E.ON SE (PNK:EONGY) Q3 2024 Earnings Call Transcript

E.ON SE (PNK:EONGY) Q3 2024 Earnings Call Transcript November 14, 2024

Björn Siggemann: Hello, everyone, and welcome to our Nine Months ’24 Results Call. Thank you for taking the time to join us. I’m Björn Siggemann, part of the IR team and will be moderating the call today. Unfortunately, Iris is not able to join us due to sickness. I’m, however, pleased to be here together with our CFO, Nadia Jakobi, who will give an update on our financials. As always, we will leave enough room for your questions after the presentation. With that, Nadia, over to you.

Nadia Jakobi: Thank you, Björn. And a warm welcome to all of you, from my side. Let me walk you through our solid nine months financials. To start, here are my three key messages for today. First, in the first nine months of the year, we have achieved an EBITDA of €6.7 billion and an adjusted net income of €2.2 billion, both in line with our expectations. These results cover 75% of the respective guidance midpoints for the full year. This puts us in a comfortable position to achieve our guidance, which we fully confirm. From an underlying operational perspective, our results show year-over-year EBITDA expansion in the low triple-digit-million euro range. This is a continuation of our operational delivery in H1 and puts us well in line with our full year growth targets.

Second, investment-driven earnings growth and operational execution remain the key underlying growth drivers across all our segments. Our planned investments are developing well and increased 20% year-over-year. Our supply chain strategy, which entails high standardization and long-term visibility to our diversified supplier base, it continues to be the right one. We procure the right materials and components at competitive prices and remain confident in our ability to meet our CapEx targets. Third, our nine months END outturn of around €41 billion provides a solid foundation not only for our current investment plans but also for future potential increases if returns are sufficiently attractive. Let’s now move on to the details of our nine-month EBITDA development.

Our adjusted EBITDA reduced by €1.1 billion because of positive timing and one-off impacts in 2023. Adjusting for these, we see a solid low triple-digit-million increase, building upon the growth trajectory we have already seen through H1. Looking into the nine months year-over-year drivers, let me start with Energy Networks. We have seen significant EBITDA growth driven by our accelerating investments into the regulated asset base across all regions. In our largest market, Germany, additional growth came from positive inflation indexation of our regulatory revenues. The underlying growth is compensated by various timing effects both in 2023 and 2024. In our second largest market, Sweden, RAB-driven growth was supported by the significant increase in regulatory RAB in 2024.

The impact from these two continuing positive drivers was slightly dampened due to the end-of-network loss recoveries which we received in 2023. In Central Eastern Europe, investment-driven earnings growth was offset by the adjustment in accounting for our Slovakian operations to a net equity basis, resulting in a technical EBITDA reduction. In South Eastern Europe, our successful regulatory management led to year-over-year growth largely due to further network loss recoveries. To make our underlying operational performance more visible to you going forward, we are currently considering to adjust for the value-neutral timing impacts on our Energy Networks business. If and when we will introduce this will be decided in the next coming months.

Q&A Session

Moving on to our energy infrastructure solution business. Our investment-driven growth is progressing well in the segment, with a 48% increase in investments compared to last year. On a nine months basis, underlying growth is still overcompensated by the 2023 one-off earnings as well as lower volumes in our district heating and cooling business due to warmer temperatures, both related to H1. In Energy Retail, we have now already achieved slightly more than €1.7 billion EBITDA in the first nine months of this year, and we are well on track for our full year guidance. The year-over-year drop in EBITDA is caused by last year’s positive one-offs, which were concentrated in the first nine months of 2023. As a reminder: The 2023 one-offs came from procurement optimization benefits and the U.K. tariff deficit recovery.

Our B2B performance in the U.K. remains particularly strong this year, slightly overcompensating for the lower volumes due to warmer temperatures in H1. Let me conclude by reiterating that our nine months results put us well on track to achieve our 2024 guidance. Moving on to Slide 4, no surprises in the adjusted net income development for our nine months results. The bottom line essentially follows EBITDA development. All earnings elements below EBITDA are in line with our expectations. When looking at our underlying adjusted net income, we are well on track for our promised underlying growth for the full year. Let us now move on to our economic net debt development. When it comes to investment spending, our execution remained strong. Our group CapEx fill rate now stands at 65%, which is around 4 percentage points ahead of nine months 2023.

Economic net debt turned out broadly flattish versus H1, driven by operating cash flow more than covering investment spending. In the third quarter, pensions moved up by a low to mid-triple-digit million euro mainly due to the fall in rates between the end of Q2 and Q3. With a year-to-date cash conversion ratio of 73%, we are well on track for our full year cash conversion expectation of around 90%. Our pension provisions and asset retirement obligations are sensitive to the movement in risk-free rates. If rates were to stay unchanged versus end of Q3, I would expect economic net debt to come in slightly above €41 billion at year-end. To conclude. Our solid END path continues to confirm our view of having strong balance sheet capacity to fund our current investment program and a potential future upgrade provided that regulatory conditions improve.

Finally, I would like to close the presentation by fully confirming our guidance. The key points you should take away from today are, first, our solid nine months performance supports 2024 earnings expectations, particularly within the Energy Networks and Energy Retail segments. We continue to expect the Energy Infrastructure Solutions segment to be in the lower half of our €550 million to €650 million guidance range due to the lower district heating and cooling volumes driven by warmer weather in H1. However, we also continue to expect the other segments to compensate for the temporary effects in Energy Infrastructure Solutions. To sum it up: We still see the midpoint of our group guidance range as the best estimate for our full year results.

Second, our investment ramp-up is progressing well, which fully supports the delivery of our mid-term targets. Finally, our balance sheet remains healthy. We will continue to focus on attractive value creation via organic growth opportunities while rewarding our shareholder with a growing dividend. With that, back to you, Björn, for the Q&A.

A – Björn Siggemann: Yes. Thank you, Nadia. [Operator Instructions] And then let’s kick it off. I’m just being told that, Harry Wyburd from Exane, you are the first one, please.

Harry Wyburd: So I hope you can hear me okay. So two, please. So firstly, I guess, an obvious one, but the election and how that might impact things. I think you mentioned just a second ago that you still felt there was room to raise CapEx if you have the right regulatory returns, but could the election change that or jeopardize it? And do you think a CDU-led government would be open to higher CapEx; and ultimately, I guess, high grid fees, which I think they’re trying to subsidize or proposing to subsidize in the future? So that’s the first one. And then secondly, you mentioned that you’re looking at adjusting your earnings for timing differences. I presume there’s quite a lot of work that you would still need to do on that to figure out where things land, but just at the moment, directionally if we think about next year’s earnings and future years after that, would you expect that adjustment to be a positive or a negative one?

I mean clearly, this year and last year, it would be negative, but I’d be interested to know where we stand or how many timing effects you have in your budgets for future years.

Nadia Jakobi: So I’ll take your first question, first. Of course, there has been a lot of turmoil in last couple of — last 10 days, but we feel very well set up, also when — we have been disclosing quite often that we have got this NAP, this national development plan for grids; and that we have got some 50% headroom towards this national allocation plan. So we feel that there is still quite a lot of room to go in — before we actually would see our investment program endangered, which we don’t do. We have been looking very — in very much detail into what CDU proposes. And we see a lot of positive things in that. Very clearly, there was this, a point around reducing network fees, but that by no means mean that sort of our shareholder remuneration or the returns would be cut.

But it would be just a subsidization from the government for the grid fees and sort of taking funds from CO2 levies and using that for lower grid fees, which we clearly support. If you look a bit deeper into what has been discussed over the last days and then you — also the interviews that Jens Spahn has given and if you look into the details of the paper of the CDU, you can see that there is, even to the opposite, a clear stance that the returns for grids need to increase to a level that is comparable to other grid infrastructure in Europe; and is clearly superior to bond clears, et cetera. So if you look into these kind of interviews, you can see that there is a stressing the point that it is beneficial to increase returns on the grid side in order to help the energy transition.

In general, we also think it’s very positive when you look into — we have, I think, a couple of things, a more pragmatic approach that is in the CDU paper, more pragmatic, more cost efficient, market economy-based, technology open. That all in its totality lead to a more affordable energy system which is then overall getting sort of more better social acceptance for the energy transition, which we then also clearly support. And other elements around grid digitalization, we feel — that is, anyway, what we are pursuing, but we also — I think it’s very positive that this is being stressed…

Björn Siggemann: The second one was on timing differences and the normalization.

Nadia Jakobi: Yes. So yes, Harry, I hope you will understand that you will need to bear with us on that topic. We are now in the process of deciding if and when we are going to do it. At this point, we are not disclosing any impact that would have on our key figures.

Björn Siggemann: Then next question comes from UBS, Wanda Serwinowska.

Wanda Serwinowska: Nadia, two questions from me. The first one is on the nuclear. There is a lot of noise in Germany if a new — old nuclear will be back, so can you please comment from the technical point of view? Is it feasible? I mean, what have you done, so far, on Isar 2? What would be needed? And the second part of the question, would there be still a fit for E.ON supply in Germany? Or would you be interested in running nuclear assets in — one nuclear asset in Germany? And the second question. Sorry for coming back to CDU’s here. So I think in the paper they were also mentioning some cost efficiencies to make things, I think, in — it’s all about costs, right, so do you expect more scrutiny from the regulator around CapEx spend or cost efficiency? Because we all know this is a very important part of your earnings. That will be appreciated, any comment from you.

Nadia Jakobi: Yes. On the nuclear side, I think that has been discussed a lot in previous calls. And we can just say we stand by what we have been saying earlier, that there is no economic, sensible way of bringing the plants back, yes. And yes, I understand that you would also — you have now specifically asked for technical. I would just leave it as that even if things could theoretically technically be possible. If it — they’re not economically sensible, there’s no point in doing it. So then the second question would be around cost efficiency. So I — we looked in depth into the cost efficiency topics. And I think what was very clear is currently we have got huge waste from the redispatch cost. And via higher digitalization, more investment in that, that can truly then go away.

Then secondly, we have a lot of cost inefficiencies by ideologically saying, “Okay, it needs to be this way,” and without having market-based systems, so — and then cost efficiency. We — as a big and performance-orientated company, we have benefits in our cost efficiency. And if you ask me, if anything, I think that is going to improve our comparable cost efficiency to the smaller operators because, with more investment into digitalization, that is, of course — from a cost digression point of view, of course, more beneficial for the big ones. So therefore, I don’t see any negative headwinds coming from that to us; if anything, positive.

Björn Siggemann: The next question comes from Goldman, Alberto.

Alberto Gandolfi: The first one is on networks. I really appreciate the comment by CDU as well about properly remunerating networks, so I wanted to ask you quite a broad question. Can you please tell us what is in your view an appropriate rate of returns, particularly for Germany networks? Is a return of 7% pre tax on new investments the right one also on the existing assets? Or is perhaps the 7% falling short of what you think it should be? And can you maybe give us an update of where we stand on the court case with the regulator? I understand there’s a public hearing before Christmas. Can we get a decision? Is it next year? Can there be a settlement? So just broadly on returns. The second one is quite specific on numbers. To me what I noticed was perhaps the networks were a little bit lower than what I thought.

And retail was better. And I have two questions here to try and understand and clarify the underlying numbers. The first point is can you tell us the weather effect that was a headwind this year by division. I was calculating 150 million, 200 million headwind, but I’m not quite sure. Now if there is a weather effect, the underlying numbers are clearly much stronger. And also I think, this year, you were supposed to release like 400 million of provisions or so in networks. Where do we stand on that? Did you do 3/4 up until today? Or did you do less, so we’re going to see higher network profits in the last quarter? I stop here.

Björn Siggemann: Yes. Magically, yes, condensed two questions, so…

Nadia Jakobi: Yes. I was about to say that, for the first question, it sounded for me a bit like more like two questions, but never mind…

Alberto Gandolfi: [Yellow card. Apologies].

Nadia Jakobi: Yes. So I think, on the specific return requirements, you know that we are sort of addressing our demands directly with the regulator and don’t necessarily go via our earnings call, but what I can say is you know that we have got this very strict value creation criteria, i.e., that we have 150 to 200 basis points surplus over on top of our pretax cost of capital. And of course, our largest entity, Germany, lives up to these expectations as well. So therefore, if you combine that — you know as well that we’ve got — for further increasing our investment program, that we would need to be able to get — to adhere to the strict return criteria, also under a larger CapEx envelope. As you know, that we’ve got some elements in our EBITDA that not necessarily scale with higher investments. That would then imply that the overall function, the overall return function, needs to work. So that’s that. Then…

Björn Siggemann: Update on court case.

Nadia Jakobi: Update on court case, yes. I said it yesterday a bit. There was this one update that we had over the course of the last quarter, which was the Xgen, which is the 0.91% — which was consulted at — now at 0.91%, which was fully in line with our expectations. Other than that, there is, honestly, no further update, as we’ve been saying the last couple of calls. And we see the results of the court case coming in 2025. We have a clear process on the RP5 in Germany, where we expect sort of the first framework at the beginning of 2025 but then more clarity around the parameterization of the different elements over the course of 2025. So there is really no news on that. Sort of we are following up on what we have been saying and disclosing earlier.

Then on your detailed question and knowing that you’ll do the numbers always very well. Yes, I think we highlighted it. In the first half, we had some elements in there, some lower volumes driven — lower volume driven by weather in the networks area and also some higher upstream network costs. So as these are value neutral — and they’re not the largest numbers, but as they are value neutral and we are still targeting for the midpoint of our guidance, you could then see that there might be a small surplus on the underlying growth for the full year on the Energy Networks segment.

Björn Siggemann: With that, next question come from James Brand from Deutsche Bank.

James Brand: A couple of questions from me. Firstly, on the kind of regulatory reform process or the process regulators are going through thinking about regulation for the next regulatory period, I think there’s been quite a few — well, at least some consultation papers already. I was wondering whether you could just kind of summarize for us where you think the debate is at the moment; whether you think there are any kind of developments that regulators bring up that would be interesting in terms of the path of regulation, where it’s going. And then the second question. Obviously, even without increasing your CapEx envelope even further, the CapEx you’re spending on networks is ramping up very materially. It’s kind of almost doubling from where it was like a year or two ago, for where it will be in a year or two.

How are you finding the supply chain? Because that’s — people ask about a bit more for [indiscernible] distribution, but do you think the supply chain is there? Are there any bottlenecks? Is there anything you’re having to do to try and build up the supply chain before you can ramp up the CapEx? Just your thoughts on that would be really interesting.

Nadia Jakobi: Yes. I think, James, coming to your first question: We see the discussion with the regulator as very constructive. To maybe highlight two elements, that is what is currently being discussed, is that we sort of returned the return regime to a simpler WACC system. And the second element is sort of how do we manage to get a bankable return framework to ensure that we have — that also the smaller DSOs can actually finance the energy transition. So that would be two elements. And of course, you know about KANU and the things around faster depreciation of our gas assets, yes. And then when it comes to supply chain, I think we have — I can just reiterate what we have been saying. We have been focusing on securing our supplies very early on.

We started with that as part of the [Edison] project that was announced three years ago. And we have long-term framework agreements. We have really secured basically everything for the next — for 2025 and 2026. We give — we are very large offtaker of the supplies. That’s why we can — we really count on the three things. We give very long-term visibility to our suppliers, and we have a very diversified supplier portfolio. And we really look into standardization to make it easier for our suppliers sort of reducing number of pilots from more than 100 to 20 different sorts or reducing the number of transformers from 100 types to 20 types. And then via sort of this massive scale-down of variants, we can then also make sure that we are in a position to — and to secure our supplies early on.

So that’s why we are very confident that this is not going to be a limiting factor for our build-out plans.

Björn Siggemann: The next question comes from Pujarini Ghosh from Bernstein.

Pujarini Ghosh: So if I go back to the elections; and specifically your thoughts on the potential slowdown in renewables build-out, which is probably being hinted at in the position paper. Do you see any implications of that on your future CapEx plans? And my second question, on the numbers slightly. So Nadia, you just mentioned that your — if rates were to remain where they were at nine months, net debt would be slightly higher than €41 billion by year-end. Was that correct? And does it imply a subtle change from the H1 guidance, which was around the level of H1, by year-end?

Nadia Jakobi: And so maybe I’ll take the second one, first. No, that means that — underlying means, from a cash point of view, we are guiding to exactly the same area, but it’s just the interest rates affecting the AROs and the pensions that make the difference. So there is not a subtle change in that element. Then coming to your first point: I think, when it comes to the build-out plans for — from our perspective, the build-out plans are fully intact. You’ve got the 2030 climate targets that have been ratified by the EU. And then there is no change that can be actually done by a potential new German government. Then you then look into sort of the most likely constellation, an all-CDU-led government — or most likely coalition to be CDU and SPD.

You can see that they’re sort of basically pretty much in-line what they are saying, yes. I’m, we are very confident for our CapEx program. As I indicated earlier, we have done a significant haircut. And we don’t only do this growth in grid. We have the build-outs. We have the current build-outs for renewables, but the grid now needs to follow what we have been seeing as redispatch cost, yes, so it is highly economically sensible, as you know, after this huge ramp-up of renewables first, that we now go and make up the pace also on the grid side. Yes, okay, yes…

Björn Siggemann: Then the next question comes from Meike Becker from HSBC.

Meike Alina: I have two. Would you mind sharing with us your updated outlook on your main retail markets in the U.K. and Germany? How is competition developing? How do you feel about the outlooks for margins in those markets? And the second question is a little bit broader, also on Germany, but it starts with the build-out of the transmission system. And maybe, if you have views if that is going according to plan or if that is maybe delayed, if you would share that with us, that would be great. And if there are then maybe implications for you. For example, if, I don’t know, offshore wind is behind target and offshore build-out is slower and we are looking more to solar and onshore, would that then kind of lead to more investments on the distribution side versus the TSO? Or is it the opposite? If there are not the TSO investments, then there are also some things you can’t do. If you have any views on that topic, that would be great.

Nadia Jakobi: Yes. So coming to your first question, Meike. So the retail business is developing absolutely in line with our expectations. We haven’t seen any bigger changes on the market. In the U.K., there was some increase in market churn but in no way comparable to the past due to the new announcement of the price cap. As you know, as we are providing attractive offerings to our customers, market churn means both things. We could lose more customers, but we can also gain more customers, so that is in principle a neutral thing. In Germany, we’ve seen some very high churn in the market in the first quarter. That has been normalizing now, but of course, there is still the usual normal business environment. That’s churn happening.

And as we say, we are having attractive offers. We are the — one of the largest in the market. We’ve got a portfolio effect, so market churn increasing also means that we can actually gain customers. And if you can look at our H1 numbers, we actually — we are sort of broadly in-line. And we actually increased our customer numbers a bit in the Netherlands. Then yes. So when it comes to TSO, yes. So there is large investments for the TSOs. And I understand your question now, but if there was less offshore, if that would then mean even more connection for onshore and solar, yes, I don’t want to on — speculate on that. I know that I currently have more than enough opportunity to invest, so that will just then potentially even more increase our opportunities to invest.

Then when it comes to we — I think what we highlighted in some instances, we are actually limited by how much a TSO invests, for example, when it comes to connection points. We discussed about that we have 6 gigawatts of data centers that we want to connect. And in some area, due to the connection points with TSOs, it takes that long, as such has that much backlog. That is actually sometimes hindering us to sort of invest to the full potential because that’s a limiting factor for us.

Björn Siggemann: Next question comes from Citi, Piotr.

Piotr Dzieciolowski: I have one follow-up on the supply — well, on the supply division; and the other I have, on the grid fees. So with regards to the supply, I wanted to ask you whether if you can take us through the bridge between the ’24 and ’25. What is that in ’25? You have the B2B large benefit in the first quarter of, in U.K., this year; and so on. So market is looking basically for a flat margin. And I just would like to get some kind of a hint from you whether that’s a right assessment of the situation given somewhat small rising competition pressure and these special kind of B2B benefits in the first half of the year. So that’s the question number one. And the second question. I wanted to ask you about the grid fees.

How — because you’re talking about the 10% of the RAB increase in Germany. Grid fees, I guess that’s including the dispatching costs, they’ve been rising 10% a year over the last five years, so I just wanted to understand. How do you think the grid fees within the bill will increase, based on your kind of — for your customers across your business plan until ’28?

Nadia Jakobi: Yes. I, of course, understand your interest in 2025. You will understand that we are at the — at this moment not yet disclosing on 2025. What I can say, however, is, yes, we have seen some extraordinary-high positive effect in U.K. B2B. We are very happy how the business developed, but some of the earnings that have materialized in this year were still contracted at times when we were able to get much higher risk premia. Then we also said that — coming back to Alberto’s question, that there were some volume-driven negative effects in our supply business in Q1. So that’s what I can highlight with regard to this respect, yes. It’s very tough for us to guide on the development of grid fees. As we’ve been discussing earlier, first of all, this — the big element in there is it’s a combined TSO and DSO grid fee.

I fully take your point. Redispatch costs are, from a price perspective, a downwards development, but it’s very hard to predict from a volume perspective, because more and more renewables have been connected, how — that from a volume perspective, redispatch can, of course, go up, yes. Yes, I hope you understand that I — because there is not that many variables, I’m — we don’t have — we are not disclosing our own view on how our grid fees are going to develop.

Björn Siggemann: So next question comes from Ahmed Farman from Jefferies.

Ahmed Farman: Two — probably two high-level questions, but — so I mean you’re clearly talking from a position of strength about the need for further investments, but there seems to be a lot of things going in the background. There’s the court case, the consultation, German elections. And then you will have to do some supply chain work for the additional CapEx above the current base plan. I just want to know if you can give us a sense of the time line when you will be able to put this all together for us. Is this something for second half of ’25? Is it for ’26 or even earlier? We’ll be very interested to know when the points can become visible for you to turn it into a business plan for us to understand, number one. Number two, on — so it seems like in the context of elections there’s a sort of broader debate about affordability, but we are also talking about more CapEx, more investments — sorry, higher return, both at the TSO, DSO level.

And at the same time, it seems to me that generally there’s sort of inflation in the component and equipment that go into the grid. What — could you just help sense — help me? Like what is the — in the context of this selections and the debate, what is the proposal out there to — that ties these things together? Is it just to simply move some of the grid fees to — and fund it another way? Or are there going to be trade-offs and we’re going to see some sectors getting prioritized, other getting deprioritized? A little bit sort of perspective on that would be helpful.

Nadia Jakobi: Yes. I think you summarized it — coming to your first question. You summarized it very well. There needs to be a couple of things that come together. And we’re — very clearly want to have a better visibility on the regulatory framework. And as we have got very strict value creation criteria, the visibility needs to be right in order to commit to a higher-CapEx plan. And you highlighted and we have said, okay, we expect that more regulatory visibility is going to come over the course of the year 2025, yes, so we haven’t set ourselves a direct timing, but of course, if we got, get more visibility into a year, we would not be limited to year-end dates or for our year-end call to give updates on that, but we could also do that into a year, in the different quarters.

Then to your second point. So very, very clearly, this reduction of grid fees that was highlighted in the CDU paper is only about sort of providing more subsidies into — providing more subsidies and sort of, via that, increase electrification. And via that, you get also then more people to share on the infrastructure cost, so that is a virtuous circle, yes. It was very clearly not that anybody — it was very much the opposite, saying, okay, look, the return requirements on grid investments — and if that is a bit higher, that is not the big cost of the energy transition. It’s rather the opposite, that if it is easier to fund a bigger CapEx envelope for the whole energy transition, it’s then better to provide better returns for the overall funding situation.

And if you compare the cost of a higher equity return to the cost of what we are currently affording by redispatch costs because we have got the bottlenecks, that is a huge gap between the two, yes. So when it comes to — you talked about affordability, inflation. And there I would go back to what I said at the beginning of the call. All the points that have been highlighted around market-based, not ideologically but technology-open, pragmatic approaches, that all brings us sort of to a more cost-efficient system. And via that also brings — it’s then easier to afford the energy transition.

Björn Siggemann: So next question comes from Rob from Morgan Stanley.

Rob Pulleyn: Quite a lot of ground covered already. Can I just clarify two things, hopefully, relatively quick? The first one is with the supreme court ruling. Could we just understand the lay of the land of the outcomes if the supreme court rules in favor of the utilities and against the regulator? Is it automatic that you get the higher allowed return currently for CapEx on the entire RAB? Or then do we go back to the drawing board to find a compromise rate? I appreciate you won’t want to say what that rate might be, but just to understand the range of outcomes and the mechanics would be super helpful. And returning all the way to the start: And I know you wanted to put this to bed, but — so I apologize for reopening it. You said the economics aren’t sensible on nuclear. And so just conceptually for clarity and closure, if the Chancellor of Germany calls and asks for a nuclear restart, what would E.ON ask for to make it economically sensible?

Nadia Jakobi: Yes. So I will go for the first one. So if we win, the BNetzA will need to come back with a new proposal based on the court ruling, yes. And to the second: We are not speculating on that. We have been — if then the new chancellor would call, then — yes, we are not speculating, but we are not — that is now very hypothetically, like a couple of hypotheses in a row; and we wouldn’t speculate on that.

Björn Siggemann: So next question comes from Ingo Becker from Kepler Cheuvreux.

Ingo Becker: Can I just ask on your investment prospects? Just in case we see bigger change under conservative governments in the U.S., Europe, Germany, would there be any potential implications for your gas network investments? Maybe, will there be additional catch-up needs of maybe lowered maintenance that you did in anticipation of moving over to electricity faster and/or even maybe expansion prospects in the gas networks? I know it’s early stage but just wondering if maybe there is more headroom. And a quick follow-up, could you confirm that the overall €42 billion CapEx plan of yours, which I understand has generally limited lead times, has limited or no stranded cost risk just in case we see bigger change on the political side?

Nadia Jakobi: Yes, yes. We’re, of course, fully aware that the “drill, baby, drill” demands of new Trump agenda and the — focus on gas. For us, we see in Europe still a speed-up for electrification. We are maintaining our gas distribution networks in a safe way, so that’s why — and as the currently foreseen exit dates are 2040 and 2045 and depending on the different states, there is still some way, some quite long distance up until then. And of course, we would need to orderly maintain our gas distribution networks up until then, so I don’t really see a big — that being a big — the changes in the U.S. policy not really anything with a significant impact on us, yes. Then €42 billion CapEx envelope. I don’t see a stranded asset risk.

As you know, we have a significant haircut compared to the national — compared to the NAP. And currently we are investing in order to connect renewables in order to connect new customers. That’s approximately 50-50. That goes then hand-in-hand with more electrification. We are investing into sort of the reinforcement. We are investing into the digitalization. I couldn’t foresee any market scenario where that wouldn’t be sensible to do.

Björn Siggemann: I think the next question and the last question comes from Alberto Gandolfi.

Alberto Gandolfi: I promise it is one, just trying to gauge the underlying EBITDA for networks for this year. You have a guidance of €6.7 billion, €6.9 billion. And I know there’s lots of growth, but I’m trying to understand the underlying number. Am I right in thinking that, this year, E.ON is going to book extraordinary positives of about €400 million, which is about one year of organic growth? And if it is true, you’re booking €400 million, how much have you booked in the first nine month? How much is it — left to book? So is it evenly spread by quarter, the €400 million provision release; or is it more back-end loaded in Q4? Because if it’s the latter case, then the numbers are better. So that’s what I’m trying to figure out.

Nadia Jakobi: You make it hard for me that I now during the call and — also need to do hard calculations. So what I can confirm is we — when we had our full year results. On full year results, we said on the EBITDA we are looking, for the overall group, to some approximately, ballpark €300 million year-over-year underlying growth, yes. And when you then take a low triple-digit-million euro sort of negative hit on the regulatory account, compared to what we thought at the beginning of the year, that would then — and this €300 million were mainly coming from the networks area. A small part was in positive in Energy Retail, and a small negative in corporate headquarter. And retail and corporate headquarter approximately netted themselves out.

If you look at the €300 million positive underlying, you would have a small expansion to that compared to the small negative variances which we’ve seen in the first half, which would be, of course, positive, would be recouped via our regulatory account. So the €300 million would be then on the networks side more €400 million.

Björn Siggemann: I think then we have answered your questions. If there are any further questions popping up, please feel free to reach out to the IR team. We remain at your disposal. And apart from that, thank you very much for taking the time and dialing in.

Nadia Jakobi: Thank you.