Good morning, ladies and gentlemen, and welcome to EVN's conference call for the results of the 2024-2025 financial year. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to Alexandra Wittmann.
Good morning, everybody, to EVN's conference call on the results for our '24-'25 financial year. I would like to structure my presentation today into two major parts. In the first part, I will, as always, present the key developments of our last financial year on both group and segment level. As you will see, the development was very much in line with our report after three quarters. Since most of you follow us closely throughout the year, I intend to keep this section a bit shorter than usual. The second part, however, will include some important new information for the capital markets. Specifically, we are updating our dividend policy until 2030, and I will share our new EBITDA ambition for 2030, including a transparent segment breakdown. But let me first start with the highlights of the '24-'25 financial year.
The energy sector environment for power generation has been challenging, especially due to weak wind and water conditions, as well as lower market prices. In contrast, temperature-related energy demand improved due to cooler weather, especially in Austria and Bulgaria. We achieved the intended turnaround in our energy supply business. Still, there is upside for further improvement, which we are working on now. EBIT in Southeast Europe, again, came out better than expected, and despite the forecasted offset of positive past earnings in accordance with the regulatory methodology. To conclude, financial performance has been solid. While EBIT increased by 21%, group net result was down by 7%, primarily due to lower financial results resulting from Verbund's reduced dividend payout for '24. With group net results of EUR 436.7 million, we achieved a result in the upper range of our full-year guidance. Last year was the first year of EVN's new executive board.
Therefore, CEO Stefan Szyszkowitz, CTO Stefan Stallinger, and I decided to work together with the whole management team on reviewing and updating EVN's Strategy 2030. We will continue to fully capitalize on the opportunities created by the energy transition. For EVN, these opportunities offer substantial potential for organic growth. I confirm our ambitious investment program. We plan to invest around EUR 1 billion per year until 2030. In line with this, during the last financial year, EVN invested more than EUR 900 million for the first time in its history. The key investment areas remain unchanged, with about 80% of our CapEx allocated to Lower Austria in networks, renewable generation, e-charging, infrastructure, and drinking water supplies. In the second section of the call, I will share further details of our strategy update with you, which also includes a refined capital market strategy.
In June, we also achieved the next important milestone in our plan to divest the international project business. Together with Strabag, we finalized the transaction contracts for the sale of WTE Group and signed the share purchase agreement. This was based on the key terms for the transaction, which were agreed upon already in last December. We are working on the fulfillment of the conditions precedent required for the closing of the transaction. Closing is expected during the first quarter of '26. In view of the sale of international project business, we have also changed EVN's segment structure. Starting with the financial year '25-'26, the environment segment does no longer exist. Until closing of the sale, the discontinued operations are subject to IFRS 5 disclosure and will be included in all other segments. Our Austrian drinking water supply business has been assigned to the network segment.
It accounts for 1.6% of group EBITDA and is mainly pipeline infrastructure business. On the next slide, I will take you through the main financial developments in the reporting period. Due to IFRS 5 disclosure of the international project business in the '24-'25 financial year, all P&L items for the previous year have been restated to reflect the IFRS 5 disclosure. Revenue rose by 3.8% year-on-year to EUR 3 billion. The main reasons were positive volume and price effects from all three network companies, as well as from our supply companies in Bulgaria and North Macedonia. Colder temperatures during the winter months led to higher revenues at EVN Wärme. In contrast, there was a drop in revenue from renewable generation and natural gas trading, mainly due to lower prices and volumes.
The increase in other operating income was due to insurance compensation we received to cover damages which were caused by the floods in Lower Austria during September '24. The cost of electricity purchases from third parties and primary energy expenses increased due to higher procurement costs in the regulated energy supply business in Southeast Europe. This increase was contrasted by lower procurement costs and reduced quantities of natural gas. The cost of materials and services were up due to the repair costs for the flood damages, which, as already mentioned before, are largely covered by insurance. The rise in personnel expenses reflects the increase in workforce and adjustments according to the collective bargaining agreements. Other operating expenses declined. In the previous year, we had two one-offs, being the impairment loss on receivables in the international project business and the energy crisis contribution for electricity.
The share of results from at equity accounted investees improved substantially. This resulted particularly from the normalization of results in the end customer business of EVN KG. A higher contribution from RAB was contrasted by declines at Burgenland Energie, as well as the hydropower plant stakes in Verbund, Innkraftwerke, and Ashta. In total, group EBITDA rose by 19% year-on-year and amounted to EUR 909 million. Scheduled depreciation and amortization increased by 8%, reflecting our high investment program. In addition, we had impairment losses of EUR 58 million, which were primarily related to flood damages in September '24. Group's EBIT was up by 21% and totaled EUR 491 million. Financial results fell substantially from EUR 146 million - EUR 84 million. This decline resulted from the lower dividend paid out by Verbund for their '24 financial year.
In total, we generated a group net result of EUR 437 million in the reporting period, which represents a decline by 7%. Now, let's move on to the next slide, which provides information regarding the group's balance sheet structure. As of the end of September, EVN's net debt amounted to EUR 1.2 billion and was a moderate EUR 27 million higher than the level as of end of September '24, bearing in mind the substantial step-up in investments. Correspondingly, gearing ratio stood at 17.3%. Our indebtedness is increasing in line with our higher investment program, but until now, the level of debt has risen at a slower pace than initially forecasted due to our strong cash flow. Our financial flexibility remains secured and solid. EVN holds contractually committed undrawn credit lines in the amount of EUR 770 million. On the next slide, I will walk you through the developments in our segments.
As mentioned earlier, I will go through them more quickly than usual since most of the developments reflect the first nine months, and I will provide an outlook for each segment for the current financial year. The developments in the energy segment mainly reflect three factors: the recovery of our equity-consolidated supply company, EVN KG, price and volume effects in the marketing of our own electricity generation, and a positive one-off effect in the heating business. Together, these developments led to a significantly better EBITDA of EUR 81 million compared to EUR -60 million in the previous year. EBIT came in at EUR 58 million. As for the segment outlook, we expect that the recovery achieved in the supply business will continue in the '25-'26 financial year. Segment EBIT should therefore equal or slightly exceed the previous year. Let's turn to our generation segment.
Electricity generation volumes in this segment declined by 8% year-on-year, mainly due to lower wind and water flows in Austria. Combined with declining market prices, this led to lower revenue and earnings from electricity generation. Thermal generation volumes increased due to higher demand by the Austrian network transmission operator for network stabilization. However, the contract for the supply of reserve capacity from the Theiss power plant ended in September 2025 and was not renewed by APG. We will keep the Theiss plant operational for the time being, but it is not producing for the market either. The generation segment also reflects the impact of flood damage in September '24. On the one hand, we received insurance compensation reported as other operating income. On the other hand, this was contrasted by repair costs and impairment loss.
Our equity-accounted investee Verbund, Innkraftwerke, contributed lower earnings compared to the previous year due to weaker water flows and lower market prices. In addition, the absence of a revaluation of the ASTA hydropower had a further negative effect on results from equity-accounted investees. In total, the segment generated EBITDA of EUR 201 million and EBIT of EUR 92 million. As predicted, these results reflect a decline compared to the previous financial year. In our outlook for the generation segment, we expect a decline in EBITDA, which was positively influenced in '24-'25 by the insurance compensation payments. Under normal average market conditions, generation typically accounts for 15%-20% of our group EBITDA. Next is the network segment. The network segment delivered a strong performance, supported by positive temperature-driven volume effects and higher tariffs. Another positive factor was the increase in RAK, driven by ongoing high investments.
Operating expenses also rose due to higher upstream network costs for electricity. Overall, EBITDA was up at EUR 351 million and EBIT totaled EUR 164 million. In our segment outlook, I want to emphasize that earnings development is strongly influenced by the Austrian regulatory methodology. Based on our continued high investments and the higher tariffs already announced by E-Control, we expect another increase in EBIT. Finally, let's move on to the Southeast Europe segment. The financial performance of our activities in Bulgaria, North Macedonia, and Croatia once again exceeded expectations. Based on our forecasts, we anticipated EBIT of around EUR 60 million, which was the lower end of our midterm range. This guidance reflected the regulatory methodology, which offsets positive earnings effects from previous years in Southeast Europe. Segment EBIT reached EUR 88 million. This was driven by positive volume and price effects.
For the '25-'26 financial year, we believe EBITDA and EBIT to reflect the level of the previous year. I will skip the environment segment, which, due to the IFRS disclosure of the international project business, was limited to the Austrian drinking water business and a few international activities, which are not included in the sale of WTE. As already mentioned earlier, the environment segment will no longer exist as of this financial year. So let me now continue with the development of our group cash flows. Gross cash flow was 6.5% lower year-on-year at EUR 919 million. The main reasons were the correction of non-cash earnings components and the lower dividend from Verbund.
Cash flow from operating activities totaled EUR 935 million, which was influenced by the changed liquidity settlement with EVN KG compared to last year, which resulted in higher liabilities and a reduction in the capital commitment for our supply company, EVN KG. Cash flow from investing activities amounted to minus EUR 779 million and reflected a substantial increase in investments. In addition, investments were again made in cash funds. The position cash flow from financing activities was minus EUR 100 million and included scheduled repayments: the dividend payment for the last financial year and new non-current financial liabilities. The net change in cash and cash equivalents amounted to EUR 57 million. In the second part of today's call, I would like to share more details on our strategy update now, focusing in particular on our revised capital market strategy, which includes an updated dividend policy.
First, I would like to outline the cornerstones of our revised Strategy 2030. On the slide, you can see a split of our investment plan. The major portion of investments will need to be directed towards the Lower Austrian electricity network infrastructure in order to enable the energy transition. This comes for the benefit of a massive growth in our RAK. As we remain committed to our CapEx program with annual investments of around EUR 1 billion, we confirm our plans to further grow our renewable generation fleet. We are currently working on several new wind and solar projects, which will bring us another step closer to achieving our 2030 expansion targets: 770 megawatts for wind and 300 megawatts peak for photovoltaics. We also made substantial progress during the last financial year. Following the commissioning of new wind and photovoltaic parks, our installed renewable capacity has increased to 980 megawatts.
Thereof, wind capacity accounted for 532 megawatts, and photovoltaics capacity is also impressive at 120 megawatts peak. By 2030, our installed total renewable capacity is planned to exceed 1,400 megawatts. This will increase our average annual electricity generation by 30%, reaching then 3.8 terawatt-hours. As part of our strategy update, we defined large battery storage as an additional investment focus. Our plan is to install a total battery storage capacity of 300 megawatts by 2030. Roughly 200 megawatts of this will be installed at existing power plant locations in Lower Austria. But we also plan to combine photovoltaic parks with battery storage in Bulgaria and North Macedonia. The rationale for investing in batteries is to change and optimize the marketing of our renewable electricity generation. When too much electricity is produced on sunny or windy days, we store the surplus in the batteries.
A few hours later, when demand picks up, we sell the electricity, and that allows us to achieve better prices. By the way, the software which we use for optimizing the energy flows was developed by CyberGrid, an EVN Group company. Battery storage also brings valuable benefits for the networks. Flexibility management helps to reduce the overall load on the network infrastructure. Transport peaks are balanced out, bottlenecks are avoided, and the entire system becomes much more stable. Flexibility management, the operation of volatile loads, and data management in the distribution grid are just a few examples of tasks which also require the intensified application of digitalization and artificial intelligence. Therefore, we have defined those as a key priority in our Strategy 2030. But we will also work on solutions which will use AI to simplify customer relations and service processes.
All this will contribute to making our group more productive and cost-efficient. Alongside the strategy update, my goal was also to further develop our capital market strategy. So now let's move on to that topic next. As you know, up to now, we had a dividend policy with a minimum dividend of EUR 0.82 per share, combined with a commitment from the board to allow shareholders to participate in future earnings growth. After careful consideration of our CapEx program, financial projections, and the current risks and uncertainties in our industry, alongside our ambition to maintain A category ratings while providing a clear and attractive dividend policy, the executive board and supervisory board took the following decisions. We will propose to the next AGM a dividend of EUR 0.90 per share for the '24-'25 financial year.
This represents a 10% increase compared to our previous minimum dividend of EUR 0.82 per share. Furthermore, we are adjusting our dividend policy after only two years. Our new policy sets a minimum dividend of EUR 0.90 per share and expresses our intention to increase the dividend to at least EUR 1.10 per share by the '29-'30 financial year, reaching a payout ratio of roughly 40% by then. With this new dividend policy, we are making a strong commitment. Shareholders can expect growing dividends over the next five years. Given the external uncertainties affecting our business, the new policy leaves some flexibility in how this dividend growth will be implemented over time, with a clear target level to be reached over five years.
Another new pillar of our capital market strategy is the updated long-term financial ambition for 2030, which replaces the indications we provided at the Capital Markets Day 2023 and last year's investor webcast. Our new financial ambition is based on the successful implementation of our CapEx program. This will enable us to deliver on our expansion targets in renewable generation, battery storage, and RAK growth. In addition, we expect stable development of our activities in Southeast Europe. Based on our organic growth plans and a stable foreseeable energy market environment, our financial ambition for 2030 assumes EBITDA will range between EUR 1.1 billion and EUR 1.2 billion. To put this into perspective, compared to the EBITDA of EUR 909 million we are reporting today, this translates into a compound annual growth rate of roughly 8% over the next five years.
In a normalized year and assuming average conditions in the energy sector, our EBITDA will be split across segments in 2030 as follows: around 10% from the energy segment, 15%-20% from generation, about 45% from the Austrian network segment, 15%-20% from Southeast Europe, leaving around 10% to all other segments, which are primarily the contributions from RAK and Burgenland Energy. The dividends from Verbund are, as you know, not included in EBITDA, but are reported in our financial results only. We have also prepared a new fact sheet that focuses on these key messages and is designed to help analysts and portfolio managers better understand our equity story and growth drivers. With this, I come to the last slide of my presentation, which includes a summary of the key messages of our strategy and equity story.
In a nutshell, our key message is this: EVN has a clear strategy to capture the opportunities offered by the energy transition. Based on this strategy, we are pursuing an ambitious CapEx program that will drive organic growth. Our promise is to deliver on these investments, supported by secured projects and procurement combined with our proven track record. These projects are profitable and will support further growth driven by a group target ROCE that must exceed 6% on average at group level. We remain committed to maintaining strong credit ratings in the A category. This is essential because we need flexible access to debt at attractive terms to finance our projects.
EVN's equity story brings together the following strengths: a clear strategy, embracing the opportunities of the energy transition, a strong commitment to CapEx, supported by a strong balance sheet, a transparent five-year financial ambition reflecting EBITDA growth, and an updated dividend policy. Now, I would like to conclude my presentation with our outlook for the current '25-'26 financial year. Please note that we haven't even completed the first quarter. Our forecasts are subject to various uncertainties, such as generation coefficients or temperature-related energy demand, to name just two. Any changes to our planning parameters can lead to fluctuations in our results. However, based on our assumptions, we expect EBITDA and group net results to be roughly at the prior year level. Our guidance for group net results is in the range of approximately EUR 430 million-EUR 480 million.
Before we start today's Q&A, I'd like to inform you that we will again be hosting a Capital Markets Day next year. It will take place on the 1st of October, '26, in London. Please save the date. We will share further details with you in the course of next year. Well, that's the end of our presentation, and we look very much forward to answering your questions.
Thank you very much. So this is my key now. Dear ladies and gentlemen, please press 9 and star now if you would like to ask a question. I repeat, the combination is 9 star. If you wish to cancel your question again, please press 3 and then the star key, but for now, please press 9 star. The first questions are already coming in. So the first question is on Patrick Steiner of ODDO BHF. Please, Mr. Steiner, over to you.
Good morning. Patrick Steiner speaking of ODDO BHF. Congrats on the good results. A few questions from my side. If I may, I will take them one by one to make it easier. First question: Is the '29-'30 net result target of EUR 450 million still intact? And if yes, could you provide us with a bridge between the 2025-2026 net result guidance of EUR 430-480 million and the '29-'30 target of only EUR 450 million, despite the strong CapEx deployment over the next 45 years?
Hi, Patrick. Just to answer the question, your first question was if the guidance for '29-'30 is still intact. The answer is yes. And the second question was, can you repeat it again?
Yes, yes, thank you. The second question was basically if you could provide us with some kind of bridge between 2025-2026 and 2029-2030, and why you don't see any significant growth over this kind of four-year time period. Thanks.
I think we see the EBITDA growth. We have an EBITDA ambition until 2030. It is a compound annual growth of 8%, and we have various EBITDA margins ambitions until 2030. For example, the network's ambition is by 45% as an EBITDA margin, followed by Southeast Europe and the generation segment. We are ranging 15%-20% EBITDA margin, and the energy segment and all other segments around 10%. So if you look at this year of the roughly EUR 900 million EBITDA and the outlook is EUR 1.2 billion EBITDA, I would call that a growth.
Okay, thank you very much. So I should expect basically that this bit of a more flattish development over the next few years on the bottom line is attributable to basically a higher financial result and higher depreciations due to the increased investments, right?
Correct.
Okay, thank you very much. Second question: You've outlined the new '25-'26 guidance at 430-480, basically with this year's results as the floor for the next year. Can you please elaborate what are the growth factors in net result this year compared to '24-'25? Is this EVN KG and higher capacities from investment?
Yeah, I think the growth is mainly driven by the generation segment and our energy segment. As I said, we had the normalization or the turnaround of the KG in this financial year. So in the current financial year, we foresee further improvements and development and the generation segments at the moment. I think I tried to draw this picture. We have not even closed the first quarter yet, but we do hope that the wind and water generation is better than the previous year. Plus, we also add more capacity for wind and solar also during the year of '25-'26. So the growth is mainly driven by those two segments.
Okay, that's very clear. Thank you very much. First question, basically: Why was Theiss not renewed by APG, and what does it mean for you earnings-wise?
It was an APG decision. I mean, that I cannot comment on, but earnings-wise, it's for us a zero result.
Okay, that's very helpful. Thank you very much. The CapEx increase from the CapEx target increase from EUR 900 million to EUR 1 billion, what's the main driver? Is this battery storage investment? So where does it come from?
That's mainly the network investment, right? We still, on our, let's say, yearly ambition to invest EUR 1 billion, over 50% flow into networks, and then, of course, followed by renewables and also e-mobility.
Okay, thanks. Perfect. But I'm not sure if I'm mistaken, but this change from EUR 900 million to EUR 1 billion, right? Or was there some kind of uptake due to the network investment? Are you expecting higher network investments than a few quarters ago?
Yes, we expect higher investments. I think we were around EUR 400 million-EUR 440 million, and we will ramp up the network investments to EUR 500 or 550 million.
Okay, thank you very much. It's very clear. Last one from my side. You mentioned EBIT growth in networks in '25-'26. Could you give us a range of expectations on your side? Where would you arrive on EBIT in networks?
I think the EBITDA margin we expect by 2030 is around 45%.
Okay. And okay, in terms of this year, basically, '25-'26, can you give us any kind of range or not?
The range for '25-'26 in terms of EBITDA is around EUR 450 million.
Okay, perfect. Thank you very much. I'll get back in line. Thanks.
Thank you.
Thank you very much. So the next question is from Richard Alderman of BTIG. One moment, please. So over to you.
Hi, can you hear me?
Yes. Yes, hi, Richard.
Hello. Hi. Thanks very much for the presentation. Very useful. Three questions initially from me, if I may. Can you just talk a little bit about the sensitivity in this year's guidance to the hydro coefficient, which I think in the first quarter has remained quite low? It's probably around about 0.84, 0.85. I mean, if you assume that that hydro coefficient didn't normalize, could you give us some sort of guidance of the impact on for the year? Maybe talk to it in terms of every 5% below 100 normalized conditions, what would that do in terms of hit to EBITDA or EBIT? And then could you perhaps comment on the main points of last week's Austrian law as passed?
I'm interested to understand, given that there will be some cap and change on the feed-in tariff for new renewable projects in Austria going forward, how does that reduce your potential returns compared to what you were thinking about when you put this plan together before last Thursday, Friday? And also, can you just talk on the bottom-line impact of the new social tariff and any costs you might have to adjust existing contracts going forward for this idea of passing through material changes in prices every six months? Will you have to restructure contracts? Will there be any cost in that, or will you just effectively adjust contracts going forward and not have to unbundle one-year and two-year plans?
Okay, I will start with the price regulation you mentioned. I think to summarize what is impacting us. I think the social tariff, as you mentioned, the impact of the social tariff is a single-digit million impact for us, yeah? The EUR 0.5 per megawatt-hour feed-in tariff is included in our calculations, and all projects are still profitable, yeah? So I think, and then to the point, will the law regulate profit margins in the event of a crisis?
I think it's very clearly we are not in a crisis. Prices are very stable. I'm giving you an example of our tariff called Garant. It's a 12-month contract, and it is declining year on year, if I take January '25 - January '26 by 13%. So overall, it's not shaking the boat. Projects are still profitable. Social tariff is included within the guidance. To your question of the hydropower for the year '24-'25, the hydro coefficient was around 85%, and it should also this year be around 80%-90%. But we expect some strong months to come probably in spring.
So just to clarify, your guidance includes an assumption of 80%-90% hydro coefficient for the full year to September 2026?
No, no. So far, we have 80%-90%.
Okay. But guidance assumes 100% normalized hydro by the end of the year?
Exactly.
Okay. Can you give me some idea of that sensitivity, what the impact of a 10% or 5% reduction in hydro coefficient over the whole year would be?
Well, then that depends on the price.
Okay , thanks very much. I'll turn it over.
Thank you, Richard.
Thank you. Thank you very much. The next question is from Emanuele Oggioni of Kepler Cheuvreux. Please, over to you.
Good morning. Thank you for the presentation. Basically, almost all my questions have been already answered. I have only one about the hedging policy update on '26, and if possible, also an updated outlook for EBITDA also in the targets until '29-'30 in the coming years about the power prices outlook. Thank you.
Okay, I start with the hedging policy, Emanuele. We have included a one-year hedge in advance.
Could you share the price level compared with the previous fiscal year?
We do not share this information.
Okay.
Does that answer your question, or did I [crosstalk] miss a second one?
No, no. Okay. The second one was on the mid-term outlook of power prices embedded in the plan.
That is included in our guidance and in our targets.
Okay, but the outlook is to have constant flat power prices or declining or in line with the current forecast. What are the underlying assumptions, if you can disclose?
We always base this on our 100% hydro coefficient. [crosstalk]
In this case, I was referring - sorry, I was referring to the wholesale price and the reference market, and then translated into your forecasting in the coming years. What are the assumptions over the, not over volumes, so not over the coefficient, but about the pricing, the oil sales price?
The [crosstalk] assumptions are based on our market forward prices.
Okay. Thank you.
Thank you very much also from my side. At the moment, there are no more questions in the call-in line. So dear ladies and gentlemen, please press 9, star now if you have a question or a follow-up question. I repeat, the combination is 9 and the star key. Let's wait for a couple of moments for maybe some follow-up questions. But I believe everything seems pretty clear so far. So no more questions incoming. With that, I'm handing the floor back over to the host. Thank you very much, ladies and gentlemen.
Yeah, well, thanks everyone for joining today's conference call. We will publish the results for the first quarter on the 25th of February. Please, also a short reminder to our Capital Markets Day in London on the 1st of October of '26. Hope you put this in your calendars, and I see you in person. Else, I think I wish you all a very happy and merry festive season and all the best coming into the new year '26. Goodbye.