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

Good morning, everyone. This is Abel Arbat speaking from the Capital Markets team at Naturgy. Thank you for joining our results call for the first half 2025. Next to me, sits our Executive Chairman, Mr. Francisco Reynés; the General Counsel to the Board, Manuel Cobaleda, the Head of Financial Markets and Corporate Development, Mr. Steven Fernández; and the Head of Control and Energy Planning Ms. Rita Ruiz de Alda. We will begin with the presentation, followed by a Q&A session addressing questions from analysts and investors. Please submit your questions in written form through the webcast during the presentation, and we will address those at the end. So let's get going, and I will hand it over to Steven to start off on the presentation.

So let's go straight to Page 3. Thank you very much, Abel, and good morning, everyone. Thank you for joining us. The key highlights of the H1 '25 results that we announced earlier this morning can be found here. Basically, you'll see that we had a very strong performance on the first half of the year. And we believe that this demonstrates the company's and asset resilience amid macro uncertainty. A key highlight also of the first half of the year is the outcome of the tender offer that you saw, which supports our objectives to increase the free float and consequently increase share liquidity with an objective of returning to the MSCI indexes. We have also announced the first dividend against 2025 results, amounting to EUR 0.60 per share, which is higher and may add than the consensus assumptions and that takes into account the current 10% treasury stock position. It's worthwhile mentioning that the current macro and energy scenario, combined with our strong current trading and outlook for 2025, certainly reaffirm the attractiveness of the 2025 and 2027 strategic plan and this is a point that our Chairman will elaborate. And finally, today, we have announced a guidance for 2025 that, as you can see, is also above the market expectations. To move over to the next slide. Energy trends for the period have been marked by a decoupling of gas and oil indexes, in particular, if we look at the average Brent prices, they were around 15% lower in the first half of 2025 compared to the same period of last year. In contrast, natural gas prices were substantially higher across the key benchmarks. For example, on TTF is up 42%, the Henry Hub, up 68% and the JKM up 27%. Iberian electricity pool prices also increased substantially from EUR 39 per megawatt hour in the first half of 2024, to EUR 62 per megawatt hour in the first half of this year, mainly driven by higher gas prices, as we have mentioned previously and also CO2 prices in addition to higher demand for gas-fired generation in the period. If we move on to the next slide, the resulting effect has been an EBITDA of close to EUR 2.9 billion in the period. This is maintaining record high levels that we started establishing last year. Net income amounted to EUR 1.1 billion, almost EUR 1.5 billion. This is also a significant increase relative to the previous year. We have announced a dividend amounting to EUR 576 million. This takes into account again this -- the impact from the 10% treasury stock. And at the same time, our net debt remains at a very subdued level of EUR 13.7 billion despite having paid a dividend in the first half of the year and despite having invested EUR 2.3 billion in the period. All in all, these results, as you can see, are very strong and resilient even if we take into account the one-offs that we had in the first half of the year. If we move over to Slide 7 on the income statement. EBITDA remained in line with last year. Although this half of the year, there are some -- there are no positive extraordinary events like we saw in the previous period, H1 2004 (sic) [ 2024 ]. Hence, it's worth highlighting that the underlying results are stronger. From an EBITDA contribution perspective, 47% of the networks -- 47% of the EBITDA was generated by networks, 53% by energy management, generation and supply, which demonstrates the well-balanced portfolio that the company has. 54% of the EBITDA was generated by gasoline activities, while 46% electricity, and as you can see, roughly 60% of the EBITDA comes from stable geographies like Spain whereas 42% comes from the international activities. The group's diversification across the businesses, activities and geographies, obviously supports its earnings resilience. As you can see also net income reached record results close to EUR 1.15 billion. We move over to the cash flow evolution. Free cash flow after minorities reached almost EUR 1.3 billion, demonstrating the strong cash flow generation in the period. For the first half of the year, Naturgy invested more than EUR 3 billion overall. But remember, that part of that is associated to the tender offer for our treasury stock. If we exclude that effect, the net investments roughly amounted to around EUR 870 million in the period, of which 42% was dedicated to the networks businesses. 37% was dedicated to renewal generation in projects that have already been launched and that meet our very strict capital disciplined criteria, while the rest of CapEx was dedicated to other businesses. It's also worth noting that EUR 169 million of hybrids were amortized during the period as a result of the recent liability management exercise that we performed, which means that only EUR 330 million of hybrid instruments remain outstanding. Overall, we will continue to follow strict capital discipline, deploying capital to ensure value creation on our investments, this sum is important to remember, what we've always been saying, we prioritize value over size. So all in all, Naturgy delivered strong cash flow in the period to back investments and shareholder remuneration. If we move over to the next slide, what we'll see there is the balance sheet remains very strong post the EUR 2.3 billion tender offer. Remember, on April 9, Naturgy distributed its 2024 final dividend of EUR 60 per share in cash -- EUR 0.60 per share in cash which was equivalent to EUR 576 million. Net debt to EBITDA of the last 12 months as of the 30th of June stands around 2.6x of the first half. So it's a very, very comfortable position for the company. Excluding the effect of a tender offer, net debt-to-EBITDA would stand just about 2x. Overall, the cost of debt remains at around 4%, while the percentage of fixed rates has decreased to 63% in the lower interest rate environment. Finally, liquidity remains very strong at the group at a level of around EUR 8.6 billion, including EUR 3.1 billion in cash, and around EUR 5.5 billion in undrawn credit committed lines, again, after taking into account the tender effect, the tender offer effect. And with that, I'll hand over to Rita to go over the different businesses and their performance during the first half of the year.

Thanks, Steven, and good morning, everyone. Starting with networks on Page 10, networks reached in 2025, a total EBITDA of EUR 1,344 million. This is an 8% lower when compared to 2024 levels, mainly due to an extraordinary impact in Chile last year. In Spain, Gas Networks experienced a remuneration adjustment foreseen in the current regulatory framework as well as an increase in demand in residential segment, mainly due to temperature effects. Additionally, a public consultation has been launched to companies in the sector, marking the beginning of the regulatory review process for the 2027-2032 period. In electricity, EBITDA increased driven by a higher regulated asset base and the publication of the 2021 and 2022 definitive remuneration. The CNMC has already published a draft of the resolution of the new regulatory scheme for the 2026-2031 period. We are preparing our allegations, which must be submitted before the end of August. In Mexico, results mainly impacted by negative foreign exchange evolution, compensated by tariff updates. In Brazil, results are also affected by currency depreciation. In Argentina, EBITDA has improved as substantial tariff increase was implemented during 2024 to offset inflation, while we are observing a moderating trend in currency depreciation. Furthermore, a new tariff review was approved for the 2025-2030 regulatory period, in line with our strategic plan estimates. This new regulatory review provides visibility through 2030 and includes monthly inflation adjustments within a stable regulatory framework. In Chile, performance decline when compared to last year due to an extraordinary effect in 2024 as of the partial reversal of the provision related to TGN conflict. It is important to highlight that during 2025, the group has reached a final agreement with Transportadora de Gas del Norte, regarding this long-standing conflict that's stemming from 2009. Therefore, this legal process is now officially closed. In Panama, results were negatively affected by lower demand due to temperature effects and increased operating expenses stemming from higher maintenance activity. In summary, comparison is affected by extraordinary impact in Chile in 2024 and currency depreciation in Latin America. Now turning to Energy Management on Page 11. EBITDA reached EUR 524 million, which shows an increase versus 2024 of 36%, mainly due to higher margins on hedge sales. On average, European gas prices were 42% over H1 2024. Energy prices decreased significantly during the first month of 2024, followed by a gradual recovery throughout the year. However, we have observed increased volatility in recent months, driven by growing uncertainty related to commercial policies and more recently by international conflicts. As mentioned during the strategic plan presentation, the group is fully hedged for 2025, having adopted a very active risk management approach in the context of high volatility and uncertainty. The figures already reflect current market condition of gas contracts in 2025, while negotiations with Sonatrach are still ongoing. Overall, the period benefited from higher margins supported by a market that remains uncertain and volatile. Continuing with thermal generation. EBITDA reached EUR 330 million in 2025, 10% over 2024 EBITDA due to higher activity in Spain, partially offset by lower revenues in Latin America. In Spain, the increase in results was supported by higher production despite the context of record hydro generation. This was due to higher demand in ancillary services from our combined cycle fleet. Ancillary services mainly support voltage control, contingency response and help to compensate for photovoltaic dropoff during the evening. And therefore, CCGTs are critical to ensure system stability. In Mexico, production and margins remained stable. However, revenues from availability markets declined mainly due to an exceptionally high revenue base in 2024. Now let's turn to renewable generation on Page 13. Renewable generation reached an EBITDA of EUR 322 million during the period, slightly above 2024 levels. In Spain, renewable production was 10% lower when compared to 2024, mainly due to lower wind and hydro generation, given the exceptionally high levels of hydro production in our basins during 2024. This negative impact was partially offset by the commissioning of new installed capacity and higher electricity prices. The United States results are higher when compared to 2024, mainly due to higher energy prices. The group completed construction of its second solar plant in Texas, 261 megabits, which has recently started operations. In LatAm, activity continues with impact due to currency devaluation in Mexico and Brazil. Finally, in Australia, performance benefited from additional 556 megawatts of installed capacity added when compared to H1 2024. Most of this new installed capacity is wind technology. All in all, higher results in renewable generation due to commissioning of new capacity and selective growth prioritizing value over size. Finally, in terms of supply, EBITDA has been EUR 386 million. This is a 15% lower when compared to 2024 levels. It is important to remember that during 2024, we had an extraordinary impact due to the positive ruling in favor of Naturgy regarding tariff subsidies. Gas margins have shown resiliency supported by higher visibility on procurement cost, but negatively affected by regulated tariffs. In terms of electricity, the group has expanded its client portfolio in a highly competitive environment, leveraging on its integrated model and diversified generation mix. Meanwhile, the company has recently launched a digital platform aimed at transforming client interactions. We are introducing AI applications that enhance customer service as well as efficiency. I will now hand it over to Steven to wrap it up. Thank you.

Thank you, Rita. So all in all, I think there is 3 key points that I would like to highlight as a summary of the 2025 first half results. First and foremost, strong performance. You've seen it in the numbers and these made macro uncertainty. This bodes well for the rest of the year, it bodes well for the execution of our strategic plan. We are certainly excited. We're excited also about the fact that we have a balance sheet that remains strong, very strong even after the tender offer, and that is -- that's something that gives us a lot of flexibility and optionality. So happy to be sitting in that position. And finally, very importantly, when we talk about the flexibility that the strong balance sheet position gives us is also very important to emphasize that capital discipline remains a cornerstone for the company, value over size. And I want to focus really quickly an overview of the completion of the tender offer because we understand there's quite a few questions on this. So to move over to the slide. As you can see, the outcome supports the objectives to increase the free float and share liquidity, the effectives of going back into the MSCI indexes. We launched the tender offer on the 30th of May and concluded on the 30th of June and delivered a highly favorable outcome aligned with the company's strategic objectives. The free float experienced only a very marginal decrease from 10% to 9.6% while the proportion held by core shareholders saw a significant reduction falling from 85% to slightly higher than 76%. As envisioned in the transaction, the tertiary stock position now stands at 10% of the total capital. It's worth highlighting as well that following the tender offer, the free float and treasury shares combined comfortably exceed the minimum [Technical Difficulty] I don't know where we had the minutes initially, from.

Better start again.

So I'll start again. Again, we understand there's quite a few questions on the tender offer. So I want to make sure that we settle them here, questions on the execution, et cetera, of the reestablishment of the free float. We retain full flexibility in the timing and execution strategy of returning treasury shares to the market and will act as needed to increase the free float and support the objective of rejoining the key indexes. Again, we retain full flexibility in terms of the strategy and in terms of the timing. What we can say nonetheless, following these results is that Naturgy presents a compelling investment case for both institutional and retail investors as evidenced by the fact that the share price has remained above the tender offer levels after completing the offer as evidenced by the fact that we have presented record results again amidst a very challenging scenario. And with that, I'll hand over to our Executive Chairman, to give you some thoughts on the evolution of the strategic plan and most importantly, on the outlook for the rest of the year.

Thank you very much, Steven, and thank you, everyone, to join today's first half presentation results. It's a pleasure to be back again transparently informing you what is going on. Our strategic plan '25-'27 started 1st Jan, and we are today finishing the first phase of this strategic plan with the first 6 months that demonstrates that the company has been able to overcome any potential weaknesses. And today, our fundamentals are quite strong to drive results to record highs. If I would need to summarize all these fundamentals in 6 key points, I will mention the following. #1 is network resilience. As Rita has explained, excluding one-offs, our results are quite resilient independently of what is going on with the ForEx and mostly activity. The second point is about the vertical integration, balancing power and gas. We have seen in the pie chart that our results are coming on a very even situation between gas and electricity will demonstrate as well that the fact that we are having both technologies in our portfolio maintains a level of resilience that is very important to commit and deliver on the long run. Third is about gas. Probably some years ago, we had much more questions around gas than we have today. Gas, today, it has been demonstrated as 1 resilient energy transition resource to maintain a very firm commitment on the trilemma. Gas helps to warranty security of supply, gas at the same time, is available in different manners to move ahead on the energy transition and decarbonization. That's the reason why we are betting on biomethane, for example, and 3, gas helps to maintain resilient prices, affordable prices. In terms of management, we have focused our first half in 2 important things. 1 is proactivity on regulatory issues and second, on reducing risk by being proactively management risks. In terms of operational excellence, as you will see later, we have a very clear commitment on continued being excellence and being efficient in our cost base. And finally, on clients, we have moved ahead in our client focus by incorporating the technology and IT updates to help our client base to fill more safe and happy to receive services from our side. In parallel, the second key principle of our strategic plan was our financial discipline. We have a very important commitment on investments. But at the same time, we want to be sure that this commitment of investment is not jeopardized in our commitment to capital discipline and rating. And this is why our strategic plan considers for example, investments in renewables in Spain, only born for hybridization and not including new capacity. In terms of shareholders, we have a very clear proposition. We want to consider a very important yield coal company, and that's why at the current prices, we are around the 7% [ G ] yield return. Second, we want to have a clear growth perspective in DPS. And 3, as Steven mentioned before, our commitment to establish proper free float, proper liquidity for our shareholders forms part of the strategic plan. We have resumed all these -- these proposals in one clear sentence, which is that we want to deliver what we commit in the plan, and that's why the team is fully focused. It's important to also take the opportunity talking about the strategic plan to remove concerns about potential M&A projects that are in the rumors. I don't want to comment on any specific project. I just want to be sure that all of you understand that the company is fully focused on delivering its strategic plan '25-'27, and that demonstrates our first half results, this is the focus of management. Of course, as always, we have said we are open to analyze projects that may come. But no one is going to break our rule that we -- our priority is value over size. And for this reason, today, we have no comments to make about any potential M&A. If we move ahead on the '25, we need to -- we want to share first our outlook on the market and then how we see our figures. On the market, as you can see, we are seeing clearly moving down brand expectations for the second half as well as TTF, which will impact -- will impact clearly, if you compare the second half of the '24 compared to the second half of the '25 Iberian electricity pools, maintaining a very stable level of CO2. These are the basis under which our projections for the '25 second half of the year are made. With these hypothesis, next Page #21, you can see what we are today committing with you. #1 is in terms of EBITDA that we are seeing a year with the guidance of EUR 5.3 billion above, which is clearly today above consensus. In terms of net income, above EUR 2 billion of net income at the end of the year, which is also clearly above consensus that will allow us to increase our dividend base between EUR 1.7 to EUR 1.9 per share, and that will depend only on the final number of shares that will remain in our treasury stock at the end of the year. I need to remember you that in terms of our dividend policy, we have established a floor for this year of EUR 1.7 that will be updated with the dividend that will be entitled to be paid to the treasury stocks that, as you know, are not getting dividends for that, and we will revert this figure to the shareholders. And finally, in terms of debt, we have assumed in this figure that we have not placed any share at the end of the year. And even without placing these shares in the market and keeping the 10% of the treasury stocks in our balance sheet at the 31st of December '25, our debt will be below EUR 15 billion, below EUR 14.7 billion in this case, clearly below consensus and maintaining a ratio of EBITDA debt, which is around 2.6x, clearly below the rest of our comparables. If we continue on Page 22, I want to highlight 3 important metrics that demonstrates that our focus on making our company more efficient is clearly alive. In terms of OpEx, our margin, our '25 year is going to move ahead in increasing our efficiency by reducing OpEx over margin compared to the year '24. In terms of return on investment capital, it will improve the figure of '24, reaching almost 11.5%. And in terms of return on equity, we will increase by more than 100 basis points, the figure already achieved in 2024. All in, that demonstrates that the focus of the company in day-to-day business in continuing delivering our efficiency and profitability is still alive and forms part of our DNA. If we move ahead on Page 23. I think that it's important to highlight how the market is today, valuing Naturgy compared to peers. We are still suffering a certain discount from the ratio EV EBITDA. We still have a harder discount in terms of price earning ratio. And as you can see, our dividend policy allow us to say that our dividend yield compared to our peers is clearly giving a premium. If we move ahead. And we just finish our presentation with the same messages that Steven started to this presentation. #1 is we have done I think, well, in the first half. #2 is we continue our commitment to return to the indexes and in particular, to MSCI. And therefore, the first step is clearly in that direction to have the opportunity to increase the level of free float. Our dividend continue being part of the cornerstone of our -- our strategic plan. Macros reaffirmed the attractivity of our plan '25-'27. And as a first year of this 3, the guidance of the year '25 shows better results than what the market today expects. I want to thank you all of you to be connected today with us. And I think that I will give the floor to Abel, who is going to drive the part of our Q&A session, considering what we have received from you so far and what we can receive during this part of the presentation. Thank you.

Thank you, Mr. Chairman, and thank you, everyone, for submitting your questions. So let's get started with a few generic questions. The first bucket of questions is around the placement of the shares we recently acquired. And if we have any specific time line to complete such an operation and at which price do we expect to place those shares?

So we're absolutely -- I want to emphasize in no rush whatsoever to dispose of the shares. We retain the flexibility to do it at the right time with the right strategy. And we will obviously keep the market informed when and if that happens, right? It is part of the strategic plan. Strategic plan goes until December 2027. Our objective, again, is to go into the MSCI indexes. We need to cross that threshold, which is 15%. And there's not much more we can say about that.

Perfect. Thank you, Steven. There are then a few questions on the Spanish nuclear life extension. And which are the latest updates on the discussions to extend the useful life of nuclear generic country, which could be the upside for the system deriving from an extension of this deadline? Any views you can share on the topic?

Well, as you know, Naturgy's position has been public since 6 months. #1 is we clearly consider that nuclear extension for Almaraz, which is -- which has been signed with all the shareholders plus the Ministry in 2019 may today be extended 3 years, technically speaking. We have said that we would support that extension for sure, and it will give us a floor to discuss in more detail, how should be the new scenario of electricity generation for Spain, considering that many things have changed in the Spanish arena. Having said that, there are not many discussions about that. That has been publicly our position since a couple of months that we have been asked for and it is known by those that may go further in an agreement. I want to remember that any agreement around nuclear must be taken with all the shareholders. It doesn't matter which presented each one had.

Thank you, Mr. Chairman. So there are a few questions as well and around any news or an update on the European plants to ban Russian LNG and what could happen to our Yamal contract or whether we think that Europe will provide any compensation and so on?

Well, I think that we are together with us, Steven, and Rita, myself, also Manuel García Cobaleda, our General Counsel and Secretary of the Board, considering that this question has a very important legal angle. I will prefer key answers to you on that question, please, Manuel.

The European Commission has been pursuing a ban on the gas that comes from Russia, both in -- through pipeline and through LNG vessels. They consider that they had to study the legal implications. We are happy that they found out the big difference between spot and long-term gas contracts, so that after this reflection on economic and legal consequences of what they wanted to achieve, they have come with a proposal that the commissioner has affirmed that since it would be a provisional ban, the companies would not get into legal problems. It literally says. The European Parliament is also aware of these circumstances. And recently, I think it's in a position paper of July 8, said that the European Union would provide a legal and effective sound toolkit for the companies to achieve the European Commission targets. So we are confident that in the process that has started in mid-June and is continuing now and should end by year-end, the commission will -- with the help of the European Parliament in the States, will find this toolkit that they have committed.

Thank you, Manuel. Now moving to question -- there are a few questions as well on the M&A topic. One of them is around our potential interest on EDP. And the second question is more related to news flow around our potential interest in smaller M&A targets in Spain. Would we be interested on that? And what's our stance?

I thought I had answered that question during the presentation. But I prefer to be, again, transparent on that topic because I think that it's important for everyone and our acts demonstrate what we say. Then we want to talk and we prefer to talk because I'm sure that we will welcome that. We have nothing to comment on any project on M&A at the time. And I think that it's important to say that M&A projects should be real and now there are only rumors and speculations that nothing to comment. But having said that, and I'm talking in general, in general, 2 important things. #1 is the company today, and I think that the scenario helps that focus is fully focused in delivering its strategic plan. And the strategic plan has nothing of M&A, and has a lot of internal work. That depends 100% on us, that doesn't depend on the market. Second, if in the future, any project will be analyzed, which is not the case today, we have always said that we will never prioritize size over value. We will always make priority of value over size. Again, at the present time, we have nothing to comment on any M&A because there is no M&A project on the table so far.

Thank you, Mr. Chairman. There have been a few questions around guidance for 2025, and we can give an indication of the main trends by business for the second half of the year, which make that guidance possible?

I think that Rita is the most appropriate person to answer that.

Yes. As I mentioned during the presentation, we have visibility into H2 results as we have all of our LNG volumes hedged for 2025. This sense, we see stability in terms of gas and electricity margins. However, we expect volatility in energy prices to remain. In terms of networks, we don't expect significant impacts during the second half of the year and we will probably see a similar trend in ancillary services. So I will say that the guidance assumes stability during H2 of 2025.

Thank you, Rita. Okay. So now we move on to a few questions on the various business units. And starting with Networks businesses. There are lots of questions around our opinion on the electricity distribution networks remuneration in Spain and what's our opinion on the proposed regulatory draft?

2 important things. First one is, as you know, the -- this is a draft. And as a draft, we have and it may be probably be corrected by Manuel until the 7th of August or the 6th of August to comment on it, which means that it is clearly the first step. Second, all our comments are going to be on the same direction, in the direction to incentivize investments, but incentivizing investment doesn't mean that we need to break our financial discipline. Therefore, the impacts on any regulation that are in a system that requires investment, will clearly be linked to the attractiveness of this business compared to the attraction of investments that may be made by the companies. In this regard, there are not only one angle to comment. There are other angles, not only on the retribution tax, but also on the rest of the conditions under which the regulation is going to be adapted. At the present time, our teams are analyzing and writing the proposals, we have still 3 weeks ahead to make them much clearer and to discuss with the CNMV, CNMC. But the reality is that as we have seen the new distribution of generation plants in Spain requires more investment on the networks, but the investment on the network should be attractive enough, not only for the system, but also for the investors. And this is why we need to focus on balancing both attractivity for the investors and attractiveness for the system.

Thank you, Mr. Chairman. Then there is a complementary question or at least related to that one, which is if there is any reading for the gas distribution proposal, when should we expect more visibility for gas distribution and what are our views or potential rate across from what we've seen so far?

As you know, the gas distribution proposal is coming 1 year after the electricity distribution proposal. But I will give the floor to Manuel that will comment on the last legal decision taken by the Audiencia Nacional, which is clearly reinforcing the current model that we have in place. But there is not still a single first draft word to comment. Then I think that is more important to understand what happened in the last month. Manuel?

So what is, as Chairman said, there's time difference of 1 year between 1 regulation and the other, which is also sensible for the CNMC, there will be over [indiscernible] of work. So in this case, it's only the first ideas, if I may say, philosophical ideas of where the regulation could end up. And what we've seen is that they have made the same reading as we have had of the last ruling of the Audiencia Nacional couple of months ago, that's somehow fixed the parametric formula is the formula that has to be used in the gas distribution, which is much more simpler than the power distribution system. So what we have seen is that the CNMC seems to continue with this idea, with the adjustments that at some point, they probably will put forward, but this will happen in some months. But the main idea is that there's continuity in the remuneration system of the gas distribution assets.

Thank you, Manuel. Okay. So now moving to a few questions on Energy Management. And in particular, what are our expectations on gas margins evolution for the second half of 2025?

For the second half of the year, we expect volatility to remain as we mentioned before. And the evolution of commodity prices will depend in many aspects. The first one, commercial policies and the evolution of tariff negotiations. Second, the evolution of international conflicts that have recently affected energy prices. And finally, gas demand in Europe and Asia, considering that European gas storage is under 2024 levels. However, as I've already mentioned several times, the group in order to address the volatility has a very active risk management approach and is fully hedged for 2025. So we expect H2 results to remain still.

Thank you very much, Rita. Now there are a number of questions as well around thermal generation in Spain. And in particular, if we could disclose the impact for Naturgy of the increase of production of CCGTs in the ancillary services post recent blackout or we could give some guidance in this respect?

Well, we can't give any guidance because we don't know how the operator of the system is going to behave. The most important thing I want to say is #1. I want to highlight 2 things. #1 is the availability of Naturgy's gas turbine cycles have been total, all our plants have been fully available because we have been maintaining these plants during the last years. I want to remember that in 2018, the decree that has not been renewed has been blocked the possibility to be paid on capacity payments, but including with these new circumstances, we decided to maintain the system and maintain our cycles on the best shape. And thanks to that, we have been able to provide service at any time. In reality, the important moment that we have seen the turbines working more than other previous comparable months have been only 2 May and June, where restrictions have been working more because the coupling of the gas turbines on the system has been higher than before. But we also know that all the system has been investing in being more resilient, and we are seeing again that this utilization is going to normal. The market -- the restriction market, we call it in Spain, is there and is exactly prepared to support the system at what is lacking for the regular generation. And the reality is that the margin that these restrictions have been incorporating in the figures we have seen are less than 3% and the total EBITDA that we have created. And this is like a myth that we are just making money on that business. We are making money on the different business we have been managing the business is the best we can.

Thank you, Mr. Chairman. Okay. So -- moving on now to a few questions on the supply business. I think we can broadly summarize those into the evolution of demand, our market share and also the evolution of margins with respect to the supply business, including both power and gas for the second half of 2025 in Spain?

Okay. During the first half in the Electricity segment, the group has expanded its client portfolio in a very highly competitive environment. However, churn rates remain high across the sector. In terms of cash, margins have remained resilient, supported by improved visibility and procurement costs, however, negatively affected by regulated tariffs. Looking ahead to the second half of the year, we expect margins in both gas and electricity to remain solid, leveraging on our integrated position, and we also anticipate at least maintaining or even growing our customer base continuing the positive trend observing electricity during the first half of the year.

Thank you very much, Rita. Okay. So these broadly finalizes the questions around the various businesses. And then there's an additional question around our capital structure, and in particular, the remaining hybrids and what's our strategy with regards to those?

So yes, you may remember that I think it was a couple of years ago, we made the decision to not extend one of our hybrid instruments and as a result of that. We lost the equity credit from that moment on, and it was a clear decision that we have made. We don't benefit from the equity content from our hybrids. As a result, they should be considered as plain vanilla instruments, which are more expensive than senior bonds, which we can issue. So as a result of that and the fact that our balance sheet is very strong right now. We do not need hybrids. And therefore, the remaining hybrid instrument when the time comes, will be -- will be called and will not be renewed.

Okay. Thank you very much, Steven. So that concludes the Q&A session. So thanks, everyone, for joining our call. The Capital Markets team remains available for you for any further questions you may have. So thanks very much. We'll be in touch, and we wish everyone a happy summer. Thank you very much.

Thank you.

Thank you.