Naturgy Energy Group, S.A. (NTGY) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Naturgy's Full Year 2019 Results Presentation. I am joined here today by our Executive Chairman, Mr. Francisco Reynés; by our Global Head of Controlling, Mr. Jon Ganuza; and, of course, the Director of Investor Relations, Abel Arbat. My name is Steven, and I head the capital markets effort here at Naturgy. We are followed today by people here in our headquarters in Madrid, so thank you for joining us, as well as by people connected by live webcast. The format of the presentation today will be very simple. We'll highlight some of the key points of the 2019 results. We have published more detailed elements at the beginning of the day, premarket. And after the presentation, we'll open up the floor for a Q&A session, first taking questions from people within the room and then obviously addressing those concerns or queries that may come through the webcast. So without further ado, Mr. Chairman, the floor is yours.

Thank you, and good afternoon. Steven, it's afternoon, not morning. It's 12:00. Thank you, and good afternoon for joining us, those that are on the website. As Steven highlighted, we are going to be fast in the presentation of the 2019 results, and then we will go then to Q&A. Presentation will be shared between Jon Ganuza on my right, Steven on my left. And hopefully, we will be able to address all the questions we have. So right throughout our presentation, we will go first on what it has been the year 2019, first, on the consolidated basis, then business-by-business unit, and then moving ahead on the company initiatives that we are carrying on for the year 2020. On 2019, if you allow me to start by highlighting what has been the most important achievements that we have achieved within the year 2019, I would like to highlight 4. Number one is, the scenario has been extremely challenging. Just as a demonstration, the JKM versus Brent, it has been reduced by 38%. This is something that it hasn't happened in the past, and the decoupling between Brent prices and gas prices has started as a demonstration of a very tough market. Second is the company has been working hard, hard towards the achievement of our efficiency plan. And compare to the figures of 2017, in 2 years, we have already achieved EUR 380 million of recurrent -- yearly recurrent savings in our P&L. Important achievement in investments, 70% of the investments have been incorporated in the remunerated or growth CapEx, and the most important part of the investment has been focused in electricity and renewables. And finally, all these achievements have been able to be done within an environment of stable debt. We have been confirmed in the maintenance of the BBB rating by Standard & Poor's with an outlook on stability that demonstrates that our balance sheet structure is quite safe. In terms of the key figures, growth in both EBITDA and net income. In ordinary EBITDA, 6% growth compared to last year in euro terms, considering all the different effects that we will see later and including the negative effects on ForEx in the different countries where we operate. Ordinary net income, plus 15%, and we are highlighting ordinary net income instead of accounting net income because, as you remember, in 2018, we have written down EUR 4.2 billion in our -- mainly in our generation assets. Therefore, the comparison will not be fair. CapEx, EUR 1.7 billion of investments, a very important figure, the highest in the last years and, as I said, stable net debt. Important to highlight on a consolidated basis of EBITDA. Point number one, last year in 2018, EUR 394 million on nonrecurrent items. That should be deducted for any comparison with 2019 ordinary EBITDA. Second is mainly growth in all the different business units, slightly decrease in the business unit of Gas & Power mainly driven by a very tough gas prices in both Spain and worldwide. Important for comparison, EUR 106 million of nonrecurring items in 2019. That's why 6% ordinary is more stable and compares to last year. In terms of net income, first deduction we should do is remove the non-ordinaries of last year that would have brought the ordinary net income for 2018 to EUR 1.2 billion. This year, EUR 1.4 billion, growth of 15%, including in the accounting, EUR 31 million of non-ordinary. The most important thing is that the main driver of this growth, it comes from the operations side. It demonstrates the good health of our operation activities. Sources and uses of cash during this period, where number one is 95% of the sources are coming from ordinary operations. This is important to be highlighted compared to former years, where the investments were more important in the sources scheme. In terms of uses, same balance between shareholders' remuneration and investments, EUR 1.7 billion, both. We include in shareholders' remuneration both dividends and share buyback. And I would like to highlight on the share buyback side that, as you remember, our strategic plan consider EUR 2 billion of share buyback as an optionality in the absence of inorganic growth opportunities. In -- during the year 2019, we haven't identified any inorganic opportunity that could deliver profitability at the same level of our ordinary shares, and we have implemented fully our ability to buy up to EUR 400 million. Next years, it will depend on market circumstances, but our commitment remains firm: a, that we will achieve the EUR 2 billion; or we would have identified projects that would generate more value. Important to say that restructuring costs, one-off costs were a little bit below EUR 170 million or $0.2 billion in rounded figures in this chart, which are fully attached to the fact that all the efficiencies would need -- would net capture costs as a part. In this scenario, stability of the net debt, level of debt over EBITDA decreasing from 3.5 to 3.3 mainly driven by the growth of EBITDA. Same level of debt, higher level of EBITDA, lower ratio of net debt to EBITDA from 3.5 to 3.3. Important to highlight that not only the level of debt has been maintained at the same level of debt 2018, but also corporate liability management of EUR 700 million has been helped to restructure the corporate debt. EUR 1.8 billion of debt pushdown has been moved into the international different business units, and EUR 500 million of restructuring with green financing in Spain has been incorporated in the balance sheet. That comes to the shareholders' remuneration. As you remember, we have changed the calendar of our shareholder remuneration in terms of dividend. First dividend was paid in July 2019, after the close of the first half of the year, and it was EUR 0.29 already paid. Second interim dividend payment was made in November 2019. And third is expected to be done in March 2020 after the AGM, if the AGM approves the balance account. In this regard, the company will call for ordinary AGM on the next 17th of March. And after that, in one week, dividend would be paid. At the present time, the second tranche of the share buyback moves up to EUR 135 million of own shares in our treasury stock, that it is part of the EUR 400 million tranche expected to be achieved during the second year of the strategic plan. Conclusion of this chart, which for us is the most important thing, we committed a dividend policy and a remuneration policy through the share buyback. We are delivering our commitment in the first full year after the strategic plan. We move now into the part of the detail of every business unit, then I hand over to Jon Ganuza, who will move on these slides.

Thank you, Mr. President, and good afternoon, everyone. Let's now review the operational performance of each of the business units, starting with Gas & Power on Page 11. Ordinary EBITDA was EUR 1,420 million, down 2%, reflecting remarkable resilience given the challenging scenario vis-à-vis last year. Gas, Power and service sales experienced strong improvement on the back of margin recovery in power supply and efficiencies, which have been partially offset by increased margin pressure in gas supply. This result improvement is done in the midst of the deployment of a new commercial strategy approach, which has had 2 main objectives: first, reduce volatility. We're balancing our electric fixed price sales with our inframarginal generation, which has led to a reduction in power sales. Second, rebalance our sales channels towards more online or find alternative ones, which has temporarily reduced our customer acquisition rate, and therefore, our total number of contracts has decreased. With regards to international LNG, the business was negatively affected by excess gas globally and the consequent low prices. Our hedging strategy has allowed us to substantially reduce the negative impact that we would have had as a pure spot. This has been especially relevant in the fourth quarter, although results have also been enhanced in this last quarter by the sales of the transport loading facility in Puerto Rico and insurance compensation against lost earnings in 2017. Power generation in Spain is affected by depressed gas prices and increased competition in CCGTs, which is now de facto the marginal technology in the daily market. This has led to a significant reduction in the clean spark spread and the size of the ancillary service markets. Furthermore, the comparison versus last year is also impacted by the suspension of CCGTs availability capacity payments and the lower hydro production. On the positive side, we have had a positive contribution from the new installed renewable capacity, of which, next year, we will see the full effect. Finally, international power generation has performed well on the back of new installed capacity, excess energy sales in Mexico and a favorable evolution of FX. Total capital -- total CapEx this year has been EUR 778 million, of which 80% growth and remunerated. In summary, a challenging scenario, partly offset by renewables and derisking. Moving on to our Infrastructure business unit in EMEA on Page 12. Ordinary EBITDA reached EUR 1,981 million, a 7.1% increase, thanks to stability and efficiencies across businesses. More specifically, the improvement in gas -- Spain gas networks has been mainly driven by lower OpEx from efficiency and stable activity. In electricity Spain, the positive evolution is supported by efficiencies, additional investment and low interruption times compared to last year. Finally, EMPL has benefited from the annual tariff increase and favorable FX evolution. The investment this year has amounted to EUR 432 million, of which 90% growth and remunerated. In summary, investments and optimizations drive business. Turning now to Infrastructure South LatAm on Page 13. Ordinary EBITDA amounted to EUR 947 million in the period, 12% higher than the previous year. In Chile electricity, positive effects of high regulated revenues, more specifically, the normas técnicas, and efficiencies have boosted the results in the midst of weak demand. In Chile gas, there have been higher margins, higher volumes and efficiencies, but especially, there has been a positive contribution of Argentinian gas imports that have increased the revenues of the gas transport assets. In Brazil, lower FX and tariff indexation partially offset lower sales. Results are especially good compared with last year's fourth quarter. This is not due to the fact that this year has been especially good, but more due to the fact that the last year and as a part of housekeeping, we tried to book several pending contingencies. Finally, in Argentina, the consolidation of the results of Gasnor has been offset by the overdue tariff adjustments and general economic conditions. I would like to remark that fourth quarter results on the ordinary basis would be a bit over EUR 20 million, but reported are minus EUR 2 million. This is a consequence of the regulator's decisions not to recognize the FX difference in gas losses for the period between April '18 and March '19. Total investment of EUR 283 million, of which 80% growth are remunerated. In summary, stable performance throughout major part of the year. Finally, moving on to Infrastructure North LatAm on Page 14. Results have been equally impacted by regulatory updates and efficiencies. Ordinary EBITDA in the period amounted to EUR 377 million, up 37%. In Mexico, the positive evolution was driven by tariff updates and indexations, together with demand growth and efficiency improvements. In Panama, the positive evolution is explained by the tariff update under the new regulatory period and the higher demand as a consequence of higher temperatures compared to last year. Investment of EUR 167 million, of which 100% growth are remunerated. In summary, growth driven by regulatory updates. And with that, I will hand over to Steven.

Thank you, Jon. When the Chairman approached us in view of preparing the 2019 results presentation, he give us a mandate which was try to highlight some of the company initiatives that we have been undertaking over the last year. And so we started working towards that goal, and we started approaching different colleagues at different parts of the business. And I wouldn't say we were surprised, we were rather very happy to hear that there were a lot of initiatives. So in fact, the challenge became trying to narrow things down and highlight a few of them because, otherwise, we would be here for a very long time. With this introduction, I want to emphasize that there are a lot of things going on in the company. And some of them may not necessarily be visible, but the reality is that change is happening, the transformation is underway, and we're being successful. But before that, we had to actually go for the summary of 2019, Mr. Chairman. So...

Thank you. We have a problem on the order of the slides, but we are flexible. We are Spanish. As a summary of 2019, I would like to highlight 3 things. Number one is that we have met the targets. It seems to be simple and easy, but it is not. And even more, in this environment that is changing, on the contrary, that everyone expected, then meeting the targets in a challenging scenario makes even more remarkable the work that has been done. And the work has been done, thanks to initiatives. And behind the initiatives are people. And people who are behind the initiatives are the responsibles that have been met the targets on the efficiency, the management of portfolio derisking, the step-up in renewables or the right allocation of our balance sheet. Then if you allow me on these figures to say 2 things, I would tell you that, number one, we delivered our commitments, thanks to our work made by our people. I would like to take the opportunity to thank you very much to the ones that are today following us here in presence, others should be doing on stream. And just confirming in front of the rest of analysts and investors that everyone is aligned in delivering the job and delivering the targets that we have met. As you are seeing, the reported and ordinary are quite close mainly because we have established a very strong structure looking forward. But now I'm handing over to Steven. That is your turn.

So with that in view, we'd like to share with you some of the outlook for 2020. And we'd like to start by saying that the lack of visibility that we have right now in the businesses, the volatility in the energy scenario makes it very difficult for us to give quantitative targets. And instead of leaving you without anything, we thought it might be worthwhile going business-by-business, describing some of the main drivers. And this is exactly what we're trying to do here on Slide 17. So we expect a better performance next year in Gas & Power. This is going to be driven by new renewables coming into operation. It's going to also be driven by stability in LNG. Yes, you heard me right, stability in LNG, and this is thanks to proactive management of our contracts. And we expect an improvement in supply linked to lower procurement costs. On the flip side, in Infrastructure EMEA, we're going to have 2 negative impacts that are going to result in a worse performance in 2020 than in 2019. First and foremost, this should come as no surprise, we have a new electricity regulation in force right now, and that's going to have a negative impact of around EUR 40 million. That's 4-0. And then on top of that, we have a step-down of the EMPL capacity starting in February, and that's going to have a negative impact of a little bit less than EUR 80 million. That's 8-0. So net-net, negative impact for Infrastructure EMEA. In Infra South LatAm, we expect tariff adjustments in Chile and Argentina not to be sufficient, okay? And also, we expect devaluation in terms of currencies. And we actually take a look at our expectations. For instance, we expect a 9% devaluation in the Chilean peso and 6% in real. So headwinds that are beyond our control are going to lead to worse performance in 2020. Finally, Infrastructure North LatAm, we are expecting a better performance overall linked to higher demand and tariff updates. All in all, if we look at the group as a whole, we expect 2020 to be the year when we reach the EUR 500 million target of efficiencies that we had initially established for year 2022. That means that we are meeting this target 2 years ahead of schedule. And that's important point to highlight because, if you remember, when we presented the strategic plan in London at the time, one of the things that Jon Ganuza mentioned, rightfully so, was that we were prepared to work on more efficiencies or accelerate the efficiencies program if the scenario did not meet our expectations. And that is exactly what we're doing. So all in all, we expect 2020 to be a challenging year as a result of the energy scenario, but this is going to be offset by company initiatives much like in 2019. And this is where I leave over to the company initiatives highlights that I was mentioning previously. First and foremost, we are becoming more efficient. It is a fact. When we look at 2017 OpEx numbers on an ordinary basis and we compare those numbers to the ones that we are presenting to you today, we see a significant reduction already. Granted not all of this is linked to efficiencies, there have been changing in accounting, there also have been changes in FX, but we are in the right path. And in fact, if we try to isolate the amount of efficiencies that we've found so far, we're here in front of you today in 2019 introducing cumulative efficiencies of EUR 380 million per year. These are recurrent. And our expectation is for 2020 to get to those EUR 500 million in addition. The game doesn't stop here. We continue to work very hard in identifying additional efficiencies that could result in a higher target by year 2022. When and if we identify those initiatives, you can rest assured that we will communicate them to the market. But we are becoming more efficient. We're 2 years ahead of our plan. We're also managing our risks more proactively. And we wanted to illustrate this point using 2 examples, the first of which would be international LNG. Again, if we go back and look at 2017 and we look at the contracted sales that we had at the beginning of the period, you'll see that we only had around 50% contracted sales/hedged. When we look at 2019, we came out to the market saying that we were going to work heavily towards making sure this number actually increased, and it did. And when we actually look at 2020, now 90% of our sales are contracted or hedged. So we have reduced our risk exposure. And this has allowed us to increase EBITDA stability. We think, for the sake of comparison, it may be better to look at 2017 as opposed to looking at 2018 because, you may remember, 2018 was actually a pretty good year for LNG, some might say even extraordinary. 2017 is perhaps a little bit more comparable. And when we do that exercise, we see that EBITDA is actually increasing. And even if we strip off one-offs, we see that's still increasing. So we are gaining that EBITDA stability. Another way of looking at it is we're reducing the EBITDA volatility. And this in the face of very negative energy scenario. The Chairman mentioned before, if we look at some of the indicators, for example, JKM to Brent, down 38%. I mean it doesn't escape anyone in this room that the energy scenario is not particularly positive, and it's not showing signs of improvement anytime soon. So we believe that proactive measures do reduce volatility and improve results. Another good example of our capacity or willingness to manage risks has to do with Spain gas networks. Yes, there has been a regulatory review, which, by the way, is underway right now. It's lodged at the Council of State. And we've done several things here to mitigate the risk, if you may. The first and foremost, which is not in this slide, but I think it's worth mentioning, we've worked very hard presenting a set of allegations that are very strong, very powerful, that explain our position very clearly, that identify mistakes and then make suggestions to improve. And by the way, maybe now is the right time to open a brief parenthesis and thank the internal teams who have worked extremely hard, the talent of people that have allowed us to present such good allegations. And there's a clear result. To begin with, some of those allegations have been accepted by the regulator, and we will continue fighting to make sure that the rest of the allegations that have not been heard are, at the very least, explained. But if we fail and the regulation comes through the way it has been presented, there will be a notable reduction in revenues, yes. And this reduction in revenues will lead to a reduction in free cash flow, absolutely. But we think it's our responsibility to identify levers that allow us to mitigate this impact, and this is what we're working on right now. We've identified 2 broad levers, OpEx and CapEx, which will allow us to, at the very least, mitigate, if not fully offset the regulatory impact. All of this simply to protect all our stakeholders. Now I remember we had a conversation in the H1 results conference call. We had a conversation and a question on the 9M results conference call with people suggesting that we just roll over and accept the regulation as it was. I think we wouldn't have met our responsibilities as administrators of this company had we done so. So good job, team. We are also investing to support the energy transition. And this is an important point because it seems like we're just a gas company. In fact, when we look at 2019, we've devoted 75% of our CapEx to growing both in renewables and in electricity. And if we just link it exclusively to electricity networks and renewals itself, it's more than 70% of the growth CapEx. So we are -- we believe in this energy transition, and we are taking steps to participate in it. And a good example of the effects of this has to do with what you see on the right side of the slide, the increase in installed capacity in renewals compared to the decline in coal. As a reminder, we were the first company in Spain -- and this is something that we have to be proud of and perhaps people forget about, we were the first company in Spain to ask for the shutdown of coal power plants. And hopefully, we'll get the administration approvals by the middle of this year. So we are deploying capital for the energy transition. This comes together with a strong commitment towards ESG. If we look at some of the metrics and in the results that we've published this morning, we have included a lot more metrics that you can look at and assess for yourselves the success of our plans. But just to highlight a couple, we're reducing our greenhouse emissions by 16% when compared 2019 to 2018. We've approved a new environmental plan. We are becoming better in managing some of our resources like water. We're reclaiming land. So there's quite a lot of work that goes together with this shift and participation of the company in the energy transition. And all these efforts are also not some efforts that we are selling to you and saying, "We're doing a good job." We're happy to be recognized by independent parties who recognize the efforts that we are undertaking, be it the Dow Jones Sustainability Index, MSCI or, more recently, S&P putting us in the Gold Class. So there's a sound and recognized ESG strategy, which, by the way, I may add, is something that we will continue elaborating over the next months. And finally, we do pursue a balanced cash flow distribution. And I think it's also important to highlight that more than 30% of our FFO is optionality. Yes, right now, we're buying back stock. Yes, we're investing around EUR 400 million because, first and foremost, we think the stock is worth it and it's a good investment. But this is optionality. If the right opportunity comes along, we're willing to invest those EUR 400 million to grow. I see Tony Basolas sitting on the back there, and I'm surprised to see him because he's extremely busy. He's looking for opportunities. This is part of our job to identify those opportunities. I see some of his team as well here. So happy that you could see us. Beyond this, we also have additional efficiencies. We have additional leverage capacity. Yes, we do. We have additional leverage capacity. The scenario is at an all-time low, so it can only go up. We have the ability to rotate assets if we wanted to. We are working heavily in reducing the cost of debt. We have Carlos here in front of us. He's helping us in this effort. And we are doing other initiatives such as management of the working capital. So all in all, we believe that we have a balanced cash flow distribution that leaves significant room for growth for the company. And with that, I'll let the Chairman close.

Thank you, Steven. Very appealing. Hopefully, it would be also thought by the ones that are on the other side of the screen. Before moving into the conclusions, I would like to highlight 3 things. Number one is I have been appointed Chairman of this company -- tomorrow, it will be 2 years ago. In 2 years, first thing I asked was some credit in terms of time to prepare a strategic plan. The strategic plan has been presented to the market on the 27th of June 2018, which meant 1.5 years ago. Then we have been just running 18 months the strategic plan that we are today talking on. 2019 has been the first full year that we have managed under these targets, and we have delivered what we committed. We are working hard. We have been working hard. And the result of this work is what you have seen. Although the scenario has become tougher, extremely tougher, probably much more than all the different analysts have seen just 2 or 3 months ago, but we are managing that as we have seen because what we are is we are managers that we want to manage our risks. And the most important thing behind these management capabilities is our motivation. And I think that without motivation, it will be very difficult to manage this situation, which is clearly new in this industry. Then I just would like to reconfirm the commitment of the team. And this is not the team on this side of the table, is coming down on the other side of the table, that we are extremely committed and highly motivated to deliver what we commit in 2018 for the period up to 2022. The company today is more efficient, but could be more in the future. We manage our risks, but we will manage more our risks. We are investing in the energy transition, but we have still more plans to invest on that. We are including more targets that we had, not only financial, but ESG-driven because we are forming part of this responsible world. And all of this we are doing under the scheme of a very balanced cash flow distribution between investment, shareholders' remuneration and other commitments. Our commitment to you, analysts, investors and employees is to continue to be delivering our commitment. And within this scheme, we need to have a little bit of fun. It is difficult to have fun in this scenario, but we will try hard to do it. I know that it's not easy when you have many initiatives to achieve our targets, but it's, again, a manageable target to combine the delivery of our commitments and certain discretionary fund. Then on -- based on that, we are today in front of you now to answer all the questions you may have. First, the people here on the room. Or after, Abel will manage what we may receive through the Internet line.

Fantastic. Are there any questions from the analysts in the room that you may want to have? Please go ahead.

This is Álvaro Navarro from Mirabaud Securities. I have 2 questions. The first one about the international LNG business. You have been dealing the challenging scenario, increasing contracted sales at the beginning of the period. But I would like to know that how are you dealing with prices because the price environment is worsened. So I would like to know how are you dealing with prices, especially for the next year. And the other question is about the liberalized business in Spain. If you are considering the possibility about introducing new taxes on, for example, hydropower or the possibility of new social tariffs that would be financed by utilities and if you are worried about that.

I mean I will start with the second question. Since we haven't given any guidance, whether we are incorporating an impact in taxes, I don't think it's something that is material. So I mean, regarding prices of international LNG, when we close a position, what we do is we hedge ourselves against price variations. So that's why we're -- when we're saying that 90% of our volumes are contracted either physically or they're hedged financially, actually, what we're doing is we're hedging ourselves against any kind of swing in the prices. And that's basically how we protect ourselves, at least 90% of our volumes, against any kind -- any shift that there can be on the prices.

Gonzalo Sánchez-Bordona from CaixaBank BPI. Maybe a clarification on your outlook for LNG. You said you expect stability. Is the meaning that you expect similar level of EBITDA as in '19? Or what sort of stability are you referring to? And also a follow-up on the previous question on the LNG from Álvaro . On -- when you say that 90% of the volumes are covered or hedged, you mean just for 2020 or it's longer term? Or what sort of term or what sort of coverage are you looking at? I would appreciate a comment on that. And then another question, and I think you put in the release of the results that you're looking at further asset disposals or asset rotation of some sort. I would like to get some comments on maybe what kind of assets are you looking at, if you're looking more on selling or buying or what kind of assets you are looking for this kind of transactions.

So I mean it's a good try to get a better guidance on the LNG. But I mean it's on the order of magnitude of what you're seeing this year, but okay, so we are not going to be more precise than that. And regarding the 90%, 90% refers exactly to the volumes at our 2020. And that's the figure that we're giving, and also on the web, we have further more information.

On the asset rotation, I think that it's important that you understand or -- and the rest of the audience understands 2 important things. Number one is that we don't have sacred cows. And the concept of sacred cows, it drives businesses to the end if the business is not evoluting as it should. But on the other side, we don't have firm commitments on the strategic plan beyond the EUR 3 billion that we have already included and achieved. That means that any opportunity that may come from both acquisitions of disposals, it would need to be chased against the market and see whether it makes financial and strategic sense or not. What we wanted just to say is that we are free on this regard to take any decision that would be the best for the company depending on the conditions under which the opportunities may arise. We haven't committed beyond the EUR 3 billion that have been already achieved explicitly because part of the commitment when you incorporate disposals in your plan, it depends on the market. And commitments and market are moving in 2 different directions. The market is volatile, and the commitments are firm. That's why our strategic plan only considered what is sure that we do. Rest are optionalities.

Any other remaining question in the room? It doesn't seem so. So we can go ahead and jump into the questions we received through the webcast. We're going to start with generic questions. And I'm going to start with 3 main questions. One is whether or not we're planning to present new business plan or Capital Markets Day shortly. Then the second one is if there is any specific reason why we are not giving a specific guidance for 2020. And the third generic question would be around what do we see as the main growth drivers moving into 2020 and beyond.

We committed already on our plan that finishes in 36 months, no, I mean, no -- more or less, which means that I think that it's premature to change our plans when we have already set up a plan that only 1/3 of it is already over. Then the reality is, of course, we will reroute the plan if we think that is any solid reasons for that. But for the time being, we haven't seen any solid reason for that. And mainly, we are focusing in the directions that have been already set up by the plan that we presented in 2018. Then our commitment is always firm. If something important needs to be explained, we'll do. If not, we continue working towards what we have already established, mainly internally because only the internal work is exactly 100% depending on what we do. The reason why our guidance today is very difficult to be set up is mainly because of the environment. It will be premature to incorporate guidance in a year that in the first 4 weeks has been more volatile than the last 5 years. Then we have commitments. We have commitments moving forward. And a guidance may just distract what it may happen in the coming months. Then, of course, if there is something to be said, we'll do it. But you should know that we will towards the direction that we have fixed. Drivers of growth, clearly, the ones that has been already given in the presentation. Number one, renewables. It's clear that the capacity that has been added in the renewables are not 100% in operations and will be in operation since January this year. And during these next years, we are going to add more capacity in this regard. Second, growth CapEx or remunerated CapEx in the activities which are regulated. We are not giving up to grow in any of our activities. We are just submitting the growth to return. As we said, capital discipline is part of our religion. And we know exactly which are the costs of our sources, and we chase permanently any project compared to the return that the project may deliver. In this regard, our prognosis for year 2020 is that all businesses will invest and all businesses will grow. Just the environment and the conditions may change the spread of this growth, but growth is going to come mainly from electricity, mainly from renewables, but for the rest of the remunerated activities, regulated activities.

Thank you, Paco. So we go on to some questions around M&A. The first one would be whether we feel pressured to potentially dispose of any assets in order to improve our payout ratio or to improve our dividend visibility going forward, and if so, if we have certain assets identified that would be more likely to be sold or not.

I think that is very easy. I mean we don't feel pressured. We are not pressed. As we said since the beginning is that there are no sacred cows, but there is -- the plan is already achieved. Then M&A is just an opportunity. And the opportunity, it depends on the project and the return. And we value, value over size, which is our most important driver. We respect a lot those that they think that size is attached to value, but we really think that value is attached to value and not to size. And if sizes, value comes together, we'll go. And if it doesn't, we don't go. And in this regard, I think that everyone in the Board shares fully what I'm saying, and that's the reason why I can clearly say that I'm not feeling any pressured at all.

Great. Thank you. Moving on to the efficiency plan. Analysts recognize we've been accelerating on the efficiency plan. In particular, they point out the additional restructuring cost envisioned for 2020. The question is, do we expect more restructuring costs beyond 2020? And are we in a position to increase or upsize our target in terms of efficiencies for 2022?