By Jason Deign

Businesses linked to Spain’s top listed CSP companies can rest easy.

If a less than year ago changes in Spanish renewable energy law meant the future looked bleak for names such as Abengoa and Acciona, in the last six months the main players in the sector have demonstrated nothing short of management genius in producing sparkling financial results.

Abengoa, for example, announced a 31% rise in year-on-year earnings before interest, taxes, depreciation and amortisation (EBITDA) in its half-yearly financial report for 2014. While revenues were flat, the company’s pipeline was up 49% on the same period last year.

Acciona reported a 16.3% hit to half-year EBITDA as a result of the government changes, but managed to boost profits by 43% through a decrease in depreciation and the sale of assets. Spain’s energy reform cost the business €216 million, Acciona said.

Net profit also rose at Grupo Cobra’s owner Grupo Actividades de Construcción y Servicios (ACS), by 10.7% compared to the first half of 2013, despite a 15.2% drop in EBITDA. Remarkably, it managed to increase renewable energy generation turnover by 14.9%.

The financial strength of these big three Spanish CSP developers will be a relief to their foreign customers and joint venture partners, which may have had much cause for concern following the introduction of punitive reforms to Spain’s renewable energy support schemes.

And closer inspection of the companies’ balance sheets reveals how they may have been able to please investors while sustaining heavy losses in the Spanish renewable energy market.

The first point to note is that all three listed companies have highly diversified business portfolios, which has helped buffer the impact of renewable energy support cuts in Spain.

Other activities

Acciona's corporate headquarters

Acciona, for example, owns interests in infrastructure, water treatment, facilities and logistics, among other businesses. A 21.6% rise in income at its ‘Other Activities’ division helped offset a 6.3% fall in its much larger energy unit over the first six months of this year.

ACS, similarly, has businesses that cover construction, industrial services and the environment, with CSP activities comprising only a small part of the company’s activities.

Even Abengoa, the company with arguably the largest exposure to the CSP market, has a healthy spread of business in other areas: 27% of its engineering and construction bookings, for example, are in transmission and distribution, and 16% is in conventional power.

The company also pulled off something of a financial coup this year by packaging up many of its energy assets into an investor-friendly ‘yield-co’ vehicle in June. Acciona is reported to be pondering a similar move.

However, perhaps an even greater factor than diversification in the balance-sheet success of these companies is the fact that they are increasingly independent of Spain.

“Spanish companies have been pursuing new markets outside of Europe, particularly in the emerging countries,” says Michael Barker, an NPD Solarbuzz senior analyst who tracks PV, a comparable market to CSP.

Thus Abengoa only got 14% of its revenues from Spain in the first half of this year, compared to 18% over the same period in 2013. Its biggest market was North America, which accounted for 39% of billings, followed by South America, with 25%. Both levels were up on last year.

Sales in Spain

ACS, meanwhile, made 16.2% of its sales in Spain, compared to 40.2% in Asia Pacific and 33.8% in the Americas.

Acciona, which does not split out its total income by geography, has more of a Spanish focus but still a major and growing presence elsewhere, with 2.4GW of its total 8.4GW of energy installations located internationally.

What is clear is that Spain’s CSP leaders would not be in the position they are in today if they had had to rely on support from their government.

“It’s true the [Spanish CSP] assets still generate a cash flow,” says a source who did not want to be named, “but the problem is they can’t provide adequate cover for their debts.”

And it is to be hoped that some of the factors that have favoured Abengoa, Acciona and ACS can be of use to other Spanish CSP players, such as privately owned Sener, which may not have recourse to stock market manoeuvres such as the creation of yield-cos.

For now, at least, the leading lights in the industry seem to have been able to take the brunt of the broadside aimed at them by their own country’s administration.

“Thanks to good management and strength of the companies in this sector, they are finding answers to the maturity of the loans,” says Luis Crespo Rodríguez, general secretary of the Spanish CSP industry association Protermosolar.

“That is in spite of reduced effective profitability created by the government reform, which has been worsened by payments for the first half of the year that are only about 50% of amount due.”