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Portugal's EDP says on track to improve ratings despite pandemic

LISBON, Sept 4 (Reuters) - Portugal’s largest utility, EDP , has a resilient balance sheet and is on track to improve its credit ratings by one notch to BBB despite a heavy impact from the COVID-19 pandemic, its interim chief executive said on Friday.

On Thursday, EDP reported a 22% drop in first-half net profit to 315 million euros ($372 million) after the pandemic reduced energy consumption in Iberia and Brazil.

Consolidated net debt was stable at 14.1 billion euros compared to a year ago or 3.7 times EBITDA (earnings before interest, tax, depreciation and amortisation) while capital expenditure increased 11% to 920 million euros.

Standard & Poor’s and Fitch rating agencies have EDP on a long-term rating of BBB-, just one notch into investment grade, while Moody’s places it at an equivalent level of Baa3.

Interim CEO Miguel Stilwell d’Andrade said EDP was focused on its business plan and “the objective of trying to move to a BBB rating and need to be consistent in the way it moves in that direction”.

“The transactions we are doing are allowing us to get a little bit more freedom to move towards the BBB (level). We are moving in the right direction and on track,” he told a conference call with analysts, adding that the balance sheet will end the year “where we wanted it to be”.

Despite the pandemic, he maintained the guidance of a recurring net profit between 850 million and 900 million euros in 2020 versus 854 million euros in 2019. The recurring profit excludes one-off impacts.

EDP expects to achieve a recurring EBITDA of 3.6 billion euros in 2020 against 3.7 billion euros last year.

“We were heavily impacted by COVID-19, but fortunately we have other (items) which can allow us to mitigate that impact on a recurring basis”, Stilwell d’Andrade said.

EDP’s shares were down 3.9% at 4.202 euros in afternoon trading. (Reporting by Sérgio Gonçalves, editing by Andrei Khalip and Emelia Sithole-Matarise)

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