Redeia Q1 2025 presentation: Regulated business drives 4.2% profit growth

Introduction & Market Context

Redeia Corporacion SA (BME:REE) presented its first quarter 2025 financial results on April 30, showing solid growth across key metrics driven primarily by its regulated businesses. The Spanish electricity transmission system operator reported a 4.2% increase in net profit to €138 million compared to the same period last year. The company’s stock closed at €19.25 before the presentation, but has since declined 3.84% to €18.51, suggesting investors may have had higher expectations.

Quarterly Performance Highlights

Redeia delivered revenue growth of 3.0% year-over-year, reaching €424 million in Q1 2025 compared to €412 million in Q1 2024. This growth was primarily driven by the company’s regulated businesses, both in Spain and internationally.

As shown in the following revenue breakdown chart, the transmission system operator (TSO) business contributed €11 million to the revenue increase, while international operations added €4 million:

The company’s EBITDA grew at an even stronger pace, rising 4.4% to €320 million from €307 million in the prior year period. This performance was largely attributed to the TSO activity and effective cost containment measures. The regulated businesses continue to form the backbone of Redeia’s operations, accounting for approximately 90% of the company’s EBITDA.

The following chart illustrates how different business segments contributed to the EBITDA growth:

Net profit increased by 4.2% to €138 million, up from €132 million in Q1 2024. This growth was achieved despite a slight increase in financial costs and some impact from discontinued operations. The company also noted that 2024 figures have been restated due to the reclassification of Hispasat.

The following breakdown shows the factors contributing to the net profit increase:

Investment Strategy

A standout element in Redeia’s Q1 results was the significant 70% increase in TSO investments, which rose from €139 million in Q1 2024 to €237 million in Q1 2025. The company highlighted progress on several strategic projects, including interconnections with France, Tenerife-La Gomera, Peninsula-Ceuta, and Galicia-Portugal.

The investment breakdown by business segment is illustrated in this chart:

Notably, 94% of the group’s investments are eligible under European Taxonomy, underscoring Redeia’s commitment to sustainable infrastructure development. The company emphasized that 2025 will see the largest investment in its history, with investments in the 2021-2025 period expected to exceed €4.2 billion.

The following chart shows the historical and projected TSO investment trajectory, highlighting a tripling of investment effort in 2025 compared to 2020:

Financial Structure

Redeia’s net debt increased by 3.9% to €5,577 million from €5,370 million at the end of December 2024. This increase was primarily driven by the company’s ambitious investment program, partially offset by funds from operations (FFO) of €254 million.

Despite the higher debt level, the company maintains healthy financial ratios with a net debt to EBITDA ratio of 4.7x and FFO to net debt of 18.1%. Redeia continues to hold an A- credit rating with a stable outlook.

The company’s financing structure shows a strong commitment to sustainability, with 70% of financing being ESG-linked. The average cost of debt stands at 2.19% with an average life of 4.4 years, providing stability to the company’s financial position.

Forward-Looking Statements

Redeia reaffirmed its 2025 outlook, which remains in line with the objectives of its strategic plan. Following the sale of Hispasat, the company expects to achieve EBITDA exceeding €1,250 million and net profit of over €500 million in 2025.

The company projects its net debt to reach approximately €5,700 million by the end of 2025, while maintaining a net debt to EBITDA ratio below 5x and FFO to net debt above 15%. Redeia also confirmed its sustainable dividend policy with a floor of €0.80 per share.

The following slide summarizes Redeia’s outlook for 2025:

For 2024, the company has proposed a dividend of €0.80 per share to be presented at the Annual General Meeting, with an interim dividend of €0.20 per share already distributed on January 7, 2025.

As Redeia continues to execute its strategic plan with a focus on regulated businesses and infrastructure investments, the company appears well-positioned to maintain its growth trajectory through 2025, despite the challenges of managing increasing debt levels in the current interest rate environment.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.