Endesa, S.A.

In first half 2026, EBITDA increased 20% year-on-year to EUR 3.2 billion, net income rose 41% to EUR 1.5 billion, and EPS increased 46% to EUR 1.44 per share. Net financial debt increased by EUR 0.2 billion to EUR 10.3 billion, with net financial debt-to-EBITDA at 1.6x. Cash generation remained strong, with FFO at EUR 2.3 billion and a 70% cash conversion rate; EBITDA-to-FFO stood at 70% and FFO-to-net financial debt at 38%. Management said approximately EUR 0.2 billion of H1 EBITDA came from nonrecurring items, including about EUR 0.1 billion in distribution resettlements and EUR 0.1 billion in non-mainland generation, plus about EUR 0.1 billion of late payment interest income in financial results. For the full year 2026, Endesa upgraded guidance and now expects net ordinary income to exceed EUR 2.4 billion, comfortably above the original range; management also said free power margin should remain broadly in line with H1 and end the year around EUR 54-55/MWh, with ancillary services cost impact lower than EUR 100 million for FY26.

Gianni Armani framed the quarter as evidence that Endesa’s strategy is working, pointing to resilience, disciplined execution, and a growing contribution from regulated assets. He emphasized that electrification and grid investment remain the core strategic themes, and said the Royal Decree increasing the cap on distribution investment is a positive step that gives more regulatory visibility. On capital allocation, he said the share buyback is on track, over 50% complete by end-June, and no extension or additional buyback is currently being considered.

Daniele Caprini highlighted the mechanics of the earnings beat: network EBITDA rose 24% to EUR 1.2 billion, generation and supply EBITDA rose 16%, operating costs fell EUR 45 million, and net ordinary income reached EUR 1.5 billion, up 42%. He pointed to a stronger regulated framework, favorable non-mainland generation developments, and lower fixed costs as key drivers, while noting that net financial debt was EUR 10.3 billion and leverage stayed at 1.6x. He also said cash generation was robust at EUR 2.3 billion of FFO, shareholder remuneration totaled EUR 1.2 billion including a roughly EUR 550 million buyback cash outflow, and the RAB reached EUR 11.4 billion.

Analysts focused on how much of the first-half strength was nonrecurring, and management quantified roughly EUR 0.2 billion of EBITDA support from positive one-offs. They also pressed on second-half drivers, where management said distribution and non-mainland generation should keep benefiting from the new framework, free power margin should stay near H1 levels, gas margin may moderate seasonally, and higher wholesale prices would have very limited impact because generation is effectively fully hedged through fixed-price sales to customers. Other major questions covered the buyback, grid-capacity regulation, the blackout investigation, and the nuclear extension for Almaraz; management said the strategy is unchanged, grid expansion is the real solution to capacity constraints, no financial impact is assumed from the blackout proceedings, and the final nuclear decision is expected before year-end.