PNE AG (PNE3) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the PNE H1 2026 Results Conference Call. I'm Vicki, the Chorus Call operator. [Operator Instructions] At this time, it's my pleasure to hand over to Heiko Wuttke, CEO. Please go ahead.

Good morning, everyone, also from my side. Thank you for joining us today in this conference call regarding the half year financial report for 2026. My name is Heiko Wuttke, CEO of PNE AG, and I'm accompanied by Dirk Simons, CFO. Before I begin with the presentation itself, I would like to comment on the latest news. On Monday evening, we published an ad hoc announcement in reaction to recent media reports. Since these reports had cited a possible price range that did not reflect the current demand situation, we were, from a purely legal standpoint, obliged to respond and set the record straight. In the announcement, we provided an update on the current status of the sales process, which we have initiated to identifying investors as part of the further development of our business strategy. However, it is currently uncertain whether a transaction will materialize and what its terms would be. Please understand that we are unable to comment further on the ongoing process, but we will inform the market of any relevant further developments in accordance with applicable law. So let me give you an overview of the presentation and the course of today's webcast on Slide 3 of the presentation. As usual, I will begin with a summary of the H1 2026, followed by an update regarding the operating business. Then I will pass over to Dirk for the financials. After that, I will conclude the presentation with the outlook for the remainder of 2026. We will then open the line for questions. And as always, our slides can be found on our Investor Relations website. Before I continue with the operating business, I would like to welcome Dirk to his first webcast in his role as CFO of PNE AG. As you know, our former CFO, Harald Wilbert, has asked the Supervisory Board to release him from his duties as a Member of the Board of Management for personal reasons. And Dirk, who was our former Chairman of the Supervisory Board, took over and provides a very strong solution to address the upcoming task. Thank you, Dirk. We are really happy to have you on board. Having said this, I would now like to draw your attention to Slide 5. Ladies and gentlemen, we are pleased to share that we have achieved important milestones in a challenging first half of 2026. We successfully sold projects in our core markets, Germany, Poland and France, with a total output of 163 megawatts in total. 5 wind projects with a total capacity of 122 megawatts and 1 PV project with 41 megawatt peak. In addition, we completed 2 wind projects with 52 megawatts, 1 with 18 megawatts for our IPP and with 34 megawatts for third parties. Our own IPP portfolio now stands at 484 megawatts after the successful sale of the wind farm Bokel with 25 megawatts and the addition of Gnutz Ost with 18 megawatts. Power generation increased to 408 gigawatt hours, which is an increase of 11% compared to H1 2025 due to higher wind yields in the German onshore wind market. And also, the total output of our services business grew to EUR 20 million, a plus of 12% year-over-year with good margins. I will elaborate in more detail on the next slide. Our total output in the first half of 2026 was at EUR 123.3 million. Revenue grew to EUR 96.8 million, which is an increase of 31% year-over-year. Our normalized EBITDA adjusted for one-off items and our EBITDA increased to EUR 27.4 million, clearly up from EUR 4.7 million in H1 2025. And please remember, from 2026 financial year onwards, normalized EBITDA will serve as a key financial performance indicator for our guidance as it provides a better and more accurate picture of our operating performance. With this, let's move on to the project pipeline on Slide 7. Our project pipeline, wind onshore and PV remained stable compared to the end of 2025 at 21.7 gigawatts. Thereof, the pipeline in core markets, Germany, France and Poland, is on a high level with 12 gigawatts. I will go into more detail on the next slide. On Slide 8, you can see our project pipeline, onshore wind, which was stable compared to end of 2025 at 14.6 gigawatts. Our home and core market, Germany, which accounts for more than 40% of our project pipeline remains strong with 6 gigawatts. As mentioned earlier, we sold 3 wind farms with a total capacity of 39.6 megawatts, including Bokel with 25.2 megawatts. 1 wind farm with 80 megawatt was completed for IPP and 1 with 34 megawatts for third parties. In addition, 4 wind farms with 59 megawatts were under construction in Germany, plus another 4 wind farms with 59.2 megawatts for third parties. And we received new permits here for 5 wind farms with 186 megawatts in total. With respect to our core market, France, we see a stable project pipeline with 1.5 gigawatts, and we sold a wind farm with 10.8 megawatts. With the transfer of the project to JP Energie Environment, we now completed our second project sale in France with a partner. Located in the Hauts-de-France region in Northern France, the wind farm was developed by PNE France and advanced to ready-to-build status. Effective value engineering has made it possible to significantly increase the height of the wind turbines and electricity generation. Under a project development agreement, PNE France will continue to support the buyer with selected development activities following the closing of the transaction. Regarding our core market, Poland, we also sold 1 wind farm project to a global player in the energy transition. The wind farm consists of 10 wind turbines with a total installed capacity of 72 megawatts. We will further develop this project to the ready-to-build stage, which is scheduled for 2029 with the commissioning planned for 2030. Coming to Slide 9. We see that our PV pipeline was stable as well at 7.1 gigawatt peak. Our development activity is continuing to show good progress from projects to the later project phases, resulting in a 26% growth of Phase 3 projects to 1,059 megawatt peak coming from 842 megawatt peak at the end of 2025. We successfully sold a 40.8 megawatt peak PV project to Poland's leading energy utility ORLEN. The project stands out due to its strategic location and technical configuration. The PV farm will be connected directly to the internal power grid of the Plock's refinery. This behind-the-meter approach offers significant advantages. By not using the general grid, it reduces regulatory risks and simplifies administrative procedures during development and construction. In addition, we received new permits in South Africa with 130-megawatt peak, in our core market Poland with 81.4 megawatt peak, in Italy with 29.9 and as well in our core market France with 12.3 megawatt peak. If you look at our own IPP portfolio in H2 2026 on Slide 10, you see that the megawatt in operation slightly decreased compared to the end of 2025 as we have successfully sold the Bokel wind farm with 25.2 megawatts in Q1 2026, but added Gnutz Ost with 18 megawatts in Q2 2026. The total megawatt in operation now amounts to 484 megawatts at the end of H1 2026. 468 megawatts are coming from the wind onshore Germany, 11 megawatts coming from wind onshore France and 6 megawatts coming from the wood-fired combined heat and power plant Silbitz. Due to the comparatively higher wind yields, we produced 408 gigawatt hours of green energy in the first half year of 2026, which is an increase of 11% and avoided 308 kilotons of CO2 equivalents. The hidden reserves accumulated in our portfolio decreased to EUR 153.1 million compared to EUR 159.3 million by the end of 2025, which is partly because they are gradually recognized over the lifetime of these projects and partly because of project sales. More than 90% of our IPP projects are based on feed-in tariffs for 20 years, leading to an average weighted contracted tenure for the IPP portfolio of more than 15 years. This shows an interesting upside opportunity through short- and medium-term PPAs that are more attractive than the EEG remuneration and about 40% of our IPP portfolio already have a PPA. Let me also give you some more information about our services business on Slide 11, since it continued to perform well and delivers growing high-margin returns through long-running contracts. So first of all, operational management and technical inspections continue to grow. The assets under operational management increased to 3.3 gigawatts, and we had a great customer retention rate for the operational management of about 99%. After the successful market entrance by the end of 2025, we now have an additional BESS asset under contract and as well as further contracts under negotiation. And last but not least, we conducted approximately 570 technical inspections in wind farms in the first half of 2026. The strong performance in wind and sites continued with approximately 300 wind assessments and expert opinions in the first half of 2026. And we have conducted approximately 190 LiDAR verifications. With these figures, we are well on the way to matching or even exceeding last year's very good results. In addition, we had a good performance of our PPA as a Service business under the new brand Wattmate with 24 wind and PV PPA projects and a total output of approximately 243 megawatts and a transaction volume of around 430 gigawatt hours. And also, Bitbloom continued to show assets under monitoring of approximately 4.5 gigawatts with a high customer retention rate. Here, a new German IPP was contracted for monitoring service after a successful trial, multiple additional one-off performance verification assessments took place during Q2 and the monitoring for a new EU customer has commenced. So we are very happy with the performance of the services segment. And with this, I would now like to hand over to Dirk for the financials.

Thank you, Heiko. First of all, I also would like to welcome everyone on this call. Looking at Slide 13, you see that revenue grew to EUR 96.8 million, which is an increase of 31% year-over-year. This was mainly driven by increased project sales as well as improved results in the power generation in H1. Our total output decreased to EUR 123.3 million, which was because fewer projects were built turnkey in H1. This is also reflected in significantly lower cost of materials. Our EBITDA and EBITDA normalized increased significantly to EUR 27.4 million compared to EUR 4.7 million in the previous year, especially due to project sales, mainly the wind farm Bokel and the improved power generation results due to the higher wind yields. The onetime effects of the first quarter of EUR 1.3 million were offset by the end of Q2. The decrease in the financial result of minus EUR 5.1 million was mainly driven by the valuation of interest rate swaps. The negative tax effect was mainly attributable to deferred tax arising in connection with project settlements due to IFRS 15, the capitalization of lease agreements, IFRS 16 and various consolidation entries. Looking at the segments on Slide 14, I would like to mention that previous year's figures were adjusted due to changes in the segment reporting. The consolidation now includes all group consolidations as well as general overhead costs that could not be reliably allocated to operational segments. Consolidation was therefore renamed to corporate functions and consolidation. Having said that, we see growth in power generation and services by the decreasing output in project development in the first quarter 2026. In the project development segment, revenues increased by 36% due to the increase in project sales. Total output, however, decreased to EUR 85.7 million compared to EUR 149.6 million in the previous year due to lower construction activities. Thus, EBITDA of the segment project development decreased to minus EUR 4.1 million from EUR 8.8 million in the previous year. Total output of the segment power generation increased to EUR 49.6 million compared to EUR 40.2 million in the previous year due to comparatively higher wind yields and improved prices. EBITDA in the segment power generation improved in the first half 2026 by 17% due to EUR 34.1 million. Total output of the segment services increased to EUR 20 million compared to EUR 17.9 million in the previous year, driven by a strong order book. EBITDA-wise, the services segment contributed EUR 4.3 million, which has increased by 16%. Regarding the consolidation, eliminations of intragroup profits in the first half of 2026 were significantly lower than in the corresponding period, mainly due to more external sales and less intra-group construction activities and thus led to an improved result. Balance sheet. On the asset side, we see on Slide 15 that most is allocated to property, plant and equipment as well as inventories, what we see as investments in stable values and recurring cash flows. Our cash position fell to EUR 56.9 million due to investments in project development but is still on a good level. Equity decreased to EUR 131.4 million, reflecting the negative net income. The equity ratio was 11.6%. However, we continue to aim for an equity ratio of 20% or more in the midterm and already expect a clear improvement in 2026. Adjusted for hidden reserves, the equity ratio was at a comfortable 22.2%. Liabilities to banks remain stable, resulting in a net debt of EUR 723.5 million. In addition, it is worth mentioning that the majority of the bank liabilities are non-recourse project financing. To further optimize our maturity profile, we issued the 2026/2031 corporate bond in the first half of 2026 with a volume of EUR 36 million, thereby taking early steps to extend our maturity profile and to partially redeem the corporate bond maturing in mid-2027 with a former face value of EUR 65 million. Whilst existing investors showed considerable interest, there was also a noticeable degree of caution amongst new investors, which is not primarily attributable to PNE itself, but it's closely linked to the challenging environment in the renewable energy sector. We continue to examine various options for strengthening our capital base. This includes considering possible capital measures, including debt financing. The final decision on this matter has not yet been taken. With that, I would like to hand back to Heiko for the outlook.

Thank you, Dirk. Ladies and gentlemen, this leads me to the outlook on Slide 17. Like the rest of the industry, we have been navigating difficult waters so far in 2026. We are aware of the challenges, which still have to overcome. Nonetheless, we confirm our guidance for the 2026 financial year of EBITDA normalized between EUR 110 million to EUR 140 million. Regarding our operating business, we aim to sell further projects in the second half of the year. At the end of July, we have already completed the sale of 2 further projects in Germany with a capacity of 45 megawatts. The expansion of our IPP portfolio will be consolidated this year before we further build it up in midterm. According to our stronger focus on selected core markets, exit for Turkey and Canada are targeted for 2026. With our focus and deliver transformation and cost reduction program, we remain firmly on track. In the first half of 2026, however, these cost positions still include program-related expenses associated with the implementation of the transformation measures. As we continue to execute the program, we expect further efficiency gains over the coming quarters. And as already mentioned last time, we now focus even more on projects and solutions with high system and grid compatibility, such as BESS applications to meet upcoming German legislation. Coming to the end of my presentation, I would like to emphasize again, we are committed to future-proof sustainable growth and value creation. And with this, I would like to conclude our presentation and open the call for questions.

[Operator Instructions] The first question is from Karsten Von Blumenthal, First Berlin Equity Research.

My first question is regarding the new EEG. The German cabinet has pushed it through. And as far as I understand, it doesn't look very promising. So perhaps you could elaborate on your impressions on the new EEG and how this affects your business.

Yes. Thank you, Karsten, for your question. In fact, this is, of course, something we very closely monitor. And in general, actually, it's not just about the EEG amendment and as well on the grid package, which is accompanying to that. There are some aspects which are leading in the right direction. For instance, if you look at the additional volume of 12 gigawatts that are planned to increase the auction volume until 2030. So there is a higher volume, and this should be a positive signal to the industry. However, what we still see, and this is mainly related to the grid package that we -- what was formerly called Redispatch-Vorbehalt has now a different name. It is now capacity constraints, bottleneck areas. There we really see issues which have to be resolved in the ongoing process in the parliament, because we, of course, have projects which are not just on those areas. So we're not just completely hit. On the other hand, there are unclear and not very straightforward stipulations, which are not very clear how this will result in the business case. For instance, how to deal with the 5% restricted areas? What is the average looking backwards 1 year or 5 years of these constraints? And there are clearly topics which still need to be addressed. And the same is on limitations on the overall capacity, which could result in redesigning wind projects and wind turbines and which cannot be done that fast. So there must be another deadline, for instance. So overall, I think from our side, where we supported this, in the associations where we are active in, there have been many proposals, and we count on the parliament as well on the federal states because you have to remember that all 16 federal states have objection on the Redispatch-Vorbehalt, so on this capacity constrained measures for wind and PV farms. And it's our understanding that the cabinet at the end of the day has to react on that. We are still closely on it. Of course, we -- in the areas where we are active, we are promoting this. Overall, one can say there is some positive parts in the amendment, but we are not overly happy with that. Looking at the grid package, we fortunately not only having projects which are in these grid constrained areas, but in other areas. So it will not completely hit us. However, it needs better regulation to, at the end of the day, meet the 12 gigawatts -- additional 12 gigawatts that are now on the table, because otherwise, you have a higher volume, but it's not feasible to invest in projects to meet that volume. I hope that answers your question.

Yes, that is of great help for elaborating on this. One follow-up to it. Have you a rough idea how much of your German pipeline could be affected by the capacity limited areas or so-called Redispatch-Vorbehalt?

Well, we have an idea. But to be clear, it's hard to say today. As I said, there are not very clear stipulations currently in there. So what will be the trigger point to take -- to judge on 5% of curtailment measures within 1 year? What is the exact area? That's not fixed. And as long as this is not fixed, it's not very clear to be answered. All I can say is that based on the maps that we have currently, we will not be affected that much. However, if you don't have regulations, it's hard to really judge on it.

Okay. Fully understood. So let's wait until the Bundestag pushes through the law and see what the outcome will be. I have another question for Dirk. I was a bit puzzled regarding your depreciation, which were much lower in Q2 compared to Q1, if I saw it right. Perhaps you could elaborate on that.

So there is actually one impact that is from the sale of the project Bokel. That obviously also then has an impact on overall depreciation.

The next question is from Holger Steffen, SMC Research.

I have only a few further questions. Once again, about depreciation, it was very low in the second quarter comparing to first quarter, and I see no special effects in the first quarter. And I think that the sale of Bokel is not enough to explain this. Are there any other effects?

So obviously, there are some other effects like the maturity of assets and other things. But if we actually need -- so we need to have a look in more detail, and we'll come back to this.

Okay. One another question in this area. Receivables amounting to EUR 3.5 million were written off. What are the circumstances behind this?

So there actually is one main effect behind this. There was an arbitration result in Sweden that actually affected one of our receivables. And so we lost the case, so to say, and actually needed to adjust.

Okay. I think to meet your guidance, it is likely that further sales from the portfolio will be necessary this year. To what extent approximately are disposals of existing wind farms planned?