EDP ​​points out that the government and the ERSE record a steep drop in profits



EDP's net income dropped 74% from EUR 1,477 million in the first nine months of 2018 to EUR 297 million in the first nine months of 2018 compared to the same period last year. EDP ​​now expects to close the year with net results of € 500-600 million.

Miguel Stilwell de Andrade, EDP Financial Administrator, justifies poor electricity performance with ERSE and government decisions. "The overarching theme of this year is the impact we had in Portugal through regulatory and legislative changes. There are overall cuts of around € 320 million, which means we have only net results of € 18 million in Portugal, if we participate in renewable resources will be 16%, "said Vivo Stilwell de Andrade. Operations in Portugal therefore account for only 6% of EDP's profit. "We have 84% of the net result from operations outside Portugal, especially from Spain and Brazil," the administrator explained.

A decrease was expected from analysts and is justified by an extra 560 million euro increase registered by the company in 2017 by the sale of Naturgas in Spain, which did not repeat this year but mainly in the accounts of the power company, an extraordinary reserve of EUR 285 million directly related with the decree of former Energy Minister Jorge Seguro Sanches, which describes this amount as an alleged overcompensation through the cost of maintaining a contractual balance (CMEC).

With Seguro Sanches in the meantime removed by António Costa, João Galamba is now the new energy portfolio holder, who has moved from the Ministry of Economy to the Ministry of Environment and Energy. EDP ​​administrator did not want to comment on these government changes anymore.

"The results of the EDP Group in the third quarter of 2018 were heavily penalized by the Energy Minister's Order of 29 August 18, which quantified the financial impact of the alleged CMEC overcompensation to € 285 million. EDP was notified to the Competition DG on 26 September (DGEG) of this decision, and although it considered that the innovation aspects were not weighed in the CMEC's ​​annual or final adjustments, and submitted a gratifying complaint, EDP recorded a provision of EUR 285 million in the third quarter of 2007. The impact of this one- EDP ​​amounts to € 195 million and in the nine months of 2018 EDP net income is € 297 million, "reads the statement sent to CMVM. In addition to the table, there is a possibility that the government will require EDP plus EUR 72.9 million for CMEC.

Stilwell de Andrade added: "After analyzing the shipment, we are demanding because we still believe that there is no technical, economic or legal basis for cutting 285 million, for the sake of caution we have to recognize this in accounting and that's what we have done. this extraordinary quarter of 285 million, linked to the Energy Minister's decree, is already supposed to overcompensate CMEC, which is reflected in this quarter. "

"As a result, depreciation, depreciation and provisions increased 100% from the first nine months of 2017 to 572 million euros by September 2018," the statement said.
Regarding recurring profit (except for extraordinary effects), the administrator confirmed that it increased by 2% from 558 to 570 million euros. The decline was also reflected in operating results, which fell by 26% to around EUR 2.4 billion in the first three quarters. Repeated operations decreased by 6%.

The company highlights poor performance in Portugal, which is only EUR 18 million, representing 6% of the net profit of the company, mainly due to the regulatory costs of EUR 320 million. On the contrary, the company has investments worth 10 billion euros, said Stilwell de Andrade. "I would like to emphasize the data from Portugal because it has a major impact this year and in this particular quarter." The net result of traditional activities in Portugal – distribution and production – is EUR 18 million, which represents 6% of EDP's total net income this year. 6%. And it is heavily penalized by a regulatory issue, at around 320 million euros linked to the revision of the distribution, the mechanism clawback, innovation costs, among others ".

With operations in Portugal penalized, in Spain, EDP's operating results grew by 8% and in Brazil by 19%. Renewable sources, the finance manager says, "have fallen by 12% over the quarter with a small wind that has affected business." "We are increasing investment by 30% over the previous year to 1.4 billion euros, two-thirds of which are in the US and Brazil," said Stilwell de Andrade.

"We maintain expectations that at the end of the year we will have profits of between EUR 500 million and EUR 600 million, including extraordinary effects. The operating income is expected to be 3.4 billion dollars and the debt will be about 14 million dollars or slightly lower," he said. According to a report by CMVM yesterday, EDP announced a debt of € 14.5 billion by September, up 4% from 2017.



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