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Investing.com - Madrid-listed shares in Endesa (BME:ELE) fell in early trading on Tuesday after the power group posted second-quarter earnings that fell short of expectations.
The firm posted earnings before interest, taxes, depreciation and amortization of 1.3 billion euros for the period, falling by 4% versus a year ago and 3% below FactSet consensus estimates, analysts at Jefferies said.
Net income of 46 million euros also missed projections, as lower wind and solar generation dragged down profit at Endesa’s renewables unit by a 23% year-over-year.
Endesa, which is majority-owned by Italy’s Enel (BIT:ENEI), also argued that a proposed remuneration framework for power grid investments in Spain did not provide adequate incentives. The firm has been pushing to expand and update its power networks, a key point of discussion in Spain following a wide-spread blackout across the country and Portugal in late April.
CEO Jose Bogas said a proposal from Spain’s competition and energy watchdog to raise the guaranteed return on investments in power grids to 6.46% would "seriously [jeopoardise] the level of investment Spain needs to achieve its decarbonization, increase electricity demand and grid investment goals," Reuters reported. Endesa had previously assumed the return would be set at 7.5%, the Jefferies analysts noted.
Endesa said it continues to expect to meet its financial targets this year, although analysts quoted by Reuters flagged that the company’s waning gas margins may dent its ability to hit those goals.
(Reuters contributed reporting.)