EDP shares fall 6% and EDP Renováveis 0.4% over new strategy plans

EDP shares fell 6.38% on Thursday and EDP Renewables tumbled 0.38% as the market reacted negatively to the energy companies’ new strategic plans, with analysts saying that profit targets had fallen short of expectations.

The value of EDP shares now stands at €4.1170 each and EDPR shares at €12.99. In the new strategy plan for 2026-2028, EDP announced states that it expected the net result to increase by around €1.2Bn in 2025 and €1.2Bn to €1.3Bn in 2026 “improving the quality profile of its results with a lesser impact on gains from assets rotation and a greater impact from regulated markets and with an ‘A’ rating.

“The new strategic plan is focused on around €12Bn of investment of which around €5Bn refers to asset rotations, particularly in the renewables segment”, states João Queiroz, Head of Trading at Banco Carregosa.

“This strategy reinforces financial discipline, but conveys to the market a structural dependence on the sale of holdings, licenses and assets to generate results and finance growth,” he warned. “With high interest rates and lower valuation multiples in the sector, there is skepticism about the ability to repeat the historical gains of these turnovers.”

João Queiroz also stressed that despite forecast growth of profits before EBITDA of €5.2Bn in 2028 and net profit of €1.3Bn, “the rate (of growth) is modest (CAGR of 2-3%) while the minimum dividend had a lackluster increase to €0.21 per share.

Analysts are interpreting this as a sign of cutting back on investment and focusing on the companies’ finances, contrasting with earlier years when EDP promised a much sharper growth.

Analysts from RBC refer that the guidance of the net result is slightly below market consensus – at €1.35Bn in 2028.

EDPR reiterated its estimate of earnings before interest, taxes, depreciation and amortization (EBITDA) of close to €1.9Bn in 2025, increasing to around €2.1-2.2Bn in 2026 and to close to €2.2Bn in 2028, mainly supported by strong growth in the US. According to J.P. Morgan analysts, the target for 2028 is slightly below the market consensus of €2.3Bn.

EDP posted a 12% fall in nine-month profits die to smaller capital gains. Its consolidated net profit fell to €952 million while EBITDA fell 3% year-on-year to €3.8Bn.

EDPR posted €35 million in capital gains from the sale of wind and solar assets – part of a strategy of disposing of stakes in mature plants to finance new ones, while in 2024 such operations netted €167 million.

As a result, EDPR profits fell 49% to €107 million. EDP said that excluding the reduced gains from asset sales, recurring net profit increased by 5% year-on-year, reflecting a 14% increase in total electricity output from new capacity, with a strong contribution from operations in the United States, Portugal and Spain.

Source: ECO/Reuters