EVN AG

F:EVN

Earnings Call Analysis

EVN Reports Mixed Financial Results

EVN's quarterly earnings call revealed a year-on-year revenue decline to EUR 1.9 billion, with net results amounting to EUR 419.1 million. Revenue growth in renewable electricity generation was offset by 18.9% less electricity produced and higher operating expenses due to inflation and energy crisis contributions. The network segment saw revenues rise to EUR 494.3 million but faced increased costs, leading to EBITDA and EBIT drops. South East Europe experienced a revenue decrease to EUR 1.185 billion, nevertheless, EBIT was up thanks to decreased operating expenses. Group cash flow increased, gross cash flow amounted to EUR 944.2 million, driving operating cash flow to EUR 365.1 million, despite a decrease in cash equivalents to minus EUR 113.6 million. EVN proposes a special dividend of EUR 0.62 per share, supplementing an expected ordinary dividend of at least EUR 0.52 per share, reflecting commitment to shareholders despite investment pressures.

Performance Amidst Climate and Market Challenges

EVN's earnings call highlighted the complexities of operating in a mild weather climate that has reduced customer energy demand, particularly in Southeast Europe. Despite these conditions, EVN's net result for the group saw a positive development, riding on the back of Southeast Europe's robust generation segment and a substantial dividend from Verbund. However, the supply business, notably EVN KG, faced a downturn with a striking negative result of EUR 268.7 million, underscoring the segment's ongoing struggles.

Investing in Renewable Expansion

Aligning with global sustainability efforts, EVN's climate initiatives are on track with science-based emission reduction targets. Notably, the company is ramping up its investment to over EUR 600 million annually, focusing on network infrastructure, renewable generation, and drinking water supplies. Future expansion includes an increase in renewable capacity by an ambitious 400 megawatts and the construction of large-scale photovoltaic plants, indicating EVN's commitment to a greener future.

Financial Snapshot

During the first three quarters, a slight dip in revenues to EUR 1.9 billion was observed, primarily due to lower energy prices in Southeast Europe and peak completion of the Kuwait project in the international segment. However, lower costs for electricity purchases and primary energy countered this trend to an extent. On a less positive note, EVN KG's significant loss contributed to an EBITDA of EUR 602.1 million, but on the brighter side, a buoyant EBIT of EUR 359.2 million was propelled by Verbund's lucrative dividend of EUR 158 million.

Segment Developments

In the Energy segment, the dip in energy sales volumes due to customer energy savings and mild temperatures was reflected in a revenue increase, marked by valuation effects of hedges and higher electricity prices. The Generation segment saw an 18.9% decrease in electricity generation volumes but an increase in revenue thanks to higher electricity prices. Meanwhile, the Network segment experienced a slight revenue increase courtesy of tariff hikes, and the South East Europe segment faced a decline in revenue but an increase in EBIT due to higher water flows and new photovoltaic plants.

International Progress

EVN's Environment segment is making strides, with major projects underway in wastewater treatment and thermal sludge treatment. The order book, padded by significant contracts in North Macedonia and Austria, stands at a robust EUR 697.3 million. This forward momentum, despite a decrease in revenues and completion percentages of ongoing projects like the one in Kuwait, bolsters confidence in sustained international business growth.

Operational and Market Adaptation Strategies

EVN's management detailed the challenges of hedging and securing energy supply amidst unpredictable market swings and customer consumption patterns. In an industry disrupted by wholesale price increases and geopolitical events like COVID-19 and the Ukraine war, EVN remains cautious, aiming for a mid-term return on revenue target of 3% to 5%. Their approach to customer retention and acquisition strategies suggests responsiveness to both market dynamics and customer needs.

Capital Markets Day and Outlook

EVN is preparing for its Capital Markets Day, a significant event against the backdrop of an industry grappling with unprecedented change. The forthcoming session is expected to provide insights into EVN's strategic direction up to 2030, with a focus on CO2 reduction targets — a pressing priority given the larger climatic and regulatory milieu. For investors and stakeholders alike, this will be an opportunity to understand EVN's adaptability and long-term vision.

Earnings Call Transcript 2023-Q3

[Operator]

Good morning, ladies and gentlemen, and welcome to the conference call on EVN's results for the first 3 quarters of the 2022/'23 financial year. [Operator Instructions] Let me now turn the floor over to your host, Mr. Stefan Szyszkowitz.

[Stefan Szyszkowitz, executive]

Welcome, everybody, to EVN's conference call on the results for the first 3 quarters of this financial year. This reporting period was still characterized by very mild weather conditions, especially to Southeastern Europe that affected the energy demand, and we also observed reduced energy consumption by our customers due to the energy-saving activities. The energy production from renewable energy sources nearly reached last year's level, and the share of renewable generation increased to 76%. Overall, our group net result developed positively due to the segment's generation in Southeast Europe. Besides this significantly higher Verbund dividend for the last financial year, it contributed EUR 158 million to the group net result. Supply business is still under pressure. EVN KG shows a negative result of EUR 268.7 million. I will go now in more detail later in the presentation.

Two years ago, EVN developed its EVN climate initiative. And joining the science-based target of this initiative is just cost one of our cornerstones whereby we committed to CO2 emission reduction targets. These goals are significantly supported by our ambitious investment program for the expansion and connection of renewables. Over the coming years, annual investment will be increased to over EUR 600 million with [indiscernible] going to Lower Austria, mainly in the fields of network infrastructure, renewal generation and drinking water supplies. In capacities, we'll be expanded by another 350 megawatts to 750 megawatts by 2030. Additionally, we will build up a photovoltaic portfolio of about 300 megawatts within this decade. In the reporting period, we commissioned the [indiscernible] as part of repowering and a really large-scale photovoltaic plants. They formed them into parks, and one additional photovoltaic project are under construction. Tomorrow impacts are already in the pipeline for 2024. All in all, we will additionally connect roughly 116 megawatt wind and photovoltaic capacities, therefore, 94 megawatts still within this calendar year. In July, EVN concluded a contract with the European Investment Bank for a green loan at the amount of EUR 110 million to finance the construction for the wind parks.

Let me now continue with the key financials of this reporting period. In the first 3 quarters, the group's revenue slightly decreased year-on-year to EUR 1.9 billion. This development is mainly due to lower revenues in Southeastern Europe due to the decrease in energy market prices and the international budget business where the Kuwait project has already reached its peak. In contrast, revenue was positively affected by price effects in renewable electricity generation, valuation effects from hedging transactions, higher prices at EVN Wärme and higher network sales. The cost of electricity purchases from third parties and primary energy expenses dropped year-on-year to EUR 1.3 billion. This news the development and the revenue against the background of increasing energy market prices. In contrast, higher costs for network losses and upstream network costs for [indiscernible] as well as higher energy procurement costs for EVN Wärme [indiscernible]. Other operating expenses increased mainly due to an energy crisis contribution for electricity, which has been payable in Austria since December last year. The share with results for net equity accounted investees sharply dropped to minus EUR 157.7 million. As forecasted, the sales company, EVN KG, recognized a significant loss in the reporting period of EUR 268.7 million. In total, group EBITDA amounted to EUR 602.1 million. Scheduled depreciation and other amortization increased slightly according to the high investment program. Please be aware that prior year's figures reflected EUR 51.2 million for impairment testing. Hence, group's EBIT rose to EUR 359.2 million, and financial results increased to EUR 132.5 million, which reflects the dividend payment from Verbund at the amount of EUR 158 million. In total, group net result amounted to EUR 419.1 million. Now let's move on to the next slide, which provides information regarding group's balance sheet structure. Balance sheet saw a decrease due to a substantial decline in the current amount of equity accounted indices, which resulted primarily from the operating loss of EVN KG and negative devaluation of hedges helped by EVN KG and [indiscernible] at the end of the reporting period. Furthermore, the price development of the Verbund share compared to the end of September '22 caused a decline in other investments. As of the end of June, EVN net debt increased year-on-year to EUR 1.5 billion due to the higher investment level and temporary financing of working capital needs. Correspondingly, gearing ratio amounted to 23.1%. Nevertheless, our financial flexibility remains solid. EVN KG had committed undrawn credit facilities in the amount of EUR 701 million at the end of June. As already mentioned, EVN concluded a contract with green loan at the amount of EUR 110 million to finance the construction for the wind parks. The first disbursement under the loan was made in July. Let me now present our segments in more detail. First, the Energy segment. Mild temperatures characterized the first 3 quarters of the financial year, especially compared to prior year level. Hence, energy sales volumes to end customers declined. Energy savings by customers' additional decreased volumes. Additionally, with increased market price levels, many supply companies came back to the market. We had to face an increased competition with the electricity and natural gas customer segment.

Revenue in the Energy segment is mainly influenced by energy trading also to optimization of the EVN gas storage facilities. The marketing of electricity generated by EVN, besides its continued revenue from our domestic heating business. In this reporting period, revenue increased to EUR 802.6 million. This development was primarily due to valuation effects of hedges as of the balance sheet date as well as price effects in the marketing of our own electricity point reduction in our own heating business. Operating expenses were higher year-on-year and reflected a rise in procurement costs for biomass and natural gas. Furthermore, price-related higher expenses for electricity purchase from third parties from the marketing of our own renewable electricity generation and the prevailing inflation negatively affected operating expenses. As already mentioned at our previous results presentation this year, earnings contribution from our equity accounted energy distribution company, EVN KG, remains under massive pressure. Its result sharply declined in the reporting period, accounting to minus EUR 268.7 billion. Higher procurement costs can only be passed on to customers with a delay that negatively affects operating results. Additionally, negative effect had to be recorded due to a lower valuation of hedges of the balance sheet gain and increased provisions for impending losses from contractual obligations. Based on this development, segment EBITDA amounted to minus EUR 109.5 million and EBIT decreased to minus EUR 126 million. On the next slide, I will present the developments of our Generation segment. Electricity generation volumes declined year-on-year by 18.9%. The main trigger for the decline was a decrease in the use of Theiss power plant by the Austrian network transmission operator for network stabilization. Production from renewable resources nearly reached at this level, but significantly lower wind flows couldn't be offset by higher electricity production from hydropower. The share of renewable generation increased year-on-year to 76%. Revenue increased to EUR 368.2 million, mainly due to higher electricity prices, which all could offset a decline in the electricity production. The prevailing high inflation as well as the energy crisis contribution for electricity led to higher operating expenses. The Austrian law on energy crisis contribution became effective as of 1st of December last year and will apply for a limited period until the end of this year. The price cap for the tax is EUR 140 per megawatt and can be increased up to EUR 176 per megawatt hour, subject investment into renewable generation assets and energy efficiency measures. However, as of the beginning of June this year, the thresholds were reduced by a federal government resolution to EUR 120 per megawatt hour, especially irrespective EUR 156 per megawatt hour. The effect in the first 3 quarters amounted to EUR 21 million and is expected to increase to about EUR 32 million in the fourth financial year. This is, of course, based on the resolutions currently in force. All in all, EBITDA of the Generation segment increased to EUR 221.8 million. The result was, in addition, positively affected by higher earnings contribution from an equity accounted Verbund Innkraftwerke. Segment EBIT amounted to EUR 189 million. But please still bear in mind, last year, the revaluation of the Kavarna wind park in Bulgaria, that amounted to EUR 6.4 million as of the 31st of March. Let's continue with the network segment. Our Network segment was impacted by the mild temperatures within the first 3 quarters of this financial year. Network distribution volumes of both the business as well as the household customers decreased year-on-year because of the mild weather. Customers energy-saving efforts also negatively affected volumes. The decline in gas distribution volumes was additionally caused by the reduced use of our Theiss power plant. This capacity is contractually reserved for grid stabilization by the transmission system operator, [indiscernible]. Segment revenues slightly increased year-on-year to EUR 494.3 million, mainly driven by the positive price effects the networks tariffs of our electricity. As of 1st of January this year, system network tariff for both electricity and natural gas increased by the Austrian energy regulator. Additionally, a positive revenue contribution was also recognized by our subsidiary, kabelplus. Costs for network losses and upstream network costs increased due to higher market prices. Other operating expenses were influenced by prevailing high inflation. In total. EBITDA slightly decreased to EUR 203.2 million, and EBIT was down to EUR 76.8 million.

Let's move on to the South East Europe segment. In the reporting period, temperatures in South East Europe were significantly below the previous year and also the long-term average. This led to a decline in network and energy sales volumes. In contrast, electricity generation volumes increased due to higher water flows as well as newly commissioned photovoltaic plant in North Macedonia. Segment revenue declined to EUR 1.185 billion because of lower network and energy sales volumes as well as lower wholesale prices. This development couldn't be offset by higher network caps in Bulgaria and an unscheduled increase in electricity prices for the regulated household customer segments in North Macedonia. Operating expenses decreased in the reporting period due to following effects. First, cost for the third-party electricity purchases and energy carriers dropped in line with the development of Marine. And secondly, cost of network loss coverage in North Macedonia were reduced due to the government subsidized purchases. In total, segment EBITDA amounted to EUR 178.8 million, and EBIT was up to EUR 118.9 million. And finally, the Environment segment. In our international project business, we currently work on 15 projects in the wastewater treatment, drinking water treatment and thermal sludge treatment. In the reporting period, we received the order for the construction of a wastewater treatment plant in sewage sludge utilization plant in scope as part of a general contractor assignment. The contract value is around EUR 184 million. Additionally, EVN recently awarded the contract for the construction of a sewage sludge incineration plant in [indiscernible] with a contract value of roughly EUR 255 million. The plant is designed to process thermal utilization all sewage sludge produced in the units and 22 connect exits around in municipalities. This plant will also take into account the issue of phosphorous recovery. The total order book as of the end of June amounted to EUR 697.3 million, with the order in unit [indiscernible] amount increased to around EUR 950 million. At our project in Kuwait, we are also making great progress. As of the end of June, completion has reached roughly 90% of the wastewater treatment plan and nearly 65% for the base water infrastructure. Revenues decreased year-on-year to EUR 364.3 million, already reflecting the good focus made at the Kuwait project, where the peak has already been reached. Correspondingly, operating expenses declined. The Kuwait project via the project total company for the positively affected earnings contribution from equity accounted industries. In total, EBITDA increased to EUR 44.3 million, and EBIT amounted to EUR 20.3 million. It should be noted again that the previous year was affected by an impairment loss at the amount of EUR 57.6 million. Financial results in the reporting period declined due to the increased interest expenses. Hence, result before income tax rose to EUR 0.6 million. The next slide now shows the development of our group cash flow in this reporting period. Gross cash flow in the reporting period was highly compared to the previous year at EUR 944.2 million. The main drivers for this development were higher earnings before income tax recorded in the reporting period and the correction of negative earnings at equity account in Turkey.

Additionally, the dividend distribution of Verbund for their financial [indiscernible] to positively influence the result and with that because cash flow. In contrast, the cash flow was weakened by lower dividend distribution from other equity accounted investees. Cash flow from operating activities amounted to EUR 365.1 million. Triggers for this development are the liquidity settlement for EVN KG and the related capital commitment for working capital. The negative effect was also the year-on-year increase in income tax payments. The cash flow from investing activities significantly increased in the reporting period to minus EUR 274.8 million. This position reflects the high investment, which were contracted by a year-on-year reduction in investments in cash funds. This position also contains the capital contribution to EVN KG. Cash flow from financing activities amounted minus EUR 103.9 million and includes EVN's dividend payment for the last financial year as well as scheduled repayments of financial liabilities. Additionally, in the reporting period, EVN concluded 3 long-term bank loans totaling EUR 150 million. The recently concluded contract with the European Investment Bank for a green loan at the amount of EUR 110 million to finance wind power project has not yet been taken into account as the first disbursement under the loan took place after the end of the reporting period. The net change in cash and cash equivalents amounted to minus EUR 113.6 million. Additionally, EVN has committed on strong credit facilities of EUR 701 million as of the end June.

I would like to conclude my presentation with the outlook for this financial year. In this financial year, the contribution of EVN's operating activities to the group net result will amount to approximately EUR 250 million and as all represented as additional earnings contribution of EUR 158 million to group net results for the current financial year has come from EVN KG.

For the next ordinary Annual General Meeting in February '24, we will propose a special dividend of EUR 0.62 per share, in addition to the ordinary dividend that is expected to amount to at least EUR 0.52 per share. The dividend proposal already considers our ambitious investment program, which is considered to exceed EUR 600 million. The focal points of the investments are on network infrastructure, renewable generation and drinking water supplies. Now I've reached the end of this results presentation. I'm looking forward to answer your questions.

[Operator]

[Operator Instructions] And the first question comes from Thibault Dujardin, Societe Generale.

[Thibault Dujardin, analyst]

A quick question concerning EVN KG. Just to understand the metrics behind it, procurement, and understand if the prevalent was mainly done in 2022, if you could maybe give us some maybe exposure in terms of terawatt hours and when we should expect returns to be positive and what to look at together.

[Stefan Szyszkowitz, executive]

Thanks a lot. Yes, as you mentioned, of course, the year '22 has been a very challenging year regarding the procurement. We are doing the procurement on a monthly basis. We try to group different kinds of customers and try to hedge also the procurement, which we are doing. And on this basis, we have -- of course, it looks like it's coming from the period of '22. Now with a more relieved energy market, of course, it takes a certain period when the new normal regarding energy pricing is stable on both sides, on the procurement and on the sales side. So we expect until April '24 that this period will last, that the easing the pressure regarding the results.

[Thibault Dujardin, analyst]

And you mentioned that you experienced delays in terms of pass-through of the procurement cost. Do you expect to be able to recover part of this negative cost? Or maybe is it less possible?

[Stefan Szyszkowitz, executive]

As we have stated over the whole year, the result of EVN KG will be highly negative for this financial year. Of course, with this reduced levels of energy costs on the international markets, the pressure from next year will be more relieved on the mid-term. And if we want to try to explain also on our Capital Markets Day, we expect a return on revenues between 3% and 5%. This is, over the long-term, a very stable position.

[Thibault Dujardin, analyst]

So maybe just to understand, maybe there is delay, but you would be probably able to recover most part of this -- of the negative result from 2023, just to be sure not to...

[Stefan Szyszkowitz, executive]

No, no, we realize, of course, in this financial year at the end of September, a big part of this kind of spreads between both human and customer sales price adoption. So there's no doubt that this is a tough year for the sales company in this financial year '22, '23. We have seen this in all 3 quarterly results, which we have published and also the expectation to the end of September.

[Operator]

The next question comes from Richard Alderman, BTIG.

[Richard Alderman, analyst]

Just really following up from those previous questions. Can I just understand a little bit more about how you manage those retail contracts in the context of your other comments, obviously, that you talked about of increased competition as well? So are you saying it's going to take you until April '24 to fully reprice all of those contracts? And is that because some of them are 2-year contracts that you fixed before the Ukrainian crisis? I'm trying to understand about the sort of movement in all of the valuation of the negative hedges versus the repricing. How quickly is that moving forward compared to what you expected or indeed what your competitors are doing? And on that point, you mentioned increased retail competition. Can you give us some color as to what's been going on through this calendar year? So are you seeing a big increase in churn because other competitors are using short-term gas and power curves to offer cheaper contracts? How is that evolving in Austria at the moment? That's the first question.

[Stefan Szyszkowitz, executive]

Yes. Well, let me take this question. You are completely right, we have 2 effects. Of course, we have this kind of delay by higher procurement costs on how you can adopt end customer prices in a historic situation, which we have faced. So we were increasing end customer prices on the normal classical customer base 2x in the year of '22. And then '23, we changed the general contract with the majority of our customers to have a new pricing basis on an EBITDA basis. This is one thing how we try to adapt to the changed situation. The second is in the crisis of autumn, early winter '22, a lot of their competitors, they're closing the operation and, therefore, ending their supply contracts with customers. We took in this situation of around 43,000 electricity and gas customers on our book and did also the procurement for them for the next year. And they have an expectation until the end of September. I would not be surprised if around the same amount of customers would move on but trying to get the best optimum.

So you have 2 sides on this crisis story, which we have seen. And therefore, with the strong come-down of energy prices, also all the hedging products, of course, showed the change also that we, in the side of security of supply, we are booking for our end customer gas and the gas storage facility, which also has now a different value, which is stored in the -- so we have no electricity side and we have also the gas security supply side. All these effects are coming together. We hope that if we follow this mechanic of this monthly procurement to different customer groups, if we offer the short-term sales contract or one which secures for both sides for 1 year, we have different possibilities how the market can develop. And on this kind of level, you should get the peak of this high energy crisis of '22 pass-through or they can acknowledge the negative result last April '22. And of course, in the new budget for the coming year, we will also acknowledge the sales company, which is more or less the mid-term perspective of this 3% to 5% return on revenue as a target.

[Richard Alderman, analyst]

So just to clarify, are you saying that when you take on new customers, you are not fully locking into the gas and power that you're selling to them on that 1-year contract at the point of taking them all?

[Stefan Szyszkowitz, executive]

Yes, it is -- you try to judge the consumption of this customer as a sum. But as we discussed before, the temperatures are always different from the normalized temperatures in the planning. So we cannot 100% hedge something, which you don't know if you go 100% sale of it. So there is always a differentiation, a deviation between what you plan and try to secure and what is really happening then. This is affecting, of course, not only the procurement side for the sell side, it's also the sale of the produced energy. So both try to use all instruments to lock in chances and risk. But of course, it's not mathematically perfect, 100% target, which you can achieve in real life. And this is then reflected with the fluctuation on balance sheet state of the different products.

[Richard Alderman, analyst]

And one last question, have you seen churn rates move up materially in terms of...

[Stefan Szyszkowitz, executive]

I think, I would say, we have a period of 18 months or 24 months because the increase on wholesale prices started in summer '21. So I would not be surprised that we will come back to a level of customer base before this kind of disruptive environment started. But as I mentioned before, on a different legal basis, because more or less, all our customers have no bilateral civil contract, the gap in the prices, so not one which is coming from the past is a bundle of customers in certain groups.

[Richard Alderman, analyst]

And can I ask one last question? The Capital Markets Day, what's prompted you to decide to hold one now? I don't think you've held one for some considerable time. I was wracking my brains. When was the last time you've done it?

[Stefan Szyszkowitz, executive]

Honestly, I think it's quite simple because as we discussed, now we come in over a period of 24 months, which never has been in any expectation of this energy industry before also, of course, COVID and the war in Ukraine. And there, we thought, okay, regarding energy future and performance and strategy, it could be a good moment now to update this and also explain things like we did before because we think it's very important for our investors that they have this kind of guidance and also have a good feeling how the priority -- the main drivers of our business and our profitability will develop over the next years. So it's not so much related to this ongoing year because it will be in the quiet period at the end of September, but heading to 2030 is still the only Austrian company who has Science-based targets for CO2 reduction. It might be a good point to do it.

[Richard Alderman, analyst]

So will it include guidance for the coming year and then longer dated guidance?

[Stefan Szyszkowitz, executive]

This is the reason we are talking with the Supervisory Board on our budget for next year. And of course, on the main assumptions for the upcoming years, we want to share this with our investors so they can put all this information together and make up their mind. So please join us, by the way.

[Operator]

[Operator Instructions] There's one question coming from Teresa Schinwald, Raiffeisen Bank International.

[Teresa Schinwald, analyst]

To round up all the questions regarding the retail business, could you please split the results of KG in operating losses and the valuation effect, please? Just to give us a flavor about that.

[Stefan Szyszkowitz, executive]

I think -- yes, this is a fair question. So I think that operating effect there amounts around to minus EUR 46 million. And the other effects regarding provisions and valuation of gas inventory is around EUR 136 million, and regarding the hedges around EUR 80 million. So this, lastly, would make it up the different components of this ongoing business in KG.

[Teresa Schinwald, analyst]

My next one is regarding the Southeast Europe operations, which are now quite significantly above the usual guidance range. Do you consider these results levels to be safe for this year? And would you think that this is a general step-up or just an exceptionally good year-end Southeast Europe?

[Stefan Szyszkowitz, executive]

Well, of course, yes, as we discussed in this situation of the last 24 months, extraordinary things on all levels have happened, right? What we did in Southeast, we did things to support the whole energy value chain by their means of the state and also to try to stabilize the overall economy. So in this result, which we are showing now, it's a part of something which we were missing in the year before in North Macedonia, and there's a part of something which we will not see in Bulgaria in the next year. So we have extraordinary timing effects on both sides. We always gave a certain guidance for the segment itself, is this EUR 40 million to EUR 60 million of EBIT. And we see a certain potential on the mid-term for a higher kind of range, but we will also try to update this on the Capital Markets Day in October and then we have more exposure and knowledge regarding the remaining weeks.

[Teresa Schinwald, analyst]

Understood. And the last one is maybe more of a general question because the Austrian regulation is now also about to switch to different kinds of remunerations for existing assets and new assets, granting a higher cost of capital or return for new network assets. And for example, Germany is now also following this example. And at the same time, the network facilities are heavily criticizing this new system because they say a higher back for just 5 years is nothing to cover the, yes, required returns for the massive new investments in the grid in this changing environment. Can you update us a bit on what's going on here in Austria for now, the upcoming regulatory period, but also, yes, in general? Because I don't think that Austria is very much different here.

[Stefan Szyszkowitz, executive]

I think I can support the analysis that, of course, this energy grid systems and the regulation, which were developed and a little bit different in different countries, but still from the core, it's a regulated asset and it's reflecting on the certain components regarding how the assets have to be financed, that the change from stable state adopting to economic development and then heading to the energy future, the energy future is a different leak of investments in the transformation in Europe. Therefore, I would support also the thesis that regulatory frameworks have also to be adopted step-by-step. A first step is seeable when we try to reflect on increasing higher interest rates by giving a higher WACC for new investment. At the end, you all have to see the overall grid development. And for net either, I can confirm that the investment level are increasing pretty strong over the last years. And we also, as we gave some guidance regarding EUR 600 million, this will also not stop here in the near future. Therefore, the debate in the industry with the different stakeholders is taking place, how the shared common goal of energy transition can be then also included in guidance regarding regulatory framework. This debate is ongoing. Of course, the European Regulatory Association is monitoring the discussion. The Austrian one is doing the same. And I think step by step, we will see a stronger adoption to the system than we have seen in the last 3, 5 years, which was pretty much stable state.

[Operator]

There are no further questions at this point. So I'd like to hand it back to Mr. Szyszkowitz for some closing remarks.

[Stefan Szyszkowitz, executive]

Yes. Thank you for joining today's conference call. We will publish the results for the full financial year on Thursday, 15th -- 14th of December. Additionally, I wanted to invite you once again to our Capital Markets Day, which we will host in London on the 5th of October. I'm looking forward to welcoming you, and please get in touch with our Investor Relations team in case you have not received the save the date info or for any further questions. Have a nice day, and see you in London at the beginning of October. Good bye.