from NEOEN SA (EPA:NEOEN)
Neoen reports 12% revenue growth and confirms its adjusted EBITDA target for 2023
Paris, November 2, 2023
NINE-MONTH 2023 REVENUE
Neoen reports 12% revenue growth and confirms its adjusted EBITDA target for 2023
▪ Nine-month 2023 revenue totaled €397.5 million, up 12% at current exchange rates and up 16% at constant exchange rates compared to the first nine months of 2022
▪ Third-quarter revenue was 8% lower than in the same quarter of 2022, essentially as a result of the mechanical effect of the entry into force in 2023 of several PPAs at prices below last year’s spot levels and of a high comparison basis for storage revenue
▪ Neoen was awarded 912 MW in new projects during the first nine months of the year, including 347 MW during the third quarter alone
▪ The secured portfolio1 was 8.3 GW at September 30, 2023, with 7.2 GW in assets already in operation or under construction
▪ The Group confirms its adjusted EBITDA[1] target for 2023, which is now expected towards the middle of the initial range of €460 million to €490 million, with an adjusted EBITDA2 margin exceeding 80%
▪ Lastly, the Group is reiterating its adjusted EBITDA2 target of over €700 million in 2025 and its target of reaching over 10 GW in capacity in operation or under construction by year-end 2025
Neoen (ISIN: FR0011675362, Ticker: NEOEN), one of the world’s leading independent producers of exclusively renewable energy, is reporting unaudited revenue of €397.5 million in the first nine months of 2023, up 12% compared to the first nine months of 2022. At constant exchange rates, revenue moved up 16%.
Xavier Barbaro, Neoen’s Chairman and Chief Executive Officer, commented: “With every passing quarter, Neoen generates substantially larger volumes of electricity, demonstrating our ability to rapidly expand our portfolio of power plants and to deliver first-class operating performance. The slower pace of growth of our cumulated revenue since the beginning of the year was widely anticipated and well taken into account in our guidance: as several major PPAs came into force, revenue streams at prices secured over the long term mechanically replaced last year’s early generation revenue, which was inflated by extremely high market prices. Likewise, the highly volatile conditions in Australia’s electricity markets ratcheted up our storage revenue last year and made for an unfavorably high base of comparison for this period, something which was clearly identified. With our forecasts on track, we are reiterating our short- and medium-term targets. Given our technological and geographical diversification and our model underpinned by a high proportion of contracted revenue streams, we are confident in our ability to deliver steady, solid and valuecreating growth.”
1 Assets in operation, under construction and projects awarded
Operational highlights
| September 30, 2023
| December 31, 2022
| chg.
|
| |||
Assets in operation (MW) (1) | 4,769 | 4,051 | +718 |
(1) Gross capacity including projects in which Neoen is a minority shareholder: Cestas (300.0 MWp, 36% owned by Neoen), Seixal (8.8 MWp, 50%-owned by Neoen), as well as Les Beaux Monts (24.2 MW that entered operation in the first half of 2023) and SaintSauvant (20.6 MW), two wind farms in which Neoen has sold 95% of its shareholding.
Neoen’s capacity in operation stood at 4,769 MW at September 30, 2023, up 718 MW from its December 31, 2022 level. During the first nine months of 2023, the Group brought into operation two major projects in Australia – the 460 MWp Western Downs solar farm and the 157 MW Kaban wind farm. In France, seven solar farms with capacity totaling 89 MWp and two wind farms with a combined capacity of 41 MW also entered service. Furthermore, the Group sold the 13 MWp Cabrela solar power plant in Portugal and ended operation of the 16 MW Degrussa power plant in Australia during the first nine months of the year.
| 9M 2023 | 9M 2022
| % chg.
|
Electricity generation (GWh) | 5,539 | 4,197 | +32% |
Electricity generation totaled 5.5 TWh in the first nine months of 2023, up 32% relative to the first nine months of 2022.
The average availability rate of the wind energy assets stood at 93.6% over the first nine months of 2023, versus 97.0% in the corresponding period of 2022 owing to the temporary unavailability in the first quarter of the southern part of the Mutkalampi facility following a cable failure. Restated for this temporary phenomenon, the average availability rate of the wind energy assets was 97.3%.
The average load factor of wind energy assets stood at 26.4% over the first nine months of 2023, versus 28.9% in the same period of 2022. This reflects the lower availability rate and the unfavorable wind conditions in Australia, especially during the third quarter of 2023, partially offset by better wind conditions in France in the first nine months of 2023.
The average availability rate of the solar energy assets stood at 94.6% over the first nine months of 2023, versus 85.8% in the same period of 2022. Availability in that earlier period was affected by the temporary shutdown of the El Llano power plant in Mexico in the third quarter of 2022 as a result of technical issues related to its transformer, the replacement of which being still scheduled over the next few months. Excluding El Llano, the average availability rate was 98.4% in the first nine months of 2023.
The average load factor of solar energy assets stood at 19.4% over the first nine months of 2023, versus 19.1% in the same period of 2022. This increase reflects the higher availability rate of the El Llano solar power plant in the third quarter of 2023 than in the corresponding period of 2022, and the ramp up in generation at the Western Downs solar power plant in Australia in the hirst half of 2023 ahead of its full entry into operation in June. These two effects more than offset the lower level of generation caused by less favorable irradiation conditions in France and Argentina, where the Altiplano 200 power plant was also impacted by technical issues that affected the grid in the second quarter of 2023.
Nine-month 2023 revenue up 12%
| 9M 2023 | 9M 2022 | % chg. | |
Revenue (€m) |
| |||
Wind | 180.6 | 141.1 | +28% | |
Solar | 172.0 | 147.5 | +17% | |
Storage | 44.0 | 65.4 | -33% | |
Other(1) | 0.7 | 0.7 | +13% | |
Consolidated revenue | 397.5 | 354.6 | +12% | |
o/w contracted energy revenue | 288.8 | 227.1 | +27% | |
o/w merchant energy revenue | 95.7 | 116.1 | -18% | |
o/w other revenue(2) | 12.9 | 11.3 | +14% |
(1) Corresponds to the Development and investment segment
(2) Other revenue chiefly derives from the capacity payments earned by certain batteries, the development business, and services to third parties
Neoen’s consolidated revenue totaled €397.5 million in the first nine months of 2023, up 12% compared to the first nine months of 2022. At constant exchange rates[2], revenue moved up 16%. The key factor driving this growth was the contribution from assets that were brought into operation and commissioned during 2022 and the first nine months of 2023, chiefly in Finland, Australia and, to a lesser extent, in France. The Mutkalampi (Finland) and Western Downs (Australia) power plants again recorded a substantial level of early generation revenue amid a high level of spot prices. This was especially the case during the first and, to a lesser extent, second quarters of 2023, ahead of the introduction of their long-term PPAs’ pricing arrangements. Kaban wind farm (Australia) also recorded early generation revenue in the first nine months of 2023. Consolidated revenue was also supported by a favorable base of comparison effect in the third quarter of 2023 at the El Llano power plant in Mexico, which was shut down temporarily in the third quarter of 2022 as a result of technical issues. Conversely, restated for the impact of last year’s El Llano power plant incident, the contribution from assets already in service at January 1, 2022 declined as a result of lower revenue recorded in Argentina and, to a wider extent, in Australia, notably for storage assets. Indeed, revenues from the Australian batteries were boosted by highly supportive market conditions in the second and third quarters of 2022.
Wind revenue, the largest contributor to the Group’s consolidated revenue (45% in the first nine months of
2023 versus 40% in the corresponding period of 2022) was 28% above its level in the first nine months of 2022. This increase was largely attributable to the contribution from assets that started generating energy in 2022 and first nine months of 2023.. Chief among these was the Mutkalampi power plant in Finland, which recorded substantial early generation revenue before its various PPAs entered force in the second and third quarters of 2023. Likewise, the Kaban plant in Australia began injecting electricity into the grid in November 2022 before entering service in June 2023. Growth was also supported by price index adjustments and better wind conditions in France. Conversely, growth was held back by lower spot prices and reduced resource in Australia, notably in the third quarter of 2023.
Solar revenue was 17% higher than in the first nine months of 2023, contributing 43% of consolidated revenue compared to 42% in the first nine months of 2022. This growth was primarily driven by the
contribution from assets that entered operation during 2022 and the first nine months of 2023, chiefly the Western Downs power plant in Australia, which earned significant early generation revenue before its longterm PPA price came into effect in the second quarter of 2023. Solar revenue was also supported by a positive volume effect at the El Llano power plant in Mexico following on from its temporary shutdown in the third quarter of 2022, and a positive price effect in France and El Salvador. These factors more than offset the impact of selling the Cabrela power plant in Portugal at the beginning of 2023 and the smaller contribution from the Altiplano 200 power plant in Argentina, which was hit by grid-related technical issues during the second quarter and by less favorable irradiation conditions than in the first nine months of 2022.
Storage revenue slipped 33% below its nine-month 2022 level. It accounted for 11% of consolidated revenue, down from 18% in the first nine months of 2022. This contraction was chiefly the product of a high base of comparison in Australia in the second and third quarters of 2022 when the Victorian Big Battery and, to a lesser extent, the Hornsdale Power Reserve capitalized on highly volatile market conditions conducive to arbitrage revenue and, to a lesser extent, grid services (FCAS). In Finland, revenue from the Yllikkälä Power Reserve moved above the level it achieved in the first nine months of 2022 supported by favorable market conditions.
During the first nine months of 2023, merchant solar and wind energy sales were almost stable at €61 million despite a 59% reduction in these sales in the third quarter of 2023 on the corresponding quarter of 2022. As expected, this decline reflects the mechanical effect of the entry into force of the long-term PPAs at the Mutkalampi facility in Finland in April and August 2023 and the application of the long-term PPA prices at the Western Downs facility in Australia from April 2023, whereas those assets earned early generation revenue in the third quarter of 2022. Lower spot prices in Australia, Finland and France, especially during the third quarter of 2023, were another factor contributing to the decline. All in all, the percentage of solar and wind revenue accounted for by merchant energy sales dropped from 21% in the first nine months of 2022 to 17% in the first nine months of 2023, and from 35% in the third quarter of 2022 to 14% in the third quarter of 2023.
Third-quarter revenue down 8%
During the third quarter of 2023, Neoen recorded consolidated revenue of €120.5 million, down 8% compared to the third quarter of 2022. This fall reflects both the mechanical effect of the entry into force of the long-term prices under the PPAs for the Mutkalampi (Finland) and Western Downs (Australia) power plants, at a lower level than the merchant prices earned in the same period of the previous year. It also reflects the high base of comparison provided by storage revenue recorded in the third quarter of 2022 in a more volatile market environment.
Solar revenue was 17% higher than in the third quarter of 2022. The positive volume effect at the El Llano power plant in Mexico following on from its temporary shutdown in the third quarter of 2022 has more than offset the impact of the fall in revenue at power plants in Australia as a result of the application of the longterm PPA prices at the Western Downs facility from April 2023 and a less favorable spot price environment. Wind revenue slipped 11% below its level in the third quarter of 2022, chiefly as a result of the drop in revenue at the Mutkalampi facility in Finland after its PPAs entered force in April and August 2023. Lastly, storage revenue was 47% below its level in the third quarter of 2022. As for the second quarter of 2022, this period provides a high base of comparison because the Victorian Big Battery actively supported the Australian grid last year amid a highly volatile market environment.
Portfolio at September 30, 2023: 25 GW, up 5.7 GW compared to at December 31, 2022
September 30, December 31,
In MW chg.
2023 2022
Assets in operation | 4 769 | 4 051 | +718(1) |
Assets under construction | 2 427 | 2 523 | -96 |
Sub-total, assets in operation or under construction | 7 196 | 6 574 | +622 |
Projects awarded | 1 122 | 782 | +340 |
Total MW – secured portfolio | 8 318 | 7 356 | +961 |
Tender-ready projects | 3 224 | 2 006 | +1 218 |
Advanced development projects | 13 490 | 9 931 | +3 558 |
Total MW – advanced pipeline | 16 714 | 11 938 | +4 776 |
Total MW – secured portfolio and advanced pipeline | 25 032 | 19 294 | +5 738 |
Early-stage projects | > 10 GW | > 10 GW |
|
(1) Net of the sale of the Cabrela solar power plant (-13 MWp) and the end of operation of the Degrussa plant (-16 MW)
Capacity in operation or under construction stood at 7.2 GW at September 30, 2023, compared to 6.6 GW at December 31, 2022. Neoen has launched construction of 572 MW in new capacity since the beginning of 2023. These projects include the Collie Battery (219 MW/877 MWh) and the Western Downs Storage extension (58 MWh/116 MWh) in Australia, the Hultsfred (100 MWp) solar farm in Sweden, the Storbötet (105 MW) and Lumivaara (56 MW) wind farms in Finland, and two solar farms (13 MWp) and one wind farm (21 MW) in France.
The secured portfolio (assets in operation, under construction and awarded projects) totaled 8.3 GW at September 30, 2023, versus 7.4 GW at December 31, 2022. During the first nine months of the year, 912 MW in new projects were awarded. These include:
- 278 MWp awarded in France under the latest government calls for tenders for solar power plants across 19 projects;
- 277 MW awarded in Australia with Collie Battery (219 MW/877 MWh) and Western Downs Storage X (58 MWh/116 MWh) that both entered their construction phase;
- 216 MWp awarded in Ecuador following a government call for tenders for three solar projects with the same capacity (Imbabura, Ambi and Intyana);
- 72 MW awarded in France across four wind farms;
- 59 MW awarded in Finland with the uncontracted portion of the Storbötet (45 MW) and Lumivaara
(14 MW) wind energy projects, of which construction has been launched;
- 10 MW related to the construction start of the Hultsfred solar farm (10 MWp)
The portfolio’s total capacity (excluding early-stage projects) rose by 5.7 GW to exceed 25.0 GW at September 30, 2023, from 19.3 GW at December 31, 2022.
Third-quarter 2023 highlights
Extension to the Western Downs plant’s battery capacity in Australia
On July 25, 2023, Neoen announced a capacity extension to the Western Downs battery located at the Western Downs Green Power Hub (Queensland, Australia) alongside the Western Downs solar power plant commissioned by the Group late in the first half of 2023. Initially planned at 200 MW/400 MWh, the capacity of the battery, currently under construction, will be increased to 270 MW/540 MWh. With this extension, the Western Downs Battery will play an even more central role in the energy transition in Queensland where demand for storage and grid services is growing rapidly.
Neoen now has 3.3 GW of capacity in operation or under construction in Australia, making it the country’s leader in renewable energies. This 3.3 GW in capacity breaks down into 2 GW in generating capacity – split evenly between solar and wind – and 1.3 GW/2.8 GWh in storage capacity.
Neoen’s secured portfolio breaks above the 2 GW mark in France
On September 28, 2023, Neoen was awarded 15 solar projects (221.6 MWp) and two canopies projects
(16.9 MWp) in the latest calls for tenders run by the CRE (France’s Energy Regulatory Commission). In the large ground-based solar power plants, Neoen won the largest number of projects and the second-largest amount of total capacity awarded. These latest wins lifted Neoen’s French capacity in operation or under construction and projects ready above the 2 GW mark.
Construction start of Hultsfred, Sweden’s largest solar farm
On October 25, 2023, Neoen and Alight officially broke ground on construction at Hultsfred, Sweden’s largest solar farm. The 100 MWp solar power project located in southeast Sweden is due to start operations in 2025. Under a long-term PPA sealed in late 2022, 95% of the energy generated will be sold together with guarantees of origin to the H&M fashion group.
Outlook
Neoen confirms its 2023 adjusted EBITDA1 target, which is now expected towards the middle of the initial €460 million to €490 million euros[3] range, with an adjusted EBITDA margin exceeding 80%.
Neoen is also reiterating its target of generating double-digit annual growth in adjusted EBITDA between 2023 and 2025.
Lastly, the Group is confirming its adjusted EBITDA target of over €700 million by 2025[4] and its target of reaching over 10 GW in total capacity in operation or under construction6 by year-end 2025.
All the Group’s targets include the best estimate to date of the likely completion dates of its projects and its current view of likely spot trends.
Implementation of a share buyback programme
In accordance with the authorization granted by the combined general shareholders’ meeting held on May 10th, 2023, for implementing a share buyback programme, Neoen announces today that it has signed a mandate with an investment services provider to purchase up to 120,000 shares during the period from November 3rd to November 30th, 2023, with a theoretical maximum amount of the funds dedicated to this program of €3.6 million euros.
The purpose of this transaction is to acquire shares to:
▪ serve maturing free shares plans, and
▪ grant or sale shares to employees for profit-sharing schemes or the implementation of any company or group savings plan (or similar plan) as provided for by law, including Articles L. 3332-1 et seq. of the French Labor Code, as well as any other share plan for executives and employees of Neoen SA and its subsidiaries.
This presentation contains forward-looking statements regarding the prospects and growth strategies of Neoen and its subsidiaries (the “Group”). These statements include statements relating to the Group’s intentions, strategies, growth prospects, and trends in its results of operations, financial situation and liquidity. Although such statements are based on data, assumptions and estimates that the Company considers reasonable, they are subject to numerous risks and uncertainties and actual results could differ from those anticipated in such statements due to a variety of factors, including those discussed in the Group’s filings with the French Autorité des marchés financiers (AMF) which are available on the website of Neoen (www.neoen.com). Prospective information contained in this presentation is given only as of the date hereof. Other than as required by law, the Group expressly disclaims any obligation to update its forward looking statements in light of new information or future developments.
Webcast
Neoen will comment on its 9M 2023 revenue in a live webcast at 6:00 pm CET on Thursday, November 2, 2023.
To join the webcast live or hear a playback, please paste the following URL into your browser:
https://channel.royalcast.com/landingpage/neoen/20231102_1/
Next financial reports
Full-year 2023 results: February 28, 2024 First-quarter 2024 revenue and operational highlights: May 2, 2024 First-half 2024 earnings: July 25, 2024 Nine-month 2024 revenue and operational highlights: November 5, 2024
About Neoen Founded in 2008, Neoen is one of the world’s leading independent producers of exclusively renewable energy. With expertise in solar power, wind power and storage, the company plays an active role in the energy transition by producing competitive, green, local energy on four continents. After a six-fold increase in the last six years, its capacity in operation and under construction now stands at 7.2 GW.
Neoen’s flagship operations are France’s most powerful solar farm (300 MWp) in Cestas, Finland’s largest wind farm (404 MW) in Mutkalampi, one of the world’s most competitive solar plants in Mexico (El Llano, 375 MWp) and two of the world’s most powerful large-scale storage plants, both in Australia: Hornsdale Power Reserve (150 MW/193.5 MWh storage capacity) and the Victorian Big Battery (300 MW/450 MWh).
A high-growth company, Neoen is targeting 10 GW in operation or under construction by the end of 2025. Neoen is listed in Compartment A of Euronext’s regulated market in Paris (ISIN code: FR0011675362, Ticker: NEOEN) on the SBF 120 and CAC Mid 60 indexes.
For more information:neoen.com
Investors Press
Neoen OPRG Financial
François Repolt Isabelle Laurent Fabrice Baron +33 6 60 46 59 45 +33 1 53 32 61 51 +33 1 53 32 61 27
francois.repolt@neoen.com isabelle.laurent@oprgfinancial.fr fabrice.baron@oprgfinancial.fr
Appendix
Quarterly revenue
| Q1 2023
| Q1 2022
| % chg. | |
Revenue (€ m) | ||||
Wind | 74.1 | 45.2 | +64% | |
Solar | 63.6 | 49.6 | +28% | |
Storage | 16.4 | 14.0 | +18% | |
Other(1) | 0.3 | 0.2 | n/s | |
Consolidated revenue | 154.4 | 109.1 | +42% | |
o/w contracted energy revenue | 112.9 | 82.7 | +37% | |
o/w merchant energy revenue | 34.6 | 19.1 | +81% | |
o/w other revenue(2) | 6.9 | 7.3 | -6% |
| Q2 2023
| Q2 2022
| % chg. | |
Revenue (€ m) | ||||
Wind | 56.2 | 39.6 | +42% | |
Solar | 52.5 | 49.8 | +5% | |
Storage | 13.7 | 25.4 | -46% | |
Other(1) | 0.2 | 0.2 | n/s | |
Consolidated revenue | 122.6 | 115.0 | +7% | |
o/w contracted energy revenue | 86.0 | 76.4 | +13% | |
o/w merchant energy revenue | 33.7 | 36.8 | -8% | |
o/w other revenue(2) | 2.9 | 1.8 | +62% |
| Q3 2023
| Q3 2022
| % chg. | |
Revenue (€ m) | ||||
Wind | 50.3 | 56.2 | -11% | |
Solar | 56.0 | 48.0 | +17% | |
Storage | 13.9 | 26.0 | -47 % | |
Other(1) | 0.3 | 0.3 | +10% | |
Consolidated revenue | 120.5 | 130.5 | -8% | |
o/w contracted energy revenue | 89.9 | 68.0 | +32% | |
o/w merchant energy revenue | 27.5 | 60.3 | -54% | |
o/w other revenue(2) | 3.1 | 2.3 | +37% |
(1) Corresponds to the Development and investment segment
(2) Other revenue chiefly derives from capacity payments earned by certain batteries, the development business and services to third parties
[1] Adjusted EBITDA corresponds to current operating income, which includes net proceeds from the disposal of assets in the secured portfolio resulting from the farm-down activity, restated for current operating depreciation, amortization and provisions, the expense resulting from the application of IFRS 2 "Share-based payments", and the change in the fair value of energy derivative financial instruments.
[2] Based on the average exchange rate in the first nine months of 2022
[3] 4 With an annual contribution for 2023 from farm-down transactions remaining below 15% of adjusted EBITDA and below 15% of growth in the secured portfolio
[4] In line with the Group’s policy, with an annual contribution from farm-down transactions remaining, in each year, below 20% of adjusted EBITDA and below 20% of growth in the secured portfolio 6 Consolidated capacity on a post-farm-down basis.