February 28, 2017 / 3:35 PM / in 9 months

Portugal's EDP Renovaveis sees profit growth picking up

* Stocks recover on guidance after early fall

* Sees EBITDA up 10 pct this year, cash flow up 10-15 pct

By Andrei Khalip

LISBON, Feb 28 (Reuters) - Portugal’s EDP Renovaveis , the world’s fourth-largest wind energy producer, expects its earnings growth to accelerate to 10 percent this year from just 3 percent reported on Tuesday in a weaker than expected performance.

EDPR said that it expected its “strategy implementation to deliver solid and profitable growth” this year, pointing specifically to increased capacity and technical innovation.

However, it projected the selling price to slip again to around 58 euros from last year’s average of 61 euros per megawatt-hour.

The company, majority owned by EDP-Energias de Portugal, the country’s largest industrial company, also said a change in its assets depreciation schedule to 30 from 25 years will boost its bottom line by 65-75 million euros from this year.

EDPR posted a 66 percent drop in 2016 net profit to 56 million euros ($59.4 million) on below-average wind load in the last quarter of the year, lower power prices, and one-offs that hit its bottom line after helping it a year earlier.

Its earnings before interest taxes, depreciation and amortization (EBITDA) rose 3 percent to 1.17 billion euros, slightly below expectations, while revenues increased 7 percent to 1.65 billion euros.

It now expects EBITDA to grow around 10 percent in 2017. EDPR also confirmed its previous longer-term EBITDA growth forecast of 8 percent a year in 2015-2020.

“All in all this was a weak set of results, but mostly resulting from already known issues, namely low wind output in the fourth quarter, even if also including some negative one-off effects,” Haitong analysts wrote in a research note, adding that the results did not change their positive view on the stock.

EDPR shares, which fell almost 2 percent after the results, recovered somewhat after the 2017 guidance to trade 0.4 percent lower on the day at 6.17 euros in afternoon trading.

Analysts see cash-flow generation as a key strength at EDPR, which is also constantly expanding its capacity.

Last year, retained cash flow rose 13 percent to 698 million euros and this year EDPR projects a new increase of between 10 and 15 percent, with the number expected to hit 900 million by 2020. ($1 = 0.9421 euros) (Reporting By Andrei Khalip; Editing by Keith Weir)

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