Audax survives the Armageddon of renewables on the Stock Market: these are the keys to its resilience | Business | EUROtoday

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The headlines are scary: a bubble within the renewable power sector, falling values, layoffs. The schizophrenic costs of the electrical energy sector have dragged some firms into the mud of the inventory market and, in essentially the most critical instances, are endangering complete enterprise fashions. The listed firm Audax, nonetheless, is managing to extend its income regardless of having decrease revenues. In truth, it had a historic first quarter: incomes 31% lower than the earlier 12 months, it earned 607% extra (17 million). After quadrupling its income in 2023, the inventory market has shot up 40% thus far this 12 months.

The very first thing that CEO Oscar Santos explains in a videoconference dialog concerning the firm is that, as kids's fables train us, appearances may be deceiving: the costs of electrical energy, which decide the earnings of his group, 2,293 million within the final full 12 months, do probably not outline its enterprise. “What is important is the energy we supply, because our margin is a fixed commission for each megawatt we sell,” he says. If the value of power goes up or down, it doesn’t have an effect on them (comparatively) as a result of they go it on to the patron. On the opposite hand, Audax earns extra if it will increase the quantity of power consumed by its purchasers, and these have gone from demanding 4 terawatts/hour to 5 at the beginning of this 12 months.

But this solely explains a small half of what’s occurring to them. Audax prides itself on being a vertically built-in firm. That is, it generates its personal power in wind or photo voltaic vegetation and distributes it to some 363,000 provide factors in seven international locations for practically 400,000 prospects. Its largest markets are within the Iberian Peninsula, together with the Netherlands and Hungary.

In actuality, the Spanish firm generates a lot much less power than it wants, so the majority of it needs to be bought from third events or on the each day market. Like all suppliers, it has to cowl the hole between supplying and paying for the power till, on the finish of the month, it expenses the shopper. When megawatt costs soared in 2021 and 2022, Audax (and all suppliers) discovered itself in a critical bind, as a result of its money consumption soared to pay these payments upfront. “My team dedicated ourselves to thinking about how to solve the problems. We realized that we had to redo all our internal policies. Throughout 2022 we were negotiating an agreement with Shell.”

The settlement was signed and, because of it, the oil firm agreed to pay upfront for the power wanted by Audax in alternate for a fee. “We changed the way we operate. Now when we go to the market, where the volatility to close a position is enormous, we no longer have to worry about the cash flow,” says the chief. “This way we can continue to grow and improve margins, and Shell’s commission is a small part of the bill.”

But there are extra components within the cocktail of the Catalan firm managed by businessman José Elías (Ezentis, frozen La Sirena). “We differentiate ourselves in customer service,” says the supervisor. “I know that everyone says this, but doing it is not easy.” As an instance, we go to the Netherlands, the place, when a buyer calls the corporate, the standard answering machine doesn’t come on however an individual solutions. Another instance comes from the actual property sector. Large homeowners of rental housing have contracted their provide with them, they usually have developed a instrument to facilitate the signing and cancellation of contracts, adjustments of possession, and many others., to make administration simpler. What works in a single nation is tried to be taken to the remaining underneath one premise: “That the customer sees that your concern is to get them to reduce their electricity bill.”

The apparent query is what curiosity an organization would have in making its prospects eat much less when its revenue comes from them consuming extra. Here the chief makes use of the instance of Kodak, which in 1975 invented the world's first digital digital camera and instantly pushed apart the invention as a result of its enterprise was printing images. “The market will be different in 2035 and we can try to avoid it or join in and see what we will be like in that year.” He predicts that most of the firms that function in the present day will disappear and that the present giants is probably not so huge.

While the longer term arrives, they should cope with an more and more demanding current. The newest outcomes have been properly valued by analysts. In the most recent report from Lighthouse they imagine that the accounts “confirm that the efficiency measures taken in previous years, the focus on the business client and the best estimation of demand and consumption are yielding results.” Investors are questioning if this development shall be repeated. “The only thing I can say is that in 2026 we will reach 115 million EBITDA. We are analysing the market to make inorganic purchases in generation and marketing to continue integrating vertically and do so without increasing debt,” the supervisor provides. The firm expects its internet revenue to exceed 20 million annually till 2026 and has introduced that it’ll dedicate 15 million to paying dividends.

Less debt

Debt is one in every of their pet peeves. “I am very risk averse,” confesses Santos, who, along with having labored within the monetary sector, led the IPO of Aspy, a threat prevention firm. At the start of the 12 months, in a posh operation, the corporate transformed a part of its debt into capital and has managed to cut back it to the equal of two.7 instances EBITDA (in 2022 it was at a harmful ratio of 6.8 instances). In addition to eliminating 106 million in loans in 2023, they’ve gotten rid of a lot of the stress from short-term traders, who in January had positions of over 6% of the capital and now account for two%. What they haven’t been spared, for the second, is the effective imposed by the CNMC of 9.2 million in 2022 for “carrying out acts of deception and confusion” to steal prospects from their rivals, a follow that will have been carried out between 2018 and 2021. “It was not like that, and we managed to get the National Court to suspend [de manera cautelar] “payment,” Santos responds.

In brief, Santos sums up, “very interesting years are coming”, with power costs in Spain that, he predicts, shall be low because of the renewable increase. Although maybe not as little as the president of Audax, José Elías, would love, who a few weeks in the past mentioned in a convention that “energy in Spain should be like Netflix, free or almost free”. Whatever the case, each imagine that Spain has an enormous alternative to supply low costs to draw massive purchasers, resembling new industries. “A historic opportunity”, they are saying, additionally for firms.

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https://elpais.com/economia/negocios/2024-07-02/audax-sobrevive-al-armagedon-de-las-renovables-en-bolsa-estas-son-las-claves-de-su-resiliencia.html