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Introduction & Market Context
Italian renewable energy company ERG presented its first half and second quarter 2025 results on August 1, showing improved performance in Q2 despite ongoing challenges from lower-than-normal wind speeds across Europe. The company reported Q2 EBITDA of €128 million, up 11% year-over-year, while its stock price declined 1.69% following the announcement, closing at €22.52.
ERG's CEO Paolo Merli highlighted the company's ability to deliver solid results despite what he described as a "persisting wind drought" that has affected the company's wind energy production since October 2024. The presentation revealed a strategic focus on securing long-term power purchase agreements (PPAs) and expanding the company's renewable energy portfolio across multiple European markets.
Quarterly Performance Highlights
ERG's second quarter performance showed notable improvement compared to the same period in 2024, with EBITDA increasing to €128 million from €116 million, representing an 11% year-over-year growth. The EBITDA margin also improved to 71% in Q2 2025 from 69% in Q2 2024. Net profit for the quarter reached €34 million, up 21.4% from €28 million in the previous year.
As shown in the following financial highlights chart, first half results were more mixed, with EBITDA declining slightly to €274 million from €281 million in 1H 2024, while net profit decreased more substantially to €83 million from €106 million:
The company's energy production remained relatively stable despite challenging wind conditions. Total energy production for the first half of 2025 was 3,697 GWh, slightly higher than the 3,670 GWh produced in 1H 2024. Second quarter production was virtually unchanged at 1,720 GWh compared to 1,723 GWh in Q2 2024.
The following chart illustrates ERG's production breakdown across its portfolio:
ERG attributed its ability to maintain production levels to the contribution of new assets, which helped offset the impact of poor wind generation. This is reflected in the EBITDA breakdown by technology and region:
Strategic Initiatives
The presentation highlighted several key strategic achievements during the first half of 2025, including the completion of a Battery Energy Storage System (BESS) plant in Vicari, Sicily with 12.5MW capacity, and the start-up of the Corlacky wind farm in Northern Ireland with 47MW capacity. The company also completed solar revamping and repowering projects in Italy totaling 28MW and secured permits for 50MW of wind and solar projects across France, Germany, and Italy.
ERG's strategy execution is illustrated in the following slide:
A significant focus of ERG's strategy has been securing long-term revenue streams through power purchase agreements. In the first half of 2025, the company secured PPAs for new capacity totaling 360GWh per year and for existing assets totaling 390GWh per year. Notable agreements included a 15-year PPA with A2A for 182GWh per year from the Salemi Castelvetrano repowering project, and a 5-10 year supply agreement with FS Group for 185GWh per year.
Detailed Financial Analysis
The company's adjusted profit and loss statement revealed the financial impact of its operations and investments. While EBITDA showed modest growth in Q2, the first half figures reflected the challenges faced earlier in the year:
ERG's investment strategy continued to be aggressive, with total investments (CAPEX and M&A) of €364 million in the first half of 2025, compared to €444 million in the same period of 2024. The second quarter saw a significant increase in investments to €290 million from €143 million in Q2 2024, indicating an acceleration of the company's growth initiatives.
The geographical distribution of these investments shows ERG's focus on diversification across multiple European markets:
The company's cash flow statement for the first half of 2025 shows how these investments, along with dividend payments and share buybacks, impacted its net financial position:
Net debt increased from €1,793 million at the end of 2024 to €1,949 million as of June 30, 2025, reflecting the company's continued investments in growth projects. The increase was primarily driven by dividend payments (€147 million), CAPEX and acquisitions (€143 million), and changes in working capital (€108 million), partially offset by EBITDA contribution (€274 million).
Forward-Looking Statements
ERG continues to face challenges from abnormal wind patterns across Europe, as illustrated in this analysis of wind speed anomalies:
Despite these challenges, the company's guidance for 2025 remains optimistic, with expected EBITDA of €540-600 million and CAPEX of €190-240 million. The company anticipates a year-end net financial position of €1.85-1.95 billion.
During the earnings call, CEO Paolo Merli emphasized the importance of flexibility in the energy market, stating, "Flexibility is going to be a game changer in the market." He also highlighted the "unstoppable nature of the decarbonization process," suggesting confidence in the long-term growth prospects for renewable energy despite short-term weather-related challenges.
With its continued investment in renewable energy assets and focus on securing long-term revenue streams through PPAs, ERG appears positioned to navigate the current challenging environment while preparing for future growth opportunities in the European renewable energy market.
Full presentation:
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