Lisbon, Portugal – Energias de Portugal (OTCPK:EDPFY) stands as Portugal’s largest utility company, serving as a key player in the global renewable energy market. With an impressive installed capacity of 26.5 GW, a significant portion derived from wind, solar, and hydro sources, the company unveiled its ambitious 2023-2026 Business Plan in FY23. This strategy aims to add 4.5 GW of renewable capacity annually, totaling 18 GW by FY26. To fund this initiative, a stock issuance of €2 billion was necessary, with €1 billion raised by the parent company and €1 billion by subsidiary EDP Renováveis. Additionally, financial support of €7 billion will be obtained through built-to-sell assets, equating to around 30% of assets under construction between FY23 and FY26.

This approach not only ensures sustainable growth for EDP but also helps maintain a Net Debt/EBITDA ratio close to 4x. Anticipated growth in operating results and profitability forecasts an EBITDA of €5.7 billion and a recurring net income between €1.4 billion and €1.5 billion by FY26. Despite facing risks like high dependence on Brazil and fluctuating asset sale prices, EDP remains an appealing investment within the renewable energy sector, supported by the outcomes of a detailed DCF analysis.

Operating through two main business units, EDP focuses on renewables, clients, and energy management, boasting an impressive installed capacity across various energy sources. The company’s Network segment handles electricity distribution and transmission across Spain, Portugal, and Brazil. Notably, Portugal and Spain contribute significantly to EDP’s revenue, with plans to achieve 100% green energy status by FY30.

Looking ahead to FY23-FY26, EDP’s management intends to invest €25 billion to expand renewable capacity, primarily in photovoltaic and wind energy. Investments will predominantly target the European and US markets, with incentives from RePowerEU and the Inflation Reduction Act driving growth strategies. Despite uncertainties and risks, EDP’s strategic planning and financial initiatives position it as a key player in the evolving renewable energy landscape.

In FY23, EDP’s economic results and forecasts showcased a decrease in revenue due to fluctuating electricity prices, offset by improved operating margins and strong performance in various energy segments. The company’s Q1 2024 preview highlighted solid renewable energy generation, paving the way for anticipated improvements in revenue and operating income in FY24. Favorable market conditions and strategic asset sales are expected to drive EDP’s financial performance in the coming years.

EDP’s financial snapshot reflects a stable net debt position, strategic investments, and potential liquidity pressures that may impact short-term operations. With a clear focus on sustainable growth and strategic investments, EDP’s financial health and operational strategies position it as a significant player in the global energy market. The company’s commitment to renewable energy and forward-thinking business model present attractive opportunities for long-term investors seeking exposure to the renewable energy sector.