Neoen slashes 2021 targets due to COVID-19 after buoyant solar year

The intensifying COVID-19 crisis has forced Neoen to revise its earnings target for 2021 to adjust to potential delays, amid claims its long-term renewable install ambitions will not falter.

This week, the Euronext-listed firm posted financial results showing a 30% boost to annual EBITDA between 2018 (€166.5 million or US$182 million) and 2019 (€216 million or US$236 million), a jump the firm linked to particularly strong solar assets.

The green energy player had previously guided EBITDA of €400 million (US$437 million) for 2021 but now believes the actual figure will be lower, with the COVID-19 crisis gradually starting to put the brakes on timetables drawn up before the outbreak.

The pandemic will, Neoen said this week, affect timelines for construction and commissioning as well as supply chains, administrative processes and project organisation. “The proportion of assets entering service during 2021 … will be lower than previously anticipated,” the firm added.

Neoen did not yet specify the EBITDA levels it expects for 2021 now that the €400 million target lies in the air. The group did however predict these earnings will reach €270-300 million (US$295-328 million) in 2020, followed by the earlier guided €400 million one year after schedule, in 2022.

Neoen remained adamant about long-term renewable growth prospects despite COVID-19. The firm claimed to be “very confident” it can tap into opportunities thanks to its develop-to-own model, its efforts to diversify regionally and the lining up of revenues under long-term PPAs.

Financial performance of Neoen's solar assets in 2019 (in € million)

Source: Neoen

For Neoen, the onset of the COVID-19 crisis follows a solid 2019 on the financial front. According to the results out this week, revenues grew 22% to €253.2 million (US$277 million), while operating income rose 28% to €135.9 million (US$148 million).

The year also proved strong for Neoen’s portfolio, which added 3GW to reach 10.7GW of renewable project assets as of 31 December 2019. Of the 10.7GW total, 1.8GW is already in operation while a further 1.19GW lies under construction.

As anticipated earlier this year, solar was instrumental in driving sound financial results across the whole of Neoen. PV assets (see table above) now account for nearly 50% of firm-wide revenues, up from 39% in 2018.

Despite the COVID-19 delays, the firm is sticking to its previous target to reach a 5GW of green assets in operation or under construction by the end of 2021. “Our large and diversified pipeline, which we replenish constantly, makes us very confident about the future,” said CEO Xavier Barbaro.

In the nearest term, Neoen’s efforts towards the 5GW target will be helped along by the fresh 1GW in awarded capacity the firm won over 2019. The pipeline includes a 352MWp PV project backed by an unidentified utility PPA offtaker, plus a 49% stake in an auction-backed scheme in Portugal.

Earlier updates showed Neoen expects various PV project completions in Latin America this year. Between Q1 and Q3, the firm is hoping to deliver PV plants in Mexico (375MWp), Argentina (208MWp) and a complex mixing PV (143MWp) and li-ion batteries (3MW/1.8MWh) in El Salvador.

Tags: covid-19, coronavirus, neoen, financial results, company results, solar, solar pv, latam, mexico, argentina