S.N. Nuclearelectrica S.A. (53V.F) Earnings Call Transcript & Summary

So before we start the conference call, I would like to let you know that this conference call is going to be recorded for the very purpose of publishing the audio file after this meeting to be available for all shareholders and investors. Thank you. So I'm going to start the recording and while I do that, I would like to introduce myself, my name is Valentina Dinu, I'm the Investor Relations for Nuclearelectrica and the reason for the conference call today is [indiscernible] financial results for third quarter of 2025. With me here today is the CFO of Nuclearelectrica, Daniel Adam. I'm going to give the floor to Daniel for the presentation, and then you can ask whatever you consider necessary. So Daniel, please. Thank you.

Hello, everybody. So we'll go through the unaudited individual and consolidated financial statements for 9 months, September 2025. We'll move now to the 9 months financial results highlights. As you see, we have a very robust results, plus RON 342 million versus last year, 9 months. So we are with the net profit, we are at RON 1.6 billion. And this is also with RON 455 million or 39% almost above the budget for the year. The reason for these better results are the sales of electricity, where we had an increase of almost 24% versus last year and also with 4% versus the budget. We also have a positive or better results in financial results, plus RON 90 million over last year as a result of the increased interest income and a positive impact from currency exchange rates. We have also a corresponding increase in windfall tax on the expenses. This is coming from the higher average selling price of RON 523 on average, higher than 9 months in 2024, which was RON 438 per megawatt. We have also some smaller increases in OpEx and an increase in depreciation and amortization costs coming from planned outage and slow rise as the equipments are getting all that. We are moving now to the waterfall. So we have an increase from RON 1.28 billion in 2024 to RON 1.6 billion in 2025. As you can see, the main drivers for these increases are the sales and the financial results. And on the expense part, we have an increase on windfall tax and income tax due to the better results and higher turnover. And it's also noted here, we have an increase in cost of uranium fuel. This is coming also from the 2024 acquisitions of uranium stocks. In the detailed individual income statement, we can see the positive deviations in terms of total revenues also versus last period and the budget. And as you can see on the expenses side, versus the budget besides the windfall tax, we have, in general, a better performance than budgeted. And this is bringing us to the net profit being better than the budget with 38% and with 26.6% versus last year. In terms of individual versus consolidated financial performance, I will not stay too much on this topic. This you have detailed on the intercompany eliminations coming from the -- our transactions with the subsidiaries like EnergoNuclear, Nuclearelectrica Serv and FPCU and RoPower, there are fairly small adjustments for consolidation purposes. In terms of financial position on individual level, we have an increase of noncurrent assets with 20.7% or almost RON 1.7 billion. The main or the half -- actually, half of the amount is coming from the increase in net book value of intangible assets from the record for the investment projects and higher net between the additions and disposals in the period, also netted with RON 506 million the depreciation recorded in the 9 months period. We have also an increase of RON 806 million in net financial assets valued at amortized cost. These are mainly coming from the increase in the loan granted to RoPower, our affiliate, coming approximately RON 400 million and also an increase in the loan granted to EnergoNuclear subsidiary of RON 422 million, including interest. On the current assets, we have a decrease of RON 890 million in bank deposits, cash and cash equivalents, and small decrease in trade receivables and other financial assets. And we have an increase of RON 212 million coming in principle from first withdrawal from our EIB loan for our CTRF projects. And of course, due to our increase in profits, we have also an increase in our equity position. Again, on the individual versus consolidated financial position, we are seeing here the eliminations. These are coming mainly from EnergoNuclear cash and on equity from retained earnings from the subsidiary financial results and on non-current assets from the cancellation of the intragroup transaction, loans granted and shares. We are moving now with some details on our main business as of electricity. So the sales increased from '24 to '25, 9 months, mainly by increase in the weighted average selling price with transport of 19.4% for the electricity sold higher by 4%. As you saw also on the reporting periods, there were no sales on MACEE in 2025 versus 2024. And we have a big increase, 445% increase in quantities sold on the competitive market and also a 10.8% increase on the average price of that market. And on spot markets, we have a decrease in quantity of 53.2% on 31.2% increase in average price. This is a testament of our selling strategy to sell mainly on forwards and to be less exposed to the spot market. And now since the regulations have been lifted, we'll go mainly on this strategy. We have also on the balancing market, we have also decrease in quantity and decrease in price. And on the next slide, we can see the movement of price from 2024 to 2025. As you can see, of course, MACEE we didn't sell, but on all the other price markets, spot and competitive market, we can see an increase of about 20% on both, on spots from RON 390 to RON 512 and on competitive from RON 419 to RON 523, I think. On -- as you all know from 30th of June, that was the last day that windfall tax applied. So now from 1st of July, actually, we are in a liberalized market again. On a couple of words about OpEx. We have a general increase in OpEx of RON 456 million in 2025 versus last year, but with RON 281 million below budget versus last year, the main increase was due to the windfall tax, RON 394 million out of the total and some smaller increases in depreciation and amortization, personnel expenses by roughly 5% from partial adjustment of wages with the inflation rate and some other small operating expenses. And as I mentioned prior, the cost of uranium fuel of 26.6% increase. This is a traded commodity and it had a sharp increase in 2024 and beginning 2025, we are seeing now a reduction in those spot prices coming down from USD 90 per pound towards USD 80 per pound on the spot market. On CapEx, the capital expenditure in the first 9 months of 2025 was RON 2.2 billion versus RON 0.5 billion in 2024. This is out of the total investment program for the year of RON 3.4 billion. We have an increased degree of completion compared with last year, around 65% versus last year where we were at 42% almost. This is also a testament of better investment management, but also an increased maturity of our projects that are moved into a construction phase. So things are flowing more, how to say, natural now. On the CapEx, we will also discuss 5 of our main projects. Of course, the most important one is the Unit 1 refurbishment. I will only comment on what happened from our last call. In September 2025, it was approved by SNN, as borrower, of financing of EUR 540 million from a banking syndicate led by JPMorgan, and comprised from major banks in Romania as well. And also in September 2025, pursuing some -- we obtained also the construction authorization from CNCAN, the nuclear regulator in Romania. So in September, we were able to start the civil construction works with the consortium for the refurbishment project. And in October 2025, we signed a strategic agreement with EDF, with the French group. Actually, their Arabelle Solutions subsidiary for the refurbishment of the turbogenerator for the Unit 1. This marks the -- how to say, we signed all the major contracts that are forming the refurbishment contracting. So basically, now the project is in full implementation phase. On Units 3&4, this project is handled by our subsidiary, EnergoNuclear. Together with the syndicated loan for SNN for -- that I spoke earlier of RON 540 million, the same syndicate or the members of the same syndicate also signed -- granted a loan of RON 80 million for EnergoNuclear as borrower where SNN is guarantor to advance the works during the LNTP phase and to be able to finish this phase towards the end of next year where we have a decision gate for the FNTP phase. In terms of SMR, during the summer of 2025, RoPower Nuclear bought -- had the approval and bought the Doicesti site for the nuclear project. And I don't remember if we specified that already. In June 2025, NuScale Technology obtained the approval from US NRC, the nuclear regulator in United States, for the 77-megawatt module, the one that we are also using for our SMR Doicesti project. Going now to the CTRF, the Tritium Removal Facility Project. In the first 9 months of 2025, there were -- the progress on the project comprised from the contracting procedures for the long-cycle equipment, the installation works of the waterproofing membrane, and in May 2025, CNCAN approval was obtained to begin the execution works for the foundation. In June 2025, the pouring of the first concrete happened in the presence of the Ambassador of Republic of Korea and other guests. And in September 2025 works began pouring for the elevation 91. And our medical project, let's call it, the Medical Isotopes project. The project is still in the conceptual design stage. This will be followed by detailed design, component procurement and installation and commissioning of irradiation system, which is estimated for 2027. And subsequently to that in 2028, we aim to start the large-scale commercial irradiation service together with our partners from Framatome for the Lutetium-177. As we've mentioned in prior meetings, this is especially effective in cancer treatment. And we hope that through this partnership also this isotope to be made available to Romanian patients and we have this in written with our partners. Now we move to the technical performance. In terms of radioactive emissions, we were -- at 9 months, we were at 6.5 versus an annual limit of 9.5. So we were within the permitted ranges. The nuclear fuel burn-up factor in megawatts per kilogram of uranium, we were at 172 megawatts versus a project estimate of minimum 156 megawatts. So all good here as well. In terms of capacity factors, we are 94.42% in September and accumulated capacity factor of 87.26%. This number are for both reactors. And of course, they are accounting also for -- the accumulated ones are accounting also for the plant outage in May, June of this year. And I think that's all. We are standing by for any questions that you may have.

Andrei from BT Capital. So I was wondering if I understand correctly, you're planning to bring in an equity investor for the SMR project. Will this also be the case for reactors 3&4?

As you may see, there is a GMS convened for this topic. So yes, this is our intention. Regarding 3&4, in the support law that was passed in 2023, there is a mention about other investors, but also in that law, there it is specified that the government needs to advance and approve a method of selection for such investors regarding 3 and 4 project. This selection method was not yet, I'd say, issued by the Ministry of Energy. But we think next year, it will happen. And then based on that procedure of selection, we can know and discuss more.