EDP raises profit outlook to €1.4B on networks strength and hydro gains

EDP raised its 2026 recurring net profit forecast to €1.4 billion, up from a prior range of €1.2 billion to €1.3 billion.

"The good execution of investment plans in our distribution networks business, better regulated returns and efficiency gains, and a favorable euro-to-Brazilian real exchange rate are supporting the upgrade," the company said in a statement.

The utility now expects 2026 recurring EBITDA of €5.3 billion, above the €4.9 billion to €5 billion range it forecast in November. EDP reported first-half recurring net profit of €753 million, flat from a year earlier but beating the €686 million average analyst estimate in an LSEG poll. Strong earnings from its renewables and networks units were offset by lower electricity prices in Iberia.

The guidance raise shows EDP's strategy of investing in regulated networks and rotating capital from mature renewable assets is paying off. Iberian hydro reservoir levels remained above historical averages in July, and stronger forward power prices for the second half are supporting the outlook, the company said.

EDP's renewables arm, EDP Renewables, the world's fourth-largest wind power producer, reported recurring first-half net profit of €183 million, up 33 percent from a year earlier and above the €170 million analyst consensus. Recurring EBITDA rose 8 percent to €1.03 billion, with US operations accounting for 62 percent of that total. Excluding foreign exchange effects, recurring net profit jumped 43 percent and recurring EBITDA rose 12 percent. EDPR has more than 85 percent of its generation volumes secured through long-term contracts or hedging arrangements.

EDPR expects to generate €300 million in asset rotation gains from the sale of stakes in mature renewable projects, at the top end of its previously forecast €200 million to €300 million range. The company booked €66 million from asset sales in Italy in the first half, compared with €12 million a year earlier. Gross capacity additions over the last 12 months totaled 1.8 gigawatts, with 48 percent in North America and 36 percent in Europe, lifting total capacity to 20.5 gigawatts. Electricity generation rose 4 percent to 22.1 terawatt-hours, supported by a 7 percent increase in North America from new capacity additions. Recurring core operating expenses decreased 2 percent year-on-year on the back of efficiency measures. By June, EDPR had 1.9 gigawatts under construction, supporting growth beyond 2026.

The guidance upgrade positions EDP for stronger earnings momentum in the second half, supported by its regulated networks business and hydro recovery in Iberia. Investors will watch the company's H1 earnings call on Thursday for details on network investment plans and the pace of asset rotation in the second half.

This article is for informational purposes only and does not constitute investment advice.