S.N. Nuclearelectrica S.A. (SNN) Earnings Call Transcript & Summary

So we are about to start the teleconference for the preliminary financial statements. But beforehand, I would like to tell you that this teleconference is recorded for the purpose of being published on the website for every single investor or potential analyst that has an interest in this. So we would like to provide availability of the audio file. So thank you for your understanding. This being said, we will go straight to the presentation of the preliminary unaudited individual financial statements for 2025. And I'll give the floor to my colleague, Daniel Adam, CFO of Nuclearelectrica. Daniel, if you can hear me, please go ahead. Thank you.

Thank you. Hi, everybody. So the 2025 preliminary financial results highlights. The company result, a net profit of RON 2.4 billion, increased by almost RON 700 million or 40.4% above 2024 previous period net profit, and also with RON 371 million or 18.3% above the revised budget profit for 2025. We had an increase in sales of electricity of almost RON 1 billion in 2025. And the reason for that was the higher average selling prices, with 17.7% versus 2024, and also higher quantity by 2.5%, without considering balancing market. Also the financial result, we had an increase of 44.7% or RON 125 million as a result of the increase in interest income, mainly higher interest rates obtained for our cash deposits and other financial assets in 2025. As you know, last year we had also some political turmoil that led to increased rates in the market. We also had some increases in expenses, mainly the windfall tax. And this was driven, of course, by the higher average selling price of RON 535 per megawatt hour in 2025 compared with the RON 455 in 2024. We had also a 1.7% increase in OpEx, mainly due to the overall inflationary trends that we saw also in last year. Also as a result of the increased net profit, we had also an increase of income tax with 34%. So this kind of sums up this financial performance, that we can characterize as very good. We have also on the next slide a detailed income statement. I will not insist on it because the main elements we discussed. The general idea being that we had a quite significant revenue increase and quite, how to say, slight increase in OpEx, and this drove the profitability up. In the next slide, we have also, which I think is more telling, we have a waterfall on the net results in 2025 versus 2024. We can see that on the negative factors, we have the windfall and income tax, as we previously discussed. On other operating expenses, we had an increase of RON 64 million, mainly due to the inflationary trends. We have also a cost of uranium fuel, which comes from the increased commodity price that we saw in last year. And of course, on the positives, we have the sales of electricity and the financial result. In terms of financial position, we have a non-current asset increase of RON 5 billion or 62% increase. And this is coming from a couple of sources. RON 1.1 billion we have an increase in financial assets, measured at amortized cost. This is coming from an increase in loan granted to our project companies, RoPower Nuclear, which is developing our SMR project. We had an increase in loans granted of RON 680 million. And also for our project company, Energonuclear, which is developing the new builds, units 3 and 4, we had an increase of RON 438 million. We have also a high increase in net value of tangible assets, RON 2 billion of RON 3.9 billion -- RON 2.3 billion, we had an increase in the net value of tangible assets according to the revaluation process carried out at the end of last year. And of course, the appraisal was done by a certified ANEVAR appraiser. RON 1.6 billion represents the cancellation of the accumulated depreciation of the revalued assets, from the point above. And RON 1.5 billion reflects the net impact of the additions and disposal of tangible assets from the reporting period, as well as advances granted for investment projects, which are amounting of RON 689 million. As you know, we are having a quite robust investment program, and this is the effect that we are seeing. On current assets, we have a decrease of 16.7%, of about RON 1 million (sic) [ about RON 1 billion ]. RON 790 million is a decrease in cash and cash equivalents, including deposits. A comment here, we can see that even with this decrease, our cash and cash equivalents are still at a very comfortable level of RON 2.7 billion. We also had a decrease in other financial assets valued at amortized cost due to treasury certificates maturing in 2025, like RON 68 million; and a decrease in the position of taxes and duties through VAT to be recovered, RON 88 million impact. And these were offset by increasing short-term government securities, plus RON 30 million, and other receivables of about RON 10 million. We had also RON 54 million decrease in inventories and a RON 39 million decrease in trade receivables. In terms of non-current liabilities, we had an increase of RON 725 million or 181.7%. This comes from an increase related to the EIB loan disbursement, RON 80 million, during 2025. This loan is for our tritium removal facility, which is being constructed. And we have a RON 347 million loan increase from deferred tax liability due to increasing calculation base, net book value of tangible assets revalued at the end of the year. In terms of current liabilities, we had a decrease of RON 149 million, of about 10.8%. This is coming from a reduction in trade payables of RON 223 million, cumulated with the reduction in debts to the state, RON 59 million. These are mainly local taxes and duties. And these were offset by an increase in debt to fixed asset suppliers of about RON 69 million. Equity, we had of course an increase of revaluation reserve of RON 1.892 billion and retained earnings of RON 1.6 billion. Now, in terms of sales of electricity. We had, versus 2024, when we had a more peculiar year due to MACEEs still being present in the beginning of Q1, now we are seeing a decrease in -- we have of course an increase in weighted average selling price without transmission of 18%. And as we stated previously, an increase in quantity of 2.5%. MACEE, we have a reduction of RON 2.3 billion, as a result of the elimination of participating in this mechanism. And we have increase in competitive market of almost 300%, and decrease in spot market of 32.3%. On balancing market or PE, we have a 50% decrease in revenue, with 29% decrease in quantity sold and 29.4% decrease in price. So the mix was different. We see that the 2025 mix better represents our main commercial strategy to sell mainly forward. On the sales structure, 2025 versus 2024, of course, MACEE didn't apply anymore. And on competitive market for the PCCB, the quantity of electricity sold represented 87.3% of the total sales of electricity without balancing, compared with just 25.5% in 2024. Also, as we discussed, the selling price increase in this market, RON 530 per megawatt-hour from RON 474 per megawatt-hour in 2024, so an 11.8% increase. On the spot market, next day and intraday, the quantities of electricity sold during last year represented 12.7% of the total sales volume. And also, the price was higher also on this market, RON 534.9 in 2025 versus RON 422.8 in 2024. Now coming on OpEx. OpEx in 2025 was RON 3.375 billion, plus almost RON 300 million or almost 10% versus 2024, but with RON 253 million or 7% below the rectified budget. The main drivers 2025 versus 2024: Of course, the windfall tax. The contribution to the Energy Transition Fund increased by RON 215 million. And as we discussed, this is based on the higher average prices. Depreciation and amortization increased 7% due to the new assets received and put in function. Cost of traded electricity, we had a significant decrease of 31.3%. This comes from a decrease in days of unplanned outage and corroborated with the impact on the balancing market of these outages and also impact of acquisition prices during the outages. Since we didn't have the significant unplanned outages in 2025, then we kind of eliminated also the cost associated with them. Cost of uranium fuel, we had an increase of 23.3% due to an increase on the average cost of fuel bundles, which also comprised uranium, of course, and this increased as a commodity. But also there were significant increases in zircalloys, on the metal which is used, and last year we had quite a, how to say, high degree of uncertainty also around the tariffs policy between Europe, America and some other areas, which impacted especially these alloys. On technological and non-technological water and energy, we had a 5.8% increase due to higher utility prices. As you know, this is a regulated price, and based on some government regulations and recommendations, all these state-owned utility actors, like National Water Company and so on, have raised their prices in 2025. We have also an increase of 10% on costs with repairs and maintenance. This was correlated with the repairs and maintenance program in 2025. ANDR contribution for the waste management increased 30.6% due to increase in the price from EUR 2 per megawatt to EUR 4 per megawatt (sic) [ per megawatt-hour ]. What we're seeing here is it's a partial effect because we didn't quote a full year since the new levels were enacted by law starting October 2025. We have a significant decrease in the annual ANRE contribution of 37%. This comes from a decrease on the basis of computation of the contribution represented by the sales of electricity recorded in the previous financial year. Moving now on the CapEx. The capital expenditure in 2025, we had RON 3.4 billion during 2025, versus RON 1.3 billion in 2024, out of a total investment program of RON 3.35 billion. We have a very high degree of completion in 2025, 102.5% of planned, versus 2024 of 98.7%. In last year, in 2025, investment was made according to the planning of the year. And you have a table with a bit more detail. We are very happy with the performance of the investment activity for this year. And now going on the main CapEx projects. Unit 1 refurbishment. The Unit 1 refurbishment is in the second phase of its implementation, which includes the provision of financial resources for carrying out the refurbishment project, preparing the execution of the activities identified in phase one. And we already obtained all the necessary approvals and endorsements for project in implementation. In February 2025, the consortium sent the official notice of commencement related to the Engineering Procurement and Construction, the so-called EPC contract. The procurement procedure for the contract having as object: "Provision of services for the modernization of Turbine, Generator and their Auxiliaries systems of Unit Cernavoda, with the sole bidder Arabelle Solutions Romania in association with Arabelle France," was finalized and the contract was signed actually in September 2025. This was the last major contract in the refurbishment. As of September last year, 2025, we have all the contracts in place for carrying out this project to its 2030 completion. Also, the environmental agreement was issued in July 2025. And following that one, we obtained also the construction permit. In September 2025, it was approved, the contracting of the loan of RON 540 million from a banking syndicate led by JPMorgan and comprising all the major banks in Romania, for the financing of project refurbishment of Unit 1. That loan is not drawn yet, but it's fully available since September last year. Also in September last year, the civil construction works for the project infrastructure also began. And we mentioned Arabelle, which is part of EDF Group, signing for the turbine and ancillary systems refurbishment. Moving now to units 3 and 4. I will focus on the latest developments marked in blue. Together with the loan for the refurbishment of RON 540 in September last year, also Energonuclear signed for a -- with the same syndicate a financing of RON 80 million for the development of units 3 and 4. This is for supporting the financing needs during the LNTP phase that Energonuclear is currently carrying out. And that is planned to be finalized by the end of this year. During last year, Energonuclear, the project company, continued the preparatory activities for the development of units 3 and 4. They also developed the financial model, prepared the documentation for the notification of state aid that will be sent to the EU Commission this year. And progress was recorded in the development and the deliverables of the EPCM contract. And already they started the initiation of negotiation regarding procurement. I think that's kind of all for units 3 and 4. On SMRs, in 2025, the shareholders approved the Addendum to the Framework Loan dated August 2023, which comprises introduction to the contract object the financing granted from SNN to RoPower and the expense related to the acquisition of the Doicesti site, and the possibility for SNN within the same loan envelope of USD 243 million to grant guarantees for financing obtained by RoPower. In June 2025, NuScale obtained the approval from USNRC of the SMR NuScale VOYGR design, with 77 megawatts output, which is the same module that we are looking to implement in our project Doicesti. During summer, RoPower acquired the site, the land. This will permit the project company to further develop the regulatory approval process with CNCAN and develop further the project. The FEED 2 process was completed at the end of 2025. And on February this year, on 12 of February 2026, the shareholders also of SNN approved the final investment decision for the SMR project, a major milestone for this project and which positions Romania in the forefront of the SMR projects in Europe. On the Tritium Removal Facility project, the CTRF, in 2025, the following progress was made. The contracting procedures for long-cycle equipment were continued and finalized. The installation works of the waterproofing membrane were carried out following the completion of the excavation works in 2024. In May 2025, CNCAN approval was obtained to begin the execution works on the foundation of the tritium removal facility. In June, we had the pouring of the first concrete event, which happened in the presence of the Ambassador of Republic of Korea to Romania and other distinguished guests. In September 2025, we poured concrete at the elevation 91 m. And in October, we had the pouring for 92 m level for the tritium container storage chamber. Note here, the budget performance lagged in 2025 due to engineering delays. But corrective measures taken towards the end of last year are expected to drive improvements for 2026. And on the last CapEx project in this presentation, the medical isotope project. I will only insist on the development, in blue on the slide. The project is currently in the conceptual design stage. This will be followed by detailed design, component procurement, and the installation and commission of the irradiation system, estimated for 2027, with an intent that from 2028, the large-scale commercial irradiation service will be launched using the existing nuclear reactor infrastructure. In terms of technical performances and with respect to radioactive emissions, on both units 1 and 2, we are in green. We had during 2025 a level of 8.7 millisieverts, well below -- under the annual limit of 9.5 millisieverts. Also, the nuclear burn factor, this means megawatts obtained per kilogram of uranium burned, we have a cumulated rate of 172 MWh/KgU, well above the minimum of 156 megawatts per kilogram. In terms of capacity factor performance, we had a simulated capacity factor of 89.33%. Very satisfactory considering that Unit 1 is closing its initial lifetime of 30 years. That's about it. We are waiting for your questions. Thank you.

This is Eduard from BT Capital. I do have a couple of questions, if you will please bear with me. The first one is on the SMR project. So now that you have taken the final investment decision, do you have an estimate for the IRR return of the project?

No. Not yet. The project now, it's going to use a comparison of units 3 and 4 to this LNTP, or preconstruction phase, where the detailed engineering and the procurement strategy will happen. We do have some internal estimates, but clear IRR will be also announced when we are moving to the ready-to-build phase. Now still, it's not, how to say, certain enough.

And if I understand, you are going to start just with 1 modular reactor? And how exactly will you take the decision on if you add more? Will it be based on operational -- strictly operational performance or is it also based on the early financial results on using 1 modular reactor?

Yes. We saw also the press interpretation of this. Basically, this 1-and-5 approach that you speak of, the procurement will be done for 6 reactors, with some clarifications here. Due to the nature of, how to say, the first-of-its-kind nature of the project, anyway for regulatory requirements, to install 1, and after 6 months to 1 year, to install the others. So in terms of procurement, it doesn't really make sense to procure 1, install it, and then to start the procurement of the other 5 because these are long lead times materials. So this will negatively impact the project implementation schedule. This, how to say, guarantee from the supplier for the other 5 based on the performance of 1, you need to see it as a performance guarantee from the supplier, from NuScale, which will ensure adequate participation and involvement of the technology provided into the project since they will have skin in the game. This is -- but the procurement will be done for the whole batch of 6 from the beginning, but there will be a performance guarantee from the supplier in this respect. So it's not 1 and then we procure the other 5 -- the company will procure the other 5. I hope this clarifies a bit.

Yes, understood. And for my last questions, I was wondering why is the effective tax rate in the last quarter so much lower than usual? On my calculations, it's around 7.8% of pretax net income.

Can you repeat? I didn't understand what indicator was.

So I was looking at the net income tax expense for the quarter. And if I'm comparing it relative to the profit before income tax, it's around 7.8%. And I was expecting somewhere around 16% as per the corporate tax rate.

Yes. As you know, our tax sheet is quite complex and it's not a direct, how to say, calculation on the profit by applying the corporate tax rate. We do have deductions, investments, deferrals and so on. So it's a more complex calculation, which also factors in the effect of the investment program.

I'm sorry to step in, but Daniel, we have 2 more questions from Mr. [ Bogdan Natarau ] on the chat. I'm not sure if you're able to see those.

Can you read it? Because I'm on the phone actually.

Yes, I'm about to do this. So the first one: Why Nuclearelectrica is not following the example of Hidroelectrica to enter the energy suppliers market?

That's according to our strategy. We don't have that in our current strategy. But of course, we are looking on what the others are doing. So far, it's not part of our strategy.

The second one, this one is a little bit longer. So which one is the estimated cost for bringing into operational the Doicesti project based on SMRs? And which one is the most realistic deadline for having this project operational, considering that, not far than yesterday, the U.S. Nuclear Regulatory Commission approved NuScale's technology, receiving the certification being the first world SMR approved? So basically the first part of the question is which is the estimated cost for the Doicesti project. And the second one, if I'm about to split into 2 parts, is which is the realistic deadline for commissioning.

On cost, it was also together with the approval on the 12 of February, we are looking now at a USD 6.2 billion cost. But mind you, this is cost Class 3. And the project team and the project company is quite, how to say, confident that these costs can be even driven down. In terms of timeline for commissioning, this will also -- we are very happy with the NRC decision, but the timeline of the project, it will mainly be impacted by the procurement chain. But we are looking early next decade as being the commission date for this project, the beginning years of 2030s.

And one more question from Mr. [ Natarau ]. What means, and I quote, "After NuScale will prove that the reactor works, Nuclearelectrica will procure the other 5 reactors?" Like this is the press report. How many years of testing?

This, again, the procurement most likely will be for 6. With the performance guarantee for units 2 to 6. Otherwise, it will unnecessarily lengthen the process with about 4 years. And I think it was also another part of the question. Can you repeat, Valentina?

No. This was the only part. Mainly, it was a quotation from the media: "After NuScale will prove that the reactor works, Nuclearelectrica will procure the other 5 reactors."

The provement of reactor, and it's not about working, it's working in the parameters of output and so on, this I understand has a gap in between the commissioning of Module 1 and Module 2 of 1 year. Anyway, all the time -- I'm not a nuclear engineer, but I understand that to get a staggered approach, a sequential approach, when you are commissioning modules or reactors, it's kind of the industry standard. And we have a good example close by, also units 3 and 4 will be about 9 months to 1 year apart in commissioning. Nobody wants to commission 2 reactors, large or small, in the same time, or 6, even less. So this is also a nuclear regulation, how to say, approach.

Daniel, we have one more question from Mr. Caius Rapanu from BCR regarding our sales mix going forward and how far ahead have we already concluded these contracts.

We are working in, how to say, in the same way of 2025, meaning that we have concluded for this year and even next year and so on. And as you also noted from the press a couple of months ago, we are trying to look also on a very long, how to say, time lines in the future.

Any more questions? Well, if not, thank you very much for joining us. In a short while, we are going to publish both the presentation and the audio file on the website, on the Investor Relations page. And a bit later on, we are also going to publish the transcript of the conference. Thank you all. Have a good day. Thank you, Daniel.

Thank you, all. Bye-bye.