Good morning, everyone. This is Abel Arbat speaking from the capital markets team at Naturgy. We hope you're well, and we thank you for joining our results call for the full year 2021. Next to me is our head of financial markets, Steven Fernández, and our head of financial planning and control, Jon Ganuza. We're going to run over the presentation first, and at the end, we will open the floor to live Q&A as usual. Just a reminder that only questions from analysts and investors will be addressed during the call, so any queries from media can be directed to our communications team. With that said, I'm handing it over to Steven to start running over the presentation. Steven, please go ahead.
Thank you, Abel, and good afternoon, everyone. We're gonna go through the presentation. I'm gonna try to read the slide piece so you can follow online as we speak. Of course, as usual, we're gonna start off with a review of the year scenario during 2021. I'll be taking you straight to page 4 of the presentation, where you can see that we have experienced a gradual recovery of energy demand in the regions where we operate. Electricity and gas demand in Spain compared on average 2.4% and 5.4% above 2020 respectively.
Similarly, electricity and gas demand across the Latin American regions where we operate experienced an increase on average of 4.8% and 22.5% respectively during 2021, obviously compared to 2020. If we move over to slide five, you'll find a comparison between the average of key commodity prices during the year 2021 compared to the previous year. The fact is that 2021 has been marked by the volatile energy scenario and the surge of gas and electricity prices, which you guys are all aware of, and most notably during the second half of the year.
Brent prices increased by 70% on average when compared against the previous year, while gas prices on major gas hubs, for example, like MB and NBP, have increased on average by 71% and close to 400% respectively during the year 2021. Wholesale electricity prices for their part multiplied by more than three times on average versus the prior year, exceeding all-time highs. Said increases resulted in significant regulatory changes and uncertainty in Spain during the year. All in all, a significant rise of commodity prices, particularly in the second half of the year as we approach the winter season. If we move over to slide six, you can see the evolution of FX. You can see that the pace of depreciation of Latin currencies has moderated.
When comparing FX rates versus a year ago, the depreciation against the Euro translated into a negative impact of EUR 42 million and EUR 8 million on the consolidated group ordinary EBITDA and net income respectively. FX depreciation pace has indeed eased in recent months, although Brazil and Argentina have still experienced significant appreciation in the period. If I move over to consolidated results, I think it's worthwhile to start off on page eight, where we briefly review the main non-ordinary items of the period, so we can really focus on the underlying performance and trends of the company. Non-ordinary impacts in the year at EBITDA level amounted to around EUR 450 million, corresponding mostly to restructuring costs, which we announced during the year, thanks to the employee voluntary departure plan in Spain, which notably impacted networks and supply activities.
Relevant are the breakup costs associated to the cease of onerous gas supply contracts in Spain during the last quarter of the year, which amounted to around EUR 230 million. On the other hand, these costs were partially compensated by the taxes reverted as a result of the hydrocarbon sentence in Spain, of which close to EUR 190 million corresponded to Naturgy. At the net income level, the aforementioned items and their value were almost fully compensated by the net gains from the disposal of CGE Chile and the agreement of UFG Gas.
If we move over to page nine, which are the key highlights, Naturgy ordinary EBITDA reached EUR 3.98 billion in the full year 2021, up 7% versus the previous year and above our guidance, mainly supported by the gradual recovery of energy demand and the rising commodity prices, particularly gas. Total CapEx in the period amounted to close to EUR 1.5 billion. This increase was mainly explained by greater investments in renewable developments in Australia, Spain, and the U.S., as well as by higher investments in supply commercial efforts and digitization. In terms of businesses, regulated activities remained stable, supported by the ongoing recovery of energy demand, while merchant activities were affected by the volatile scenario on the rising energy prices with transitory impacts.
This is something that we'll review later on. Net reduction in the year was driven by the cash flow generation together with the completion of the UFG agreement and the disposal of CGE Electricidad in Chile, but partially offset by the above average working capital consumption in the last quarter of the year amid a volatile energy scenario. All in all, 2021 ordinary EBITDA of around EUR 4 billion above guidance. If we move over to page 10, you'll see that the improvement in the base consolidated EBITDA number was mainly supported by the gradual recovery of energy demand, and particularly by the rising gas prices, positively impacting our international gas sales, as you can see in the energy management unit, which was nonetheless offset by weak weather results in supply in Spain.
Manuel García Cobaleda is going to make an interesting point about this when he goes detailing the performance of the business by business. If we move over to page 11, the net income evolution shows that the company's level reached EUR 1.2 billion in 2021, up 41% versus 2020. On a recorded basis, net income amounted to around EUR 1.2 billion as well, as negative non-ordinary impacts were compensated by positive ones. In this sense, it's worth highlighting that the company continued to actively optimize our financial structure, which resulted in improving financial results with longer term visibility on cost.
If we move over to page 12 on the cash flow, net debt at the end of 2021 stood at EUR 12.8 billion, implying a net debt to last twelve months reported EBITDA of 3.6 times compared to 3.9 times the year prior. The significant net debt reduction and deleveraging was mainly driven by the disposal of Naturgy's CGE subsidiary, and the cash payments resulting from the agreement of exiting UFG. On the other hand, the surge and volatility in gas prices had a temporary negative impact on working capital consumption, as we mentioned, mainly in the fourth quarter, which has partially offset the expected re-reduction in net debt. Such impact, however, it's worthwhile pointing that we deem as transitory and working capital consumption should normalize in the forthcoming quarters.
On shareholder remuneration on page 13, we just remind you that during the year 2021, the company paid out a total dividend of EUR 1.33 per share in cash, including the final dividend of 2021, which was EUR 0.63 per share, paid in March. As well as the first and second interim dividends for 2021, corresponding to EUR 0.30 per share and EUR 0.40 per share, paid both in August and November of 2021. We will be proposing a final dividend against 2021 of EUR 0.50 per share in our upcoming AGM, which has to be called, bringing the total number to EUR 1.2 per share, which is our commitment, as you may remember from our strategic plan presentation.
With this, I hand over to John, who will go over the review and detailed review of the different businesses' performance in the year.
Okay. Thank you, Steven, and good afternoon, everyone. Starting with Networks Spain on page 15 of the presentation. Gas Networks delivered growth driven by higher volumes, notably in the industrial segment and operational improvements, which compensated the lower remuneration base under the new regulatory framework. Spanish Electricity Networks, for its part, delivered modest growth on the back of investment and efficiencies, which was partially offset by the financial remuneration adjustment of -50 basis points during 2021 as part of the regulatory period, 2020, 2025. All in all, modest improvements vis-à-vis 2020, supported by demand recovery and operational improvements, and despite the negative regulatory effects of 2020. Moving forward to Networks LatAm on page 16. Chile Gas was slightly down. Stable results in gas distribution were offset by margin pressure in supply, leading to insufficient pass-through of higher gas costs to end customers.
Brazil came out stronger, supported by increased demand, tariff indexation, and operational improvements, which were partially offset by FX depreciation. We are still holding ongoing talks with the regulators for the tariff update already five years due. In Mexico, the recovery of gas demand was not enough to compensate for delays in the overdue tariff update. Panama showed demand recovery despite the lower temperatures, which was offset by tariff decreases for indexation and US dollar depreciation. Finally, in Argentina, demand recovery and tariff indexation were not enough to compensate for impacts of inflation and FX effects. In summary, LatAm recovery is underway, only FX depreciation and Chile Gas performance eroded away. Turning now to the Liberalized business on page 17. 2021 in the energy sector in Europe has been an exceptional year, and any way to describe it is an understatement.
I'm going to start you with the figures that I suppose that you've heard and read many times these past few weeks and months. What I'm going to do is focus on the main consequence that it has had on the results of Naturgy liberalized businesses. In order to understand Naturgy results in 2021 in these liberalized businesses, it only makes sense to do it on an aggregate level, at least for the business units that generate, procure, and sell energy in Europe, and not on a separate business-by-business unit level. Naturgy defines and optimizes energy sales and procurements on an aggregate level, but business unit results are a result of internal transfer prices.
These internal contracts are set on arm's length basis, but have proven to introduce distortions on a year as exceptional as this one, generating benefits on one part of the company as they were generating losses in other parts of the company. Therefore, some of the business unit results that we see in 2021 are basically a result of how the internal contracts are structured and do not reflect the overall performance of Naturgy's aggregate energy management. If we add all of the business units that procure, generate, and sell energy in Europe, and for the sake of simplicity, I will exclude LNG, we see that the aggregate result has increased in EUR 159 million or 25% vis-a-vis 2020.
I would like to emphasize that this result is comparing a 2020, when we saw the lowest gas spot prices ever in Europe, with a 2021 with the highest gas prices ever. Moving to international LNG, the scenario of high prices and optimizations we have managed to carry out have allowed the business to capture higher margins during the later part of the year, most notably in Q4 2021, where spreads and basis widened the most. Finally, LatAm, thermal generation was slightly up compared to 2020, supported by higher margins in Mexico as a result of the PPAs and higher electricity prices, although this was partially offset by the U.S. dollar depreciation. Let's now turn to our renewable activities on page 18 of the presentation.
End results, as said before, should be regarded on an aggregate level, so I'm not going to discuss them. In Australia, higher capacity was offset by lower margins on the mark to market of existing PPA contracts, while LatAm continued to grow, backed by new capacity coming into operation in Chile. Overall, installed capacity has increased by 562 MW in Spain, Australia and Chile. CapEx has increased by more than 40%, and we expect the new capacity to gradually increase its contribution to the results. Finally, supply on page nineteen. As said before, results should be viewed on an aggregate level, but there are two things I would like to single out of the supply results.
First, this year, our evolution in the channel strategy has started yielding results, and for the first time since 2017, we see a net increase in our retail liberalized electricity customers. Second, there are several contracts that, with the current outlook of the energy scenario, and considering all uncertainties, we deem them unprofitable and therefore have been or are currently being canceled. The best estimation associated to that cancellation has been provisioned this year, totaling an amount of EUR 234 million. Although they are mainly supply contracts, it also includes contracts currently now being sold at markets and procurement. This is for the review of the various activities in the year. Back to you, Steven, to summarize.
All right. Thank you, John. To briefly summarize on page 22, the regulated activities remain stable, supported by ongoing recovery of energy demand. Energy management in international markets performed strongly, although the improvement was partly offset by supply purchases in Spain. This is in line with the approach mentioned by John looking at it on an aggregate basis. Indeed, supply in Spain was impacted by contracts with end customers, not reflecting the increase in gas and electricity prices in the major hubs. However, presence across the value chain and risk management were key to navigate the ongoing volatility and its transitory impact on the various activities. As for net debt, its reduction was offset in the last quarter of the year by above average working capital consumption as a result of the volatile scenario.
All in all, a 2021 ordinary EBITDA with guidance amid a volatile scenario. If we look at 2022, the current market volatility and ongoing contract renegotiations warrants that we don't provide EBITDA guidance for the year. Beyond saying that we're working hard towards having a 2022 EBITDA, we should be at least in line, if not better, than 2021 ordinary EBITDA, which again, as you know, was higher than the consensus expectations. With that, we conclude our presentation, and we are happy now to take any questions you may have.
Our first question comes from Manuel Palomo of BNP Paribas. Your line is open. Please go ahead.
Good morning, and thank you very much for taking my questions. I will stick to two questions, well, three. The first two are on renewables. I'd like to have your views on potential inflation impacts on returns or on project delays, if any. The second one, we have recently read in the press about your interest on potentially the assets, the pipeline from Siemens Gamesa. I wonder whether you would make any comment or why you would be interested, given that you already have a pretty decent pipeline, particularly in Spain. The second one I wanted to ask was about the gas supply contracts you've done.
Understand that the effort in order to break up those contracts in which were, you were loss-making. We could see the impact in the P&L in 2021. Could we expect any additional impact in the year 2022? Thank you very much.
Hi, Manuel. This is Steven. I'll ask you a question on press speculation about a potential interest in Siemens Gamesa acquisition. We don't comment on projects that we may or may not be analyzing. Unfortunately, we're not gonna fuel press speculation on this point.
Hello, Manuel. Moving to your two other questions. The impact that inflation is going to have on the renewables, potential delays. I think that it shows already in the CapEx that we've done this year. When we started the year and the inflation had not yet come, we gave a guidance of what we were expecting to do this year regarding CapEx of renewables, but we saw that there was an increase, a serious increase in the prices of both PV and also wind CapEx. That led us to evaluate some of the projects that we had in our portfolio, and some of them therefore have been delayed.
I think that inflation is something that goes two ways, not only in the CapEx, also in the revenues, and that's what we're currently analyzing. In some of the projects that we are moving forward and we are building, we don't see that that's something that could have a negative impact, but in some of them, as we see, and therefore that's why we have delayed them. Regarding the gas supply contracts, what we've provisioned this year is our best expectation of which are the contracts that we think that would be loss-making, taking into account all of the uncertainties and all of the moving parts that might have to take into account.
Therefore, we would not be expecting next year to make any further provision, unless there was something completely unforeseen that we were not able to consider at the closing of this year accounts.
Thank you.
The next question comes from Harry Wyburd of Bank of America. Your line is open. Please go ahead.
Hi, everyone. Thanks very much for taking my questions. First one, just a quick clarification on the gas contract breakup costs. Are you actually breaking a contract and paying money or cash to the counterparty to get out of that contract, or are you just provisioning against future losses? Just interested how that's sort of structured from an accounting standpoint. Second one on renewables, just on the pace of expansion, if I've added it up right, I think you did about 0.5 GW in 2021. I guess in your plan that you put out in July, you're aiming for about two GW a year, sort of 10 GW over the next five years, or 9.5.
Are you happy with the pace of project additions, and could you give us a sense of what you're expecting in terms of gigawatt additions for 2022 and 2023? Thirdly, if there's a bad outcome in Ukraine, I guess you're one of the key entry points for gas into Europe. It's a very open-ended question, but what would your exposure be? Perhaps more specifically, is there a risk here that the government effectively sort of takes over? Are there laws that mean that the Spanish government or Europe via the Spanish government could effectively mandate you to increase flows from North Africa, and how would that work for you commercially? Thank you.
Okay. Thank you, Harry. I will try to answer the questions, although I think that the further we move on the questions, the more vague they're, I'm going to be. Regarding the first question, accounting policies, what makes us do is that we have to put the lower of the two following amounts. How much is the amount, the cash amount that you have to pay to the end customer for the breakup of the contract, or the expected loss that you think that you are going to have in the contract.
Basically, what we've seen is that in all of the loss-making contracts that we have, the lower of the quantities was the cash that we should pay to the customer in order to break up the contract, and that's what we have provisioned in the P&L by the end of the year, and those are EUR 234 million. Moving to the following question, it's true that this year we've had a delay in the renewables CapEx, and that's something that has to do with the inflation of the projects. I think that first of all, some of the inflation, at least, in the PV is due to transitory effects. Others that have to do with steel or with other commodities.
Everyone will have its take, its view of how long it's going to be or whether it's going to be structural or it's going to be transient. We must not forget that in the countries where we expect to develop the renewable capacity, governments have to meet targets, renewable targets, and they have to meet other targets. Therefore, if the prices keep on being high and the market does not provide a price signal that is good enough to make those projects profitable, they will have to design some kind of a support mechanism that allows them to be profitable, or otherwise they will not be able to meet the renewable target.
I think that when we're looking at the installed capacity that we expect to have in renewables on a five-year basis, I think that we don't have to look so much as transient effects, like inflation, that we might be seeing this year. Other things we have to also take into account a longer view, and in that longer view, we are still confident that we will be able to meet the renewable targets that we set ourselves for 2025 in the strategic plan that we published in July. Moving on to the third question, I think that the contribution that Spain can have if there is some kind of disaster scenario in Ukraine, I think basically it has to do with the fact that we have a lot of regasification capacity.
In that sense, we have a lot of regasification capacity in Spain, but also we are seeing that exceptionally tight LNG market. We have the infrastructures, but we would have to see whether it would be possible to get spare capacity in order to make up for the shortfall that there would be if there was a scenario with Ukraine. In that case, I don't know. I think that it depends. I think that if we reach that scenario, and we see that Russia would eventually no longer supply gas to Europe, I think that scenario, all paths are open and all options are open, and therefore it would be pure speculation on our part to say what's going to happen.
Okay. Understood. Apologies, just one clarification. Does the government have any powers that would allow them to order you to do certain things to, you know, increase volumes and flows from the pipelines from North Africa? Like, could you be forced to increase your volumes?
I mean, they would have to be under stress, but they could eventually do something with our current gas contracts. The thing is that they would not be able to get more gas from our gas contracts because our gas contracts, they do have an ACQ. They do have certain degrees of flexibility, but the degree of flexibility that our current gas contracts have are not even close to matching up, shortfall in demand by the Russians. So I think that it would be just a drop in the bucket, the flexibility that we have in our contracts compared with the shortfall in natural gas.
Okay. Understood. Thank you.
The next question comes from Javier Suárez of Mediobanca. The line is open. Please go ahead.
Hi, good morning, and thank you for the presentation. Three questions on my side. The first one is on the guidance for 2022. I think the company had mentioned that has guided for a number similar to the ordinary EBITDA of this year. That should be just below EUR 4 billion. The question is, in a scenario of higher natural gas prices, in principle, that should be a positive for a company like Naturgy. You have mentioned a temporary effect that I guess has to do with the supply activity and the difficulty to pass through higher natural gas prices to final consumers, but that should be progressively corrected through 2022.
I'm right to say that in 2022, in principle, on a scenario of higher gas prices should be a positive for Naturgy. If that is the case, which are the other moving pieces that lead you to guide for a kind of a flat performance versus the previous year? That would be the first question. The second question is on the working capital performance during the last part of the year. There has been a total reduction of EUR 1 billion. If you can help us to understand what you are expecting from where this is coming from and what you are expecting for in 2022.
The question is, should we expect to recover most of that nearly EUR 1 billion through 2022? And if so, why? And the third question is related to your restructuring costs that has been amounting to, I guess, EUR 400 million in 2021. What should we expect for 2022 with your restructuring program completed, and therefore we should assume zero additional restructuring costs from now? Many thanks.
All right. Javier, on the guidance, I think I need to be clear again. We mentioned that current market volatility and ongoing contract renegotiations warrant we do not provide guidance for 2022 beyond saying that we're working hard towards making sure that 2022 EBITDA should be at least in line, if not better than 2021 ordinary EBITDA. Either one of those numbers, by the way, is above consensus expectations, if we look at Bloomberg consensus right now. Beyond that, what we can say is, look, there's a lot of moving parts, among them, those contract renegotiations I mentioned, market volatility. We can't go into more details. I think it's. You can read between the lines of what we're saying here.
Yeah, moving to the other two questions, Javier, the working capital and restructuring costs. Regarding the working capital, basically it has to do with the high of the energy prices. If we compare how much where the procurement costs
This year, the procurement costs that we had last year, we see that there was an increase of 65%. Last year, we spent EUR 10 billion in energy procurement. This year has been EUR 16 billion. We take it on a month-by-month basis. Only November, energy procurement costs were almost EUR half a billion higher than the ones that we had the previous year. Basically the working capital variation that we see is due to this fact, and the fact that our suppliers, we are paying them with a number of days that is lower than the days that we have for the receivables that we have with our end customers, and therefore we have to bear with the increase in the cost of energy for that difference.
Also, in stocks, we do have an increase because the energy that we have in our stocks is more expensive this year than last year. That basically will explain most of the EUR 1.1 billion. It's an increase, working capital is transient. As the prices move lower, actually what we will see is that we will have a decrease in our working capital needs that will be in almost the same amount. It's going to take as long as it takes for the prices to reach those lower prices. If the prices remain unchanged, then we will keep with the current working capital that we have. Regarding restructuring costs, we provisioned all of the restructuring costs already in the third quarter.
They should be almost all of the restructuring costs, because actually what we did is all of the restructuring costs that were considered in the strategic plan 2022 through 2025, they were moved in in advance, and we tried to do as much as possible in this year. There might be some minor adjustments in the next few years, but they should be minor adjustments compared with the level of restructuring costs that we've seen this year.
The next question comes from Jorge Guimarães of Davy Capital. Your line is open. Please go ahead.
Good afternoon. Thank you very much for taking my questions. I have three. The first is related to your gas operation in Chile. In the presentation you mentioned there were some difficulties in recovering higher costs. Could we expect some recovery of those costs in 2022? That would be the first one. The second one is related to the LNG business. Given the current high margin environment, could you reconsider your decision to effectively run down the operation as the leasing contracts of the ships end? Or alternatively, could you take the opportunity of that to speed up its sale? This would be the second one. The third one is also related to LNG. Where do you see the margin for the volumes already contracted? Thank you very much.
Thank you, Jorge Guimarães. Regarding the question in Chile, I think that the increase that we saw in the gas supply in Chile, it was, you know, partly transient because it was due to the fact that we had to do some unplanned spot procurements. It was harder to make a pass through to the end customers. Therefore, I think that it's not going to be so easy to see a recovery in here. I would like to stress that it was not so much of a structural increase in the gas cost as a transitory and one-off effect that we saw in Chile. Moving to the second question.
I think that starting in 2018, when we did this Investor Day presentation in London, what we said is that we aim for Naturgy to be a company that has a cash flow generation that is as feasible and as stable as possible. I think that what we're currently seeing in the LNG business actually shows that there are ups and downs. What we want to do is we want to remain as stable and with higher level of visibility possible for cash flow generation for the next few years.
I think that increasing our level of exposure to the LNG business or trying to decrease the level of position that we have closed, it would go against our, what's the main objective or the main aim that we have, regarding, Naturgy's overall cash flow generation. Regarding what's the outlook for the LNG business, volumes are going to be a bit lower than the ones that we currently have sold this year, but should not be a big variation. That is, we're now going to be a bit lower. Which are the prices that we're going to see, I think is anybody's guess.
What is true is that what we've done is, and what we've been doing these past few years, try to close and to hedge as much as possible our open positions to increase the level of visibility regarding our cash flow generation, regarding that business and also overall with Naturgy's position.
The next question comes from Gonzalo Sánchez-Bordona of UBS. Your line is open. Please go ahead.
Hi, thank you very much for the presentation and for taking my questions. I just have a couple of clarifications, if I may, and then one question. On the clarifications, first one is on the provisioning for the gas contracts that are all out of the money or basically creating some sort of loss. I was wondering if you could provide us some guidance in terms of when the positive impact attached to that BG contracts is to be expected, like, or at least, you know, roughly if most of that was already booked during 2021, or we expect most of the positive effect to be felt in 2022, 2023 and onwards, or just one or two years. Any sort of clarification on that would be highly appreciated.
On the working capital evolution, I perfectly understand what was the explanation provided. I was wondering if during the first month of this year, you've seen any meaningful change in working capital, because assuming basically prices remains the same for the whole of the year, we shouldn't see any changes. Just was wondering if during the first month of 2022, we've seen further deterioration or not from that perspective. On the question side, I had one question related with the pipeline between Spain and Morocco, the GME. Basically, we see some news out there that Spain is negotiating with Morocco some sort of reverse flow delivery of gas from Spain to Morocco.
I'd like to ask if you are involved somehow in that matter and if this could be seen as an upside risk at some point. Thank you very much.
Hi, Gonzalo. I'll start with the last one. In Morocco pipeline, as you know, the concession expired. Any developments on that should be something that the Spanish government discusses, because we are not operating the pipeline at this stage, as you remember. Okay?
Yeah. Hello, Gonzalo. Moving to your first two questions. The breakup of the contracts has been started in December, and it's also currently underway in January and might also be done in February. Although all of the costs have been provisioned for 2021, truth is that we're talking contracts that they were out of the money, and therefore, they should be in the money starting January 2022. Regarding the working capital, are we going to keep on seeing deterioration? Yes, we will keep on seeing deterioration in working capital as long as the energy prices that we see are greater than the ones that we had the previous year. Yeah, we will see it.
Compared to last year, we would see a deterioration, but compared to the closing of this year, with the 31st of December 2021, I think that we might see a slight deterioration in January, but starting February, we should plateau, and we should go lower. So it depends on which way you compare your valuation of the working capital.
Perfect. Thank you very much.
As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad now. Our next question comes from Javier Garrido of JP Morgan. Your line is open. Please go ahead.
Yeah, good morning, everyone. Thanks for taking my questions. The first one would be on your on the savings that you get from your restructuring program. You can give any indication of what is the amount of savings that you have already secured but were not reflected in the 2021 accounts? Because the savings program, I guess, will have a full impact only in 2022 and 2023. The second question is on the company structure, whether you are happy with the current company structure or in order to continue with that re-risking of the business model, do you still believe that you should be reducing further your exposure to Latin America in the future? Thank you.
[Hola, Javier.] I don't know if I wanna call it company structure or I mean, we're always looking at our portfolio. That's part of our job. We're always thinking of ideas to generate value for our shareholders and for stakeholders in general. From that perspective, you can imagine that the analysis is very broad and it includes everything. There's a lot of very bright people in the company with excellent ideas. It's a very flat structure. This is one of the things that perhaps has not been as visible from the outside as it is from the inside. We have a very flat structure that allows for the idea to upstream and ideas to downstream as well.
There's a very proactive cultural change that has taken place, and that generates ultimately a very vibrant organization that constantly looks at ways of optimizing value. Okay.
From that perspective, what we can tell you is what we've always said. We are very flexible and very open to any ideas that allow the company to be worth more ultimately.
Hello, Javier. Regarding the savings, I think that there are several things that must be taken into account. First of all, I mean, I think that the decrease in the personnel cost in our P&L is something that is obvious. This year compared to last year, we have a decrease of EUR 72 million. I think that that's something that is substantial. I think that first of all, more substantial part of the redundancies that have been done this year have been done in the third and fourth quarter of the year. Therefore, the impact that they will have on the personnel cost will be more visible next year. They have been in this year's account.
Secondly, when we take into account the savings, we take into account what the cost of the person that is leaving the company. Next year, what we will be seeing is the evolution of the base of the company that we have, and we have inflationary pressure, and therefore that will erode at least a partial way the savings that we're seeing. Thirdly, I think that Naturgy is not only reducing its headcount, it's also rejuvenating and incorporating new blood. This year, not only have we had capital costs, but also we have been hiring, and we have been incorporating new young talent that that also something that is will be incorporated in the personnel cost that we have. Okay. That's clear. Thank you very much.
There are no further questions on the line, so I'll hand the call back to Abel.
Thank you. Thank you, Charlie, and thank you everyone for joining the call. We conclude the call today here. We look forward to continuing our dialogue with you, and we remain available to take any additional questions in the future through the usual channels. With that, thank you very much everyone, and hope you continue to do well. Thanks. Bye-bye.