REN - REDES ENERGÉTICAS NACIONAIS, SGPS, S.A. (RENE) Q1 2026 Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to RAND First Quarter 2026 Results Conference School. We appreciate your time and availability this morning. Joining us today are the members of our RAND Executive Committee, Rodrigo Corza, our CEO, Gonzalo Reis-Souart, our CFO, and Jean-Claude Sissam, our CEO. Rodrigo will begin with his opening remarks, and then this will be followed by a detailed overview on RAND's operation and financial performance for the first quarter. Following the presentation, we will open the floor for your questions. Thank you again today for your attention and continued interest in RIMS.

Thank you, Mother Lena. Good morning, all. First, thanks for accommodating the schedule change. We had a need to anticipate the call due to a time conflict with an external meeting. We really appreciate your effort. We had another busy quarter. On the last phase of this call, we went through most of the key events, and we will try not to repeat too much ourselves. In April, we had our annual shareholder meeting, and all proposals were approved by almost 100% of the participants. As expected, all the first quarter figures came aligned with the analyst's positive expectations. Again, as usual, no surprises. Our Q1 EBTA grew slightly. On the tax front, we had a significant positive impact on our net results, and we will explain that in detail. Overall operations are going well, including the Chilean operations. The Spanish regulator made an important announcement regarding their final conclusions on the blackout in Spain that caused our blackout, and we are now waiting for the Portuguese regulator report. For Portugal, the situation that causes more concern at this point is the Middle East For the moment, there is no shortage of supply on the oil and natural gas front. Reserves are fine. supply flow is regular, but the outlook is quite negative. If the crisis persists, as we all know, disruptions beyond price may happen. As you know, RAN does not have any benefit from the oil and gas price increase. In fact, what we see is an overall growing inflation that will have a negative impact in the country infrastructure costs, both from a CapEx perspective and operations. And we may talk about that a little bit more during the call. And with that, I would invite Gonzalo to move with the call.

Thank you, Rodrigo. And on that, I'll move to the…

Good morning to you all. You have the summary of the main national site in Portuguese electricity. 80% of the total consumption of the country was supplied by renewable sources. This is mainly driven by a very high level of hydrocapacity with 38 percent, following by 32 percent from wind and solar picking up with 6 percent. Another important point is that we keep increasing of demand, but this highest level in the first quarter with an increase to the previous year of 3.8 percent or 3.9 if you consider the adjustments on the weekdays and the temperature adjustment. This is a trend that we are following and this is not yet considering what is expected to be a highest increase with the start of these new industrial consumers like data centers and some big industrial sites that are foreseen for Sinus area. As Gonzalo mentioned in this first quarter we had this extreme event with the several storms and some of them affected significantly our operations in the sense that we had to mobilize temporarily all our teams to respond to the infrastructure that was impacted by the storms, namely the big storm on the 28th of January. That caused a very short interruption on one of our substations, and that's the reason why you see an increase on the interruption time that is presented in the following slides. Another point I would like to highlight is the fact that we are doing the necessary calculations and to give our inputs in the Direcção Geral de Energia, the body, the formal body of the state following the energy issues regarding this security of supply methodology. As you are aware, security of supply become, again, on the top of the issue of the energy sector. We are finishing this European Resource Adequacy Assessment, which is the new EU methodology, quite robust one, in order to give the necessary inputs for policymakers and regulators to decide what will be the scope of the future landscape of the electricity and natural gas sector. Moving to slide number seven, you have the summary of the operational indicators. As I mentioned to you, we saw this 3.8 increase in the electricity. On the gas sector, we also saw an increase in consumption, 13.8, mainly driven by the fact that following the storms in the beginning of the end of January, as well as the measures that we were taking since the blackout of last year, there is a higher consumption of gas for electricity generation, this corresponds to an increase of 53.6%, whereas what we call the conventional consumption, which is the industrial one, because in Portugal, residential is not really significant, but the conventional consumption kept mostly constant, but didn't decrease. So, in all, this caused an increase on 13.8% on gas transmission. Quality of service, no big issues to report. In short, we kept the very high level of quality of service, apart from this interruption time where you see a quite big increase through 8 minutes, and as I mentioned, this was caused by the interruption, the slight interruption we have in Zezer substation. If we do not consider that interruption because this event is considered an exceptional event, Then the interruption, the average interruption time was only 0.01 minutes. And with that, Kosal, again, it's back to you.

Thank you, João. So on slide number eight is just, on EBITDA, basically, financial results, we also received the interest. It's almost net profit in slide 16, what you see is the impact of these several things.

As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To read through your question, please press star 1 and 1 again. We will now take the first question from the line of Alessandro Tevito from Mediabanca. Please go ahead.

Yes, good morning all. Thanks for the presentation and thanks for taking my questions. I have two. First one, you mentioned before that electricity consumption could further accelerate from the development of new data centers and electrification. So I wanted to understand when do you expect to see this further acceleration and whether the current capex plan is already fit for this new scenario and the second question is on regulation so of course the regulatory update on gas is still far from now but i wanted to understand first if you have started preliminary discussions with the regulator and second if you believe that the attitude of the regulators have changed on gas regulation as already proved by the recent, let's say, document proposed by the CNMC. If you believe that maybe the recent energy crisis could trigger a more constructive attitude from regulators also on gas regulation. Thank you.

I will try to answer your first question regarding the electricity construction acceleration. We see it happening from now on because we are already including several projects both driven by the regular asset base as well as for the solar agreements. We have this approval from the government of some extra capex for security of supply purpose after the blackout. So I would say that this is something that is going to happen or is happening now, and this will continue to happen in the next few years.

To what you asked, the proposals might have come.

Just to compliment that yesterday there was a formal event regulator to listen to the perspectives of the different stakeholders on the natural gas sector. So I would say that this is the, between quotes, the official kickoff of this preparation of the new regulatory period. So we will continue to deal directly with the regulator and through the entities like the Tariff Council and so on. So this is a process that…

Thank you. We will now take the next question from the line of Ignacio Domenech from JB Capital. Please go ahead.

Thank you for taking my questions. And just to, on my side, the first one is a verification on FESE, on the gas recovery. I just wanted to clarify if the guidance you provided in March on net income, that includes a gas recovery, not only the end, okay, of the 10 million euros per year on gas FESE. and also if you can give us some detail or any calendar or any any news that you might have on on for and further cases okay and the second question is related with them with the with Iberian blackout I think I've reading I've seen some statements, you know, from the Portuguese government, which could look to request for compensation from the blackout.

So just wanted to get a sense on how could this be a channel, and if you have an estimate maybe of the compensation that the country as a whole could be looking to to seek thank you very much uh thank you i'll answer the first one so relative to these numbers the recoveries and they are not in the in the in the numbers and in the so all of these recoveries are always upside and i'd say that the only other one that we have on the radar as of now is the last one that we didn't account for in 2019. We had an overall ruling regarding death here in the Constitutional Court in our favor, but we still haven't had a final decision on that one. That is around 5.4 million euros from 2019. So that one was also not in the account. We are waiting for that. All of the other amounts, really, that's the only concrete one that we know that may this year still come about, but nothing of this, neither the numbers nor any values relating to interest were on those numbers that we told you.

Yeah, on the blackout, well, what the minister said about compensations, I think she said, you know, it's, let's say, it's just a fine comment regarding, you know, if people want to seek compensation, they can seek for compensations. It's a right that any company or individual has. But I think it's important to understand that clearly, and also it's the same conclusion from the government, that the blackout was a blackout caused by Spain, not by Portugal. Then we are not expecting to be liable for any type of compensation here. And, you know, we are waiting for the conclusions of the regulator. The regulator said they should come soon, but we are very comfortable with what happened, what we did, and we're pretty sure that the conversations will not cause any harm to run.

Thank you.

Thank you. We will now take the next question from the line of Flora Trinidade from CaixaBank. Please go ahead.

Yes, hi. Good morning. Thanks for taking my questions. I have two. The first one is if you could guidance on how should we think on net debt evolution throughout the year. You have accounted for 76 million euros of subsidies in the first quarter. Can you clarify whether you would have further subsidies in the upcoming quarters? And also the expected evolution in terms of tariff deviations on the cash flow impact. And then my second question is on this resilience study requested by the government following the storms in Portugal. Do you have any visibility on how much this could mean if there is incremental CAPEX for rent? I assume this is not in your full year disclosed CAPEX guidance. I assume it also might be too soon to have an idea. but if you can help us understand whether this could mean potential capex upside it would be helpful thank you in terms of net depth first aviation are now at a low amount which is below

what we normally have so you should not expect obviously the biggest question is on the ground

or not when we are speaking about the transmission grids this is not really the focus the focus is more related to downstream to the low voltage grid, eventually mid-voltage grid. So we have a couple of increases. We are foreseeing some possible couple of deviations in terms of right-of-way. But I would say that this is not substantial change to what is the CAPEX plan that we have presented.

Thank you. thank you as a reminder to ask a question please press star one and one we will now take the next question from the line of fernando garcia from rbc please go ahead hey good morning and thank you for taking uh my questions i have three so in terms of data centers no i was reading recently about the initiatives taken by the Portuguese regulators in order to try to speed up data center developments in Portugal. So there I have a couple of questions. I would like your view about how you see this development of data centers and as well when you think we could have an indication about potential capex for rent. The second question, clearly, in terms of the extraordinary taxes, that is the process is well advanced in the constitutional courts in terms of gas, but electricity is kind of stopped. Do you know the reason for that and when we could have news about this in the constitutional court? And final question is, I would like to know an update how you see all in returns in electricity when we are incorporated to the base return, things like incentives or efficiencies. ...exactly with the government to tell them so.

It's an upside that you have on the numbers, but also it's something that is not going to happen this or next year or the following year. So this is as fast as people like to do things, then you have to build lines by team. And also the energy net is there, helping them decide this, but there's no visibility yet on time. On the levy, on electricity, no news. More time at constitutional level for them. On this news there, to get solved, we don't have it.

Thank you.

There are no further questions at this time. I would now like to turn the conference back to Maddalena Garrido for closing remarks.

Thank you, everyone on the line. And as always, we remain available for any additional questions that you may have on RANs. Thank you very much.

Thank you. Have a good day.