July 17, 2020 / 10:18 AM / a month ago

Portugal's EDP keeps net income goal and dividend despite pandemic

LISBON (Reuters) - Portugal’s biggest utility EDP will stick to its recurring net income target of 850-900 million euros this year, and will not cut its dividend, despite the impact of the COVID-19 pandemic.

FILE PHOTO: The logo of Portuguese utility company EDP - Energias de Portugal is seen at the company's offices in Oviedo, Spain, May 14, 2018. REUTERS/Eloy Alonso/File Photo

Interim Chief Executive Miguel Stilwell d’Andrade told Reuters the decision to keep the goal for its recurring net income, which amounted to 854 million euros in 2019, was a sign of the resilience of EDP’s business.

“Obviously we will be impacted, but we maintain our guidance between 850 million and 900 million euros ($971 million-$1 billion),” he said in an interview.

Stilwell d’Andrade said the company would keep its dividend payout ratio at 75%-85% of net income, with a floor of 0.19 euros per share, and would keep its net debt target at 3.2 times EBITDA for 2020, despite a deal announced on Wednesday to acquire Spanish electricity company Viesgo.

EDP shares rose 1.5% in early trading, outperforming the broader market in Lisbon, which was up 0.2%.

The company has said it will buy Viesgo for a net equity investment of 900 million euros, and take on its existing net financial debt of 1.1 billion euros.

The deal will more than double EDP’s presence in electricity distribution in Spain and will be financed through a rights issue worth just more than 1 billion euros.

Stilwell d’Andrade said the acquisition of Viesgo was “clearly” earnings per share accretive, without providing further details.

“EDP tried to buy Viesgo four or five times in the last 20 years,” he said. “This time the stars were aligned and it was possible.”

The acquisition came after days after prosecutors named EDP as a formal suspect in a corruption investigation that led to the suspension of the company’s CEO Antonio Mexia this month over malpractice allegations dating back to 2007.

EDP and Mexia have always denied any wrongdoing.

Reporting by Sergio Goncalves; Writing by Catarina Demony and Andrei Khalip; Editing by Andrei Khalip; Editing by Pravin Char

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