EDP Renovaveis SA

ELI:EDPR

Earnings Call Transcript 2018-Q1

[Operator]

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to today's EDPR 1Q '18 Results Presentation. [Operator Instructions] I must advise that this conference is being recorded today, on Wednesday, the 9th of May, 2018. I would now like to hand the conference over to your speaker today, João Manso Neto. Please go ahead.

[Rui Antunes]

Hello. Good afternoon, ladies and gentlemen. I'm Rui Antunes, the head Investor Relations of EDPR. I'm here with João Manso Neto, the CEO. Welcome to EDPR First Quarter 2018 Results. We will start this conference call with the highlights of the period. We will go through the details of the result, then we have some conclusions. And afterwards, we will open the call for a Q&A session. I will now hand over to João Manso Neto.

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

Good afternoon, ladies and gentlemen. So it's a pleasure to be here again with you. And to present, I would say, another quarter of rather resilient results in the past to fulfill with the business plan. In fact, I would say that we will continue -- we are continue to delivers all of the pillars of the business plan. In terms of extract sales from our portfolio, the results are here. So we were able to have high levels of profitability 97.3%, lower -- slightly lower than last year because of some weather -- extreme weather phenomenons in certain places. But globally, even with that 97.3% is a positive number. The load factor was high, 38% against 36% last year. The wind helped, but besides the wind, the fact that we're introducing, increasing and adding value-added projects to the portfolio also had an important issue. And all in all, we keep -- we are obviously of adjusting the -- reducing the adjusted -- the core OpEx per megawatt, which was reduced again by 1%, which has to do a lot not only with scale but also with our O&M strategy And all this always with a policy of low risk. We keeping 49% -- 93% of our revenue streaks for '18 and the price was 54.2. This is something that we were expected. It's 10% below last year, excluding the foreign exchange just 5%, which is a number, which we -- is totally within our expectation. Second, pure profitable growth. We were -- last we were able to add 600 megawatts of this power capacity. That's important as this we have -- we are having construction over 1 giga always as you know based on long-term agreement. In fact, for 2020 we have already reached -- overcome 85% of our target secured, of our target of 3.5 giga, so 85% more than that is already secured. The EBITDA. This was a year as we explain later on, in which we -- there was -- it's a transition year in which there was an important amount of expiring PTCs. But even with that, excluding the impact of foreign exchange, which goes up and down, we were able to increase 8% year-on-year, 2% reported. But excluding the foreign exchange 8% in terms of EBITDA is a positive number. But more important than that, we are able -- we're not on a company which has robust cash flow, as you see, with cash flow increase 17%. But on top of that, the net profits were -- because of our financial discipline would -- the net profits increased almost 40% in terms of year-on-year. Why was this possible? It was because of the EBITDA but also because of what we having doing in terms of the financial side. You know that we have been able to control and reduce the cost of debt, so which is stable at 3.9%, notwithstanding the fact that we're adding debt in the dollars or in reais which has higher bases rates, but nevertheless the rate was kept. Debt impacts equity globally, basically stable, it's a EUR 51 million increase and helping and adding to the value on acquisition by the firm down approach that we have been following in the last quarters has also important impact, with a 20% increase -- sell down in the offshore. But nevertheless, even without that, the net profit will have shown high in double digits increase even without that. So net profit EBITDA, net profit cash flow, all of them in line and consolidating what we are doing in terms of operations. I would ask now Rui Antunes to lead us to more details outlook [indiscernible].

[Rui Antunes]

Okay. Thank you, João. So we may go to Page 7. Here we have the detail of installed capacity of EDPR in the first quarter. So we have 11,000 megawatts of installed capacity. In the first quarter, we did not install megawatts. Everything is carried over to being sold over the next quarters until the end of the year. Let's say year-on-year capacity has increased 7%, given that vis-a-vis last period in the last year we increased installed capacity by 600 megawatts. More important than that is that the company already has more than 1,000 megawatts under construction. So we have a very good visibility what we're going to deliver this year and also [indiscernible] already under construction for the next year. In the next page, Page #8. We can see the performance of the load factor of EDPR. Can see that we have reached 38% of load factor in the period, was a very strong load factor for the first quarter of the year. This was 5% ahead of the average for the first quarter. You can see in the charts on the right that last year, we are 1% ahead of the average. So you can see year-on-year, it's a very good evolution in terms of performance of the load factor. Where was this most evident was in Iberia, very strong winds in Iberia, in Portugal and Spain. Portugal has -- was at 120% of the average and Spain, 113% of the average. So for the 2 geographies that contributed the most for this performance. Over to Page 9. So we can see the results of the electrical outputs. So we installed in the period or we increased the megawatts in 7% vis-a-vis last year. Load factor has improved more than 5% vis-a-vis last year. So electricity production jumped 14% when compared with the same periods of last year. Not only because of the performance of the load factor and in terms of volume of megawatts but because the new megawatts that were installed have a load factor superior to the average of the old portfolio that was at the company last year. Page 10. In terms of prices, prices to -- that's average ones at EUR 54 per megawatt hour. Something that is particularly in line with what we were expecting for the period and what we are expecting for the year. It's a decline of 10% when I compare to last year, but half of this is explained by the ForEx, especially the dollar. The other half, we can divide the other half in several pieces. So one piece you can start in Iberia, strong stability in Iberia. Also, we have ore fixed prices, ore financial hedges in place. Rest of Europe there was a drop, big significant drop in 2 countries, expected declines. One is in Romania since 2013 was designed for the -- by the regulation that in 2019 the green certificates would be cut to half. So it was something that we already knew when we were investing -- starting to invest in the country. So it's perfectly in line with what was designed several years ago. And in Poland there was a -- since summer last year, there is a new calculation of the substitution fee for the green certificates. And this new calculation triggered a reduction of the green certificates in the country. So events expected. In the United States, prices went down. So North America by 6%, specifically in U.S. Given that we are installing projects with a much higher load factor and cheaper CapEx than the ones that we had before, the prices for these projects are lower. Bear in mind that what is important here is for us to keep a good profitability level with what we target when we negotiate PPAs. It's not the price itself, it's the full package of price load factor, the quality of the projects and the CapEx levels. In Brazil, there was an natural increase of 5% and this explains the year-on-year performance. So half of it's ForEx; the other half, many, many things that were already expected by us when we were starting the year. Page 11. So revenues stood flat at EUR 528 million, even considering the ForEx and the declines that we saw in the Rest of Europe and the expiration of the PTC. So revenues stood flat but we have important impacts here that we can call discontinuities vis-a-vis last year. So the obvious one is the ForEx that took EUR 36 million. So if we levelize by the ForEx, revenues would have increased by 7%. So it's the underlying growth. So megawatts increased by 7%, revenues increased by 7% on a levelized basis given that we're investing in U.S., we're investing dollars; in Europe, we're investing euros; in Brazil, investing reais. The other one big discontinuity here and we are starting to see the first expirations of the PTC. Recall that the PTCs are the production tax credits that we get in the United States in our U.S. projects and these PTCs are granted for 10 years. So the portfolios that were installed in 2006, 2007 so are seeing the PTCs expiring. And the ones that were installed in 2008 will expire more towards the end of the year. So this took EUR 17 million in the quarter out of the revenues when we compare with last year. But these are -- you know that the PTCs are used to pay down the debt that we have with tax equity in there. So if these reach this again, it means that the debt now is 0 with the tax equity, with the tax equity so it's used for a special purpose. The other one is the green certificates in Romania that were already also defined by the regulation since 2013. This took EUR 9 million out of the revenues, but this was discontinued also that we are already expecting more than 5 years ago. So that's why revenues are flat, important events to take in consideration. If we strip out the ForEx, which are the one that goes up and down, revenues would have been 7% better then last year.The following page, Page 12. Here is the -- where we see the efficiency of the company. So OpEx of the company totaled EUR 160 million, so it a flat evolution vis-a-vis last year. We can go through the core CapEx of the company, so that the costs that we control, which are personnel costs, services costs, online costs, everything, these went up by 3.5%. But I recall that capacity went up by 7%. So if we measure this on a unitary basis core OpEx per average megawatt declined by 4%. So it's the measure that we take to see the efficiency of the company. Of course, again, here the ForEx has an impact and if we adjust by ForEx and other small one-offs that we had on the cost line, so the clean core OpEx per average megawatt installed declined by 1%. So this is the clean figure, a 1% reduction. And clearly, is the result of the ongoing O&M strategy that we are executing and the cost control in place that we have at EDPR. So Page 13. So the page of the EBITDA of the company. So you all -- we already saw good performance at the top line without the ForEx, 7% better. Good performance in terms of efficiency, core OpEx going down by 1%, unitary core OpEx going down by 1%. So EBITDA, stripping out the ForEx impact, went up by 8%. So reported 1%, 2%, without the ForEx, 8%. So it's a good level of performance taking consideration the volume of the growth in megawatt terms that we have vis-a-vis last year. Page 14 and the bridge between EBITDA and net profit. So EBITDA explained, depreciation, amortization actually went down when we compare to last year. So we have EUR 3 million more in this line when compared to last year. But this is because of the ForEx again. If we strip this out, depreciation would have increased 7%, again in line with the megawatt increase. Financial results much better than last year. So EUR 50 million we already know was the capital gain that resulted from the sell down process of the 20% that we sold to Mitsubishi, so the U.K. offshore project. And the other part is better financial costs, so lower financial costs than the ones that we have same period last year. Taxes, effective tax rate is at 21%, already benefiting from the U.S. tax reform here. I recall that in the U.S., we don't pay taxes but we book a tax provision. So tax provision is lower than the one that we have last year. And minorities went up just because of one thing. We closed a transaction mid last year with CTG, we sold Portuguese -- 49% of Portuguese assets to CTG, portfolio of 400 megawatts roughly. And now we are having this first quarter something that was not there in the first quarter of last year. So all in all, net profit of EUR 94 million is a very good performance of almost 40% increase, when we compare to last year, it's more EUR 26 million. And the underlying growth, it's very strong. Page 15. Linked to the cash flow of the company, again we measure this with the metric of retaining cash flow, which is basically starts with EBITDA, we take a look at the cash, non-cash components at the EBITDA level. We pay the taxes, we pay interest costs, financial costs, derivatives costs. We distribute dividends to the minority shareholders of the projects. We pay interest, given that the shareholders also have -- are debt holders on those projects. And we get to a figure of EUR 284 million of retained cash flow. So it's a 17% jump when compared to last year. So this clearly demonstrates the potential of cash flow generation of EBITDA. Moving to Page 16. It's the bridge between retained cash flow to the change of net tax and tax equity liability. So retained cash flow more than covered the cash investment needs. Then we have a one-off impact here, that was the settlement of a cross-interest rate swap that we have to cover our investment in dollars in the United States. And this lays our economic liabilities at EUR 51 million higher vis-a-vis December 2017. So I think it's a quite good underlying performance, especially at bottom line. And I will now hand over to João Manso Neto for the conclusions.

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

So thank you, Rui. I would stress that it -- again, it's a quarter in which you continue to deliver the business plan. As we explained, we began this year with a cliff in terms of income because of the beginning -- the decrease of the PTCs in the older projects where there were changes expected in the green certificates market. But my point here, as you can see Page 18, is that we were able to, on operational level, to overcome this negative effect -- expected but negative effect in [indiscernible] EBITDA. How? Keeping growing with eclectic projects, the wind helped, but more important than -- as important as that, we were able to increase the project portfolio with good projects with very high load factor. Always keeping in mind and keeping with a very conservative policy in terms of risk, 93% as I told fixed for this year and keeping the cost control and always improvement in O&M. So all in all, 8% excluding the foreign exchange. But besides that I said, we should more and more to this, EBITDA is the variable which is important but it's not the final objective. And what we have shown this month and this quarter again is that not only we are strong in terms of generating cash flow, which has not been something that everybody knows from the beginning with almost EUR 300 million of cash flow more than investment. But also we were able to keep solid growth in terms of the net profit with almost 40% growth. And how we do it? We do it with EBITDA plus reductions just plus an ability to -- on opportunistic base to be able to have sale downs of project as we did in offshore for the second time in the same projects, keeping it, consolidating value. This is a strategy that we are not upset by that. But we are doing it in offshore and we don't exclude and we will, when we think it makes sense, we will be able to -- we will do it also in terms of onshore, the ability of consolidating value of the projects, selling, even losing control in many cases keeping today and consolidate for today the -- most of the value and keeping the operations managed. So all in all, an important increase not only in terms of the cash flow, as we've always known, but in terms of end profit on the return basis. And what about the future, about the future, as we said, we have more than gigawatt in construction. And we are 85% already secured, always long term and you can see here with more detail the justification. U.S., Brazil, several countries in Europe, and so we have a perfect visibility and we expect in the next weeks to continue to increase this level of visibility. And we are not only thinking about the -- until 2020. We are already building our portfolio, I'm going to say portfolio, secure portfolio for the post '20. Not only -- and here, not only in terms of countries but also in terms of technology. And I think it's important to see that we have long-term agreements in terms of onshore, wind onshore guaranteed in Brazil. We have offshore in France, in 2 projects. And we also have, as is public information, as we disclosed in the market in the last weeks, a 20 year PPA of 200 megawatts in U.S. So we're already preparing the post 2020. Working on always designing this time, not only in terms of [indiscernible] in terms of -- also in terms of technology. So this was basically what you had. So a resilience growth model moving in, in terms of complying with all the regs , all the [indiscernible] of the business plan, positive in terms of EBITDA, positive in terms of financial and with the consequences in terms -- positive consequences in terms of net profit in Russia. So we're more and more confident as time goes on that we'll meet and fulfill all the objectives of the business plan. So this was basically what we had to tell you. So now we will be ready to answer any questions you may have.

[Operator]

[Operator Instructions] And the first one comes from the line of Rui Dias.

[Rui Dias, Associate Director and Equity Research Analyst]

I have 3 very quick questions. I promise I'm not taking too much of your time. The first one is a bit of a more broad question, and just to see if you could provide with an update on current market conditions. More specifically, where are you seeing acceleration or headwinds in demand for new capacity? The second question is on solar. Iberdrola, as you know, announced recently that it will develop a solar project in Spain, supported by PPA contracts. So I just wanted to ask if this is something that you could potentially look at in Portugal and in Spain? And last question. I know that you are developing a prototype project on floating offshore in Portugal. And I was wondering if you could give us your thoughts regarding this technology, mainly in terms of cost competitiveness and future growth potential?

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

Okay. So thank you very much for your questions. So regarding the market conditions. It is clear that all the renewables technologies industry, wind onshore, wind offshore and BV are more and more competitive. And so we are seeing growth in demand widespread. To be more specific, U.S. is -- continues to be the stronger market. Wind onshore is very strong, and as we know, offshore is also there, with several RFPs. So that wind onshore is really very strong and because it is cheap and because with -- people wants to -- the offtakers wants to take profit from the fact the prices are interesting and we have the full percent, 100% PPAs. Offshore, as you know, is -- the cost is increasing, and also we are seeing demand there. This is U.S. In Europe offshore is the main growth driven in this moment, clearly. And so in terms of countries, there are some pockets, the growth is -- depends on the markets where we are, the growth is not so strong. But nevertheless, we are seeing also the revamping of this because of the fact, again, because it's cheap and sometimes they have to comply with. That's offshore seems to be the most promising one. And in Brazil, the demand, so I would say that in Brazil what we are seeing here besides the demand, which exists there from central auction. We are seeing rather quick development of the private PPAs. So we are seeing a global demand in all the technologies. And so the idea that you have that we are in the market, which is a winner one, it is, it's confirmed year-by-year. The only thing I would like to stress is that to say is that U.S., we may see, in certain cases, in what comes in solar a certain delay on the beginning of the PPAs because of signing of tariff. But here is not really -- the offtakers are not really delaying the decision, but they are delaying the beginning of the little bit the PPA, as was our phase with this 200 megawatts that I referred to in which we have already secured it, but we will do it only after 2020, but sadly not to be more competitive in price. So very positive evolution in terms of the market. Specifically regarding the Iberia Peninsula, that we think that, as we know, we are not very comfortable with the auction system in Spain. We think it's not the best way of doing it. We believe in the private PPA market. However, what we see today until now from our point of view is that most of the PPAs that we are seeing are too short in time. So to make the profitable project, we have to believe a lot on the long end of the curve. So we have projects we are -- we've bid on the process, but we have strict rules in terms of not -- of profitability and risk, which require that you cannot make investments based on the expectation of the lower end of the curve. So we believe on the market, we believe on the PPA market, we don't believe on the merchant market, as you know. So we must -- to believe [indiscernible] invest in Iberia, we have -- must have long-term investments, which does not make -- which -- so that the impact of the long term, long end of the tail is not so material. Finally regarding offshore, so offshore, which in fact, to be precise we are developing 2 offshore projects with the same technology, 1 in Portugal and another 1 in France in the Mediterranean Sea. What we think about the technology? We think that from a technical point of view, the technology proved to be efficient, so even with very adverse weather conditions, it works. The big chance now is that whether we can be competitive. We believe it can. So we are going to develop these 2 projects which are supported by -- because are still, more or less, R&D, are in the transition phase. But we think that this technology has conditions to be an important line in the future. In fact, that's true this is not just a Portuguese specificity, we have in Portugal, in France and, as you know, we signed a pilot project also in California. And so that means that in every place in which we have deep waters, this may make sense. So we are investing in protected projects with support, but also then we don't have important investments at risk. However, our objective is that -- to prove that the technology is really an alternative and that meaning that there are markets in which offshore traditionally is not viable because of the bigness of the waters in which we believe that floating one can be profitable way of developing renewals.

[Operator]

The next question comes from the line of Jose Martins.

[Jose Martins Soares, Managing Director]

I have 2 quick ones. One is can you give us a little bit of the guidance in terms of tax rate for this year? We see a lot of confusing signals on the domestic side. The industry [indiscernible] on the financial side, a little bit of help would be much appreciated. And the second question is...

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

Sir, sorry, it's -- the connection is very bad. Could you speak bit louder because we cannot understand the questions, please?

[Jose Martins Soares, Managing Director]

Can you hear me now?

[Rui Antunes]

n.Yes.

[Jose Martins Soares, Managing Director]

Is it better?

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

It's better, thank you.

[Jose Martins Soares, Managing Director]

So the first question is on tax rate, can you give us some guidance for this year how -- where your expectations are? We're seeing some conflicting feedback from companies on the domestic side, i.e., a trend to increase, but on the international side you have tailwinds. So a little bit of guidance would be appreciated. So the second question is 85% of your business plan is pretty much secure. So it's not a question of if you're going to have new targets, it's a question of when. When would you think you would be comfortable, the year before, just before 2020? It's just to get a sense of, if you can look further than 2020, if you feel that -- when can you increase a little bit or change the overall perception or guidance for the years post 2020?

[Rui Antunes]

So in terms of tax rates, we expect these to be -- for these to be lower 20%, so this is the impact of the tax reform in the United States. You know that from 2018 onwards is tax rates -- federal tax rate decreased from 38% to 21% in the U.S. So we don't expect, as you said, we have tailwinds on this front. We don't see tax -- effective tax rates going up, we actually see going down just because of the U.S. But in the U.S., we don't pay taxes, it's just an accounting perspective to our accounting in the tax line.

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

Regarding the amounts, what I can guarantee you is that we are not going to not -- we will do all the projects which are profitable that we can sign. And the fact that we are prepared also to sell majorities will help debt. So when I going to advise you in terms of visibility [indiscernible] but nevertheless what I can guarantee you is that we are looking for good opportunities and we will not lose the opportunities to do that. And the fact that we have these 2 of [indiscernible] in terms of new projects, being able to adjust, to make also sell down which makes sense confirms our -- what I am seeing.

[Jose Martins Soares, Managing Director]

So after the summer we should get some...

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

[indiscernible] in the summer we will not stop. We are not waiting for the summer.

[Operator]

The next question comes from the line of Carolina Dores.

[Carolina Botacini das Dores, Equity Analyst]

I have 2 on offshore. First, Joao, if I understood correctly, I guess the -- if any potential PP on offshore would come either from the U.S. and you'd be looking specifically on the West Coast and Portugal, so is there any other upcoming tender for offshore that you would be consider bidding? And my second question was in one of your existing projects in France, if you have any update on how are the negotiations with the government given that they want to revise some of the conditions of the PPAs?

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

Let's see, in Portugal, it was not really a tender, it was a project that we were -- we proposed and which was supported by the Portuguese government. And we -- and according to stated repeated rules. So this is something that we are [indiscernible] it's not a big project, it's 6 megawatts to test this new technology on the [indiscernible] site. What concerns you as we are starting different alternatives, but this is [indiscernible] this is public information. We will have this year, very likely, a new in auction in France, in [indiscernible]. And we'd like, next year, we will expect to have also another round in U.K, in which we also have projects. So we are seeing different opportunities in different markets, and in trying to consolidate our efforts there. In what concerns the sort of the second question had to do with? Okay. France. Let's see. We have a policy of not commenting on negotiations with the government. We are negotiating. We are speaking with them and I think if everybody's reasonable then we are. We will reach an agreement.

[Rui Antunes]

Next one, please?

[Operator]

The next question comes from Sara [ Pittanini ].

[Unknown Analyst]

I have a few questions. And the first one is in Portugal if you see any fiscal risk given that left wing parties want to apply the special energy levy and if you can quantify these risk for EDPR? The second question is on Spain. If you have any update on the ongoing discussion with the government on the review for renewables remuneration from 2020? And the third question, so you recognize that wind offshore in Europe is among the leading technologies, also solar in the latest auctions that has been the technologies that have been, let's say, has won most ground versus the wind onshore. So just to ask if you think that the 10% on capacity addition so that you were forecasting in your business plan, could that be higher and if you would consider any transformation or deal to get more presence in this technology?

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

Okay. So regarding Portugal, I would say the only thing that we know is that proposals by left wing were not accepted by the Parliament last year. So in this moment, there are no proposals over the table regarding this issue. So I would say that any other thing is speculation. The fact is that this proposal was rejected last year. About Spain, I think it's too soon. The decisions will only be taken with in with effects from the beginning of 2020. So I would say that it's too soon to discuss that, and frankly, my point is that those discussions should not occur in the press. And so this is how the way we react. And it's too soon to speculate about that, but discussions, conversations should be taken professionally, but not in the press. Regarding then the 10%. I would say that, that should be reflected in the new business plan. I would say the impact is not really until 2020 very likely in terms of new capacity would be more after that. And one of the reasons for that is that as I referred before, that in U.S. our goal of everybody's to have to contract, that beginning later when the [indiscernible] impact is more dilutive or even disappears. So the change in terms of the structure company, we will continue to occur but I would say that is something that we'll address more after 2020 within the new business plan.

[Operator]

The next question comes from the line of Manuel Palomo with Exane BNP.

[Manuel Palomo, Analyst of Utilities]

I have a couple of questions and also maybe a couple of, well, things I would like to check with you. First of all, question #1 is about your installation target for the year, which if I'm not wrong, it's 800 megawatts. However, assets under construction are north of 1 gigawatt. Do you feel like you could beat to this 800 megawatts installations target, which I mean, I know is still from the IPO days in which you were installing around 1.4 gigawatts? So what do you reckon to be the normalized installation run rate for the coming future? Question #2 is on offshore, a lot of questions on offshore. And you have clearly stated your interest in offshore projects in France, the U.S. and also the U.K. My question is about your strategy and whether you will -- you would be willing to build and keep those assets or you would be willing to build and sell those assets, keeping a minority stake maybe in some of them. And then in terms of checks, I'm not sure whether I've understood correctly. Are you expecting a 10% decline in average selling prices for the full year 2018? That would be my number one. And the number two check is about the revenues. You mentioned that revenues are 7% up when normalized by FX. My question is if this calculation is also normalizing the above-average load factors you enjoyed in the period?

[Rui Antunes]

So starting with the last 2. So the last one was 7% of revenue, is just normalized for the ForEx is a simple translation calculation, it's mathematic. Is if the ForEx was the same, it will be 7% up. So as you know, in U.S. we invest in dollars, revenues in dollars, costs dollars. In Europe, we invest in euros, revenues in euros, costs in euros. And the same in Brazil. So it's a natural hedge that we get. So the impact of ForEx that we have is a translation impact. There's no -- not ForEx exchange risk, it's a translation one. So when we look to the biggest underlying one is a 7% better at top line vis-a-vis last year.

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

[indiscernible] if you don't want to look at EBITDA, then look at the net profit, which have -- without any translation you have the 39% increase in net profit. So, that said...

[Rui Antunes]

That one is localized for exchange. In terms of the average price for the year, the message that we compiled is that first quarter price should be more or less the price that we are going to see in this year. Given the discontinuities that we are seeing in Romania, Poland that are going to stay. And also given that's the new megawatts that we have installed at a much higher load factor and the CapEx is much cheaper than the ones that we have been installing in the past. So it's natural for the price to be lower and to dilute these metrics that everybody follows.

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

But as we said, what really is important is that new projects had the same level of profitability we are used to that prices is an instrument, but you have to put the price together with CapEx and load factor and all this. But for the full year, our expectation is about EUR 54 as we have in the first quarter. Regarding your first question about the amount we expect this year, still between 800 and 900 megawatts to be installed because part of those which are in construction will have still the -- in the first half of next year, that's what. Regarding the future, I would prefer to wait for the new business plan, in which we would present what is the steady state level. For the moment, we have the amount 600, sometimes this is a bit lower, it offsets tremendous, sometimes is a bit low, sometimes is a bit higher. This year we will be higher than the average. Regarding the offshore and our strategy. I would say that from the beginning as commonsense approach almost -- very big projects should -- the risks should be divided. And so we always have the idea that having a project, afterwards we should keep with something between 20%, 30%, in the end, of course, participating actively in the management. And this is the policy that we have already -- we have defined from the beginning, say that we have a project, we are together with or alone, and in the end and afterwards when we do risk it, we sell part of it, keeping a significant minority as we did in U.K. and we will do it in other countries. So nothing changing under this policy. What is different is that we are also prepared in some onshore projects to do the same when -- if and when we can consolidate value and in a certain way, benefit from the lower cost of capital of other investments if [indiscernible] when the project has its due risk basically.

[Operator]

We have one more question when from the telephone lines and it comes from the line of Pinaki Das.

[Pinaki Das, Vice President and Analyst]

I've got a few questions. The first one is on your OpEx per megawatt. You've disclosed that adjusted number is down 1% year-on-year, which is adjusted for FX, which is fair enough. I just wanted to understand how does the dynamic work? I mean, your capacity is growing by about 6%, 7% or so, but yet your OpEx per megawatt is down only 1%. Shouldn't that number be down more? Are there any other upward pressures which adds to increasing the OpEx, maybe new geographies? So I wanted to understand that. The second question I wanted to understand was, I missed some of comments, you mentioned U.S. offshore. Could you again clarify which particular states, locations in the U.S. are you looking at? Do you already have any leases or are you just looking and starting to look into the thing? And I'll come back with a couple of follow-ons.

[Rui Antunes]

On the -- I think the OpEx is going down every year [ for me ] going down every year as we have been showing, is very strong results. So the trend is for down costs of the wind farm to go up. But it's a normal trend of the industry. But we have been able with our O&M strategy to turn around that, so to put costs going down. So going down 1%, it's very strong results.

[Pinaki Das, Vice President and Analyst]

Yes, but wasn't the whole idea about growing the asset base was that your OpEx doesn't change that much? And the megawatts will grow and therefore, OpEx from megawatts should come down much, much faster, actually, than the 1%?

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

Let's see, we have -- when we present the business plan, we spoke about a 2% reduction during the period on average. In the previous years, we have decreased more than that. And so let's ride through each one, bigger than 2 -- not like last one is bigger than 2 because in the past, we were able to institute [indiscernible] growth but the trend megawatt is there, it should be -- the absolute terms is grows. But in relative terms, we have been able to decrease it. Let's see, if we hadn't done anything and if you just get the dual policy to have gone up because the, as the time passes, the suppliers, which had the wrap up the agreements we would have increased the prices. So we did. We were able to decrease the costs and we'll continue to do it. So but we have to look at 2 -- 1 and 2 years before in which we did much better than the 2% that you had committed to do during this period. Regarding U.S., we are doing 2 things. So from one side, we don't have yet place so in this moment we are doing -- seeing -- possibly looking at possible initial leads in the East Coast, which are still -- and which will have new competitions this year. We qualified for that. This is something more on the medium term. On the longer term, we are looking at the West Coast where the waters are deeper and which -- where we are able to have already signed an agreement to develop on the region more longer term on and offshore facility in the coast of California with the floating one.

[Pinaki Das, Vice President and Analyst]

And then on the East Coast, which state, sorry?

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

We are looking at -- there will be -- at places -- in places we can serve more demand states. As you know, Massachusetts, New York, now New Jersey, all of them have. And so we have to power and we are seeing several places, some of them can cover more than one state. Can compete in more than one state.

[Pinaki Das, Vice President and Analyst]

And just the final question on -- just on minorities. I understand that, obviously, you had some of the U.S. wind farms coming off the PTCs. Did you have any minorities in them and should it have reduced the minority interest in the P&L?

[Rui Antunes]

For those specific projects, yes. Yes. But also we have a transaction last year with CTG at middle of the year for 100 megawatts in Portugal, that in the first quarter were not there. And in Portugal, we have a very strong performance in the first quarter of the year. So you can see, as I said, previously in the call, [indiscernible] was at 120% of the average, okay. So that effect a new deal in Portugal and the good performance of Portugal increases the minorities and offsets the decline of the projects that the PTCs is expiring.

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

And one thing I would like to call attention to the following. We increased 6 million the minorities. However, we -- excluding, as you can see, excluding the capital gaining offshore, that the financial results were improved, I'm sorry, let me look at the page. So excluding the minorities, the financial results have gone down.

[Pinaki Das, Vice President and Analyst]

And even excluding FX, is the financial results down?

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

You see the -- yes, as you can see, Page 14, the financial costs reduced EUR 28 million. Those included EUR 15 million of financial capital gain. So even without the financial capital gain, we had, on absolute terms, decreased the financial costs by EUR 13 million, which is the double of the increase of the minorities. So what we have said when we present the business plan a few years ago and repeatedly is that the minorities are not a problem because you have to look at all which is below EBIT. We are seeing that our policies are reducing the costs of the financial, now it's -- you can see it's positive and we have here from this side a positive impact in terms of the P&L.

[Operator]

There currently no further questions from the telephone lines. Please continue.

[Rui Antunes]

Okay, we have one question from the web. And so it's from Garcia and that he is asking could you provide details of the FX in revenues of the PTC ex duration for the years 2018 up to 2020. Does the consensus incorporate this impact?So yes, we can provide the numbers on FX, this was something that was already quite expected for a very long time and watching every single business plan that we have presented in the markets. So everybody should have this incorporated. So you can go through it. So expect in 2018, and I'm going to talk about only the PTCs that expire, okay, not the new PTCs that are going to come from new transactions. So PTCs that expired this year is about EUR 50 million. You saw that in the first quarter was EUR 17 million. So PTCs expiring 2019, EUR 35 million; PTCs expiring 2020 is EUR 5 million; PTCs expiring 2021, nothing; 2022, EUR 7 million.

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

So that's why there's a concentration this year, which will be lower and lower on the following years. So but -- and I've tried -- and as we explained our -- globally the portfolio overcomes this impact, which is the highest this year and afterwards will decline quickly.

[Rui Antunes]

It's important to bear in mind that these are used to pay down the debt, okay. So debt goes down to 0.

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

Which is an expensive debt.

[Rui Antunes]

Yes. Okay, I think we have no more questions. We can close the conference call. Thank you very much for attending.

[João Manuel Manso Neto, Executive Vice Chairman & CEO]

Well, thank you very much. I think it was all -- again, an important quarter with a stable and resilient. And we'll -- I'll probably speak with you at end of the pillars that you have seen. And the business plan may be presented after summer, which we'll update. But until then, we are not waiting for the business plan and we will not lose any opportunity, profitable [indiscernible]. Thank you very much.

[Operator]

Ladies and gentlemen, that does conclude the conference for today. Thank you for participating. You may all disconnect.