German solar and wind firm Encavis AG has maintained its 2020 financial targets despite the COVID-19 outbreak.
Having achieved record earnings in 2019, beating its so-called “summer of the century” in 2018, Encavis said it expects earnings to stay strong this year even if there are delays with the construction of two major solar PV plants in Spain.
In a release, the firm stated: “Even in these difficult times, we feel well-positioned to achieve our long-term goals. For the current financial year, we are expecting moderate growth in revenues and earnings, which is in line with our original forecast before the Corona crisis.”
2019 weather boon
Last year, expansion of the firm’s generation portfolio in Denmark and the Netherlands, growth of Encavis Asset Management and more favourable weather conditions helped Encavis obtain a 10% increase in revenue of €25 million. This was €10.5 million higher than originally forecasted and €3.8 million higher than in 2018.
2019 revenue growth was driven by around €13.6 million from solar parks, €5.3 million from wind, and €7.5 million from the firm’s asset management business.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by around 16% to €217.6 million compared to the previous year, with the EBITDA margin rising to 79.5%, up from 75% in the previous year.
The renewable energy parks each achieved operating EBITDA margins of 82% (wind) and 84% (solar). Increases in EBITDA were also boosted by the sale of minority interests in four wind parks as well a decline in other operating expenses, mainly due to the application of International Financial Reporting Standard (IFRS) 16.
Operating cash flow increased by €15 million (9%) to €189.3 million – again meeting guidance.
2020 Spanish solar giants
In 2020, Encavis will chiefly focus on two major PV projects in Spain that are due to be connected to the grid in the second half of the year.
For example, in January, UK-based firm Solarcentury and Encavis started construction on the US$250.5 million Talayuela Solar Project, a 300MW PV project being developed in Cáceres, Extremadura, Spain. Once completed, it will be one of the largest subsidy-free solar developments in Spain to date.
The German company said that even if there was a delay with the construction of these projects, this would have limited impact, with a negative effect on earnings per share for 2020 of €0.01.
The Management Board also expects a moderate increase in revenues to more than €280 million for the 2020 financial year. The firm plans to achieve operating earnings (EBITDA) of more than €220 million and operating EBIT of around €130 million, with operating cash flow expected to exceed €200 million.
Thus, despite all the expected headwinds from COVID-19 globally, the firm said it will continue to follow its Fast Forward 2025 strategy unencumbered. The company is, however, postponing the Annual General Meeting for the safety of shareholders and employees.