation businesses) disposed of in 2024. Despite this, proceeds from divestitures—including the US$1.743 billion gain from Peru sales—strengthened liquidity.

Debt and Capex:
- Net debt rose 34% to US$2.85 billion, driven by Brazil’s borrowing.
- Capital expenditures fell 27% to US$406 million, partially due to currency effects and asset sales.

Enel Américas remains focused on corporate simplification, having divested non-core assets like thermal plants in Argentina and Colombia. This pivot to core markets aligns with its 2023–2025 strategy of capital discipline and risk mitigation.

Spain: Endesa’s Strong Growth Drives Group Resilience

Endesa, Enel’s Spanish subsidiary, delivered standout results:
- Net profit rose to €583 million, a significant increase versus Q1 2024.
- EBITDA surged 33% to €1.431 billion, benefiting from the removal of a 1.2% extraordinary tax and strong performance in deregulated businesses (generation and supply).

Strategic Moves:
- Asset acquisitions: Endesa finalized a €1 billion purchase of 626 MW hydro assets, enhancing its renewable portfolio.
- Divestments: Sold a 49.9% stake in a 400 MW solar portfolio for €200 million.
- Share buyback: Launched a €500 million tranche, with potential to expand to €2 billion by year-end.

Market Challenges:
- Gas prices rose 71% YoY to €47/MWh (TTF index), pressuring margins.
- Electricity pool prices jumped 90% to €85/MWh, driven by renewable penetration and high demand.

Despite these headwinds, adjusted electricity demand grew 2.5% in Spain and 2.9% in Endesa’s distribution areas, signaling industrial revival. CEO José Bogas emphasized the need for regulatory reforms to support grid investments and nuclear energy taxation, critical for long-term supply security.

Why Enel Confirmed Its 2025 Guidance

Enel’s confidence stems from:
1. Strong Spain performance: Endesa’s tax removal and deregulated growth offset Latin America’s currency-related declines.
2. Strategic asset sales: Proceeds from Peru and Colombia divestitures (totaling over US$2 billion) bolstered liquidity and reduced debt risks.
3. Capital discipline: Lower CAPEX in Latin America and Endesa’s buyback program align with shareholder returns.
4. Regulatory tailwinds: Spain’s demand surge and potential grid reforms could unlock further value in Europe.

Enel’s diversified portfolio—combining regulated assets in core markets with renewable growth—provides a buffer against regional volatility. The group’s 2025 guidance (not disclosed in detail but confirmed as achievable) is underpinned by these structural advantages.

Conclusion: A Balancing Act with Upside Potential

Enel’s Q1 results underscore its ability to navigate mixed regional performance through strategic asset management and regulatory advocacy. While Latin America faces currency and debt headwinds, Spain’s robust growth and cash-generative divestitures provide a solid foundation for 2025. Key data points reinforcing this outlook:

Endesa’s 33% EBITDA growth highlights Spain’s recovery.
US$1.74 billion from Peru sales funds debt reduction and shareholder returns.
Enel’s renewable investments (e.g., hydro and solar) align with long-term energy transition trends.

Investors should monitor regulatory developments in Spain and currency stability in Latin America. However, Enel’s diversified earnings streams and disciplined capital allocation suggest it remains on track to meet its guidance, making it a compelling play on the global energy transition.

The road ahead is uneven, but Enel’s resilience in Q1 positions it to capitalize on both regional strengths and structural shifts in the energy sector.

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