EDP - Energias de Portugal, S.A.

Good morning. Thanks for attending EDP's 2025 Results Conference Call.

We have today with us our CEO, Miguel Stilwell de Andrade; and our CFO, Rui Teixeira, which will present you the main highlights of our strategic execution and 2025 financial performance. We'll then move to the Q&A session, in which we'll be taking your questions, starting with written questions, you can insert from now onwards at our webcast platform and then by phone.

I'll give now the floor to our CEO, Miguel Stilwell de Andrade.

Thank you, Miguel. Good morning, everyone, and welcome to the 2025 results conference call.

Just before presenting our results yesterday, I just wanted to address the extreme weather events that impact Portugal. And as you know, Portugal was hit by a series of devastating storms starting at the end of January and then well into February to a certain point, had winds over 200 kilometers an hour, which really caused unprecedented physical damage to infrastructure in the country, including our own network infrastructure and also customers.

I think the first thing to say is that we immediately responded with a very coordinated large-scale support from all the internal and external teams. I mean we had people coming in from Spain, Brazil, France and Ireland, and I just wanted to thank also all those teams.

The networks and the hydropower teams worked around the clock to limit the damage caused by the storm and to restore power to our consumers. Naturally, the first thing is our thoughts are with the people and the communities affected.

We understand the damage that this has caused, the frustration from people that had no power over those weeks. And from the beginning, our first priority was to reestablish power in the quickest, safest and the most effective way possible.

We have now recovered 100% of the customers, only a very few specific situations outstanding that will be resolved very shortly. But I think the worst is definitely over.

I also wanted to extend a really sincere word of appreciation for the absolutely extraordinary professionalism and dedication demonstrated by the teams, both internal and external across all the country. I mean the response from grid repair to the hydro power management, the community support, emergency logistics.

I mean, it was absolutely exemplary. And I think it really showed the best of EDP in terms of the commitment to stand with our customers and with the communities that we serve, especially in the moments where they need us most.

So I will come back to this later in the presentation just to talk a little bit about the impact on us in more detail. But I would move now into the bulk of the presentation.

And on to Slide 3, which essentially shows an overview of our results for 2025. And I'd start off by saying EDP had a very strong set of results for 2025.

The recurring EBITDA reached EUR 5 billion, so outperformed the EUR 4.9 billion guidance. It's mostly on the back of a better-than-expected fourth quarter in the integrated segment in Iberia from above-average hydro resources in the fourth quarter.

If we compare that with 2024, EBITDA was up 1% year-on-year. So it reflected a rebound in EDPR's performance, which as you know, had record capacity additions towards the end of last year.

Recurring net profit came in at EUR 1.3 billion, so also above the guidance, although it's down 8% versus 2024, and that's mostly explained by higher financial expenses. Net debt ended the year very well.

So at EUR 15.4 billion, better than the EUR 16 billion guidance, and that led us to have a great FFO over net debt of 21% compared with the 19% guidance. So the upside versus guidance at all levels allowed us to then increase the shareholder return.

So we're proposing a dividend of EUR 0.205 per share. So that's a small increase, which will be paid this year already in 2026, obviously subject to the General Shareholders Meeting approval.

If we move forward into the next slide to talk a little bit more detail about the FlexGen and customers. So here, we see a structural uplift in the value flexibility.

And I really wanted to highlight, if you see here on the left-hand side, there's a chart from the International Energy Agency recently that shows the capture rates in Spain by technology. And it shows how the market is increasingly rewarding assets that can respond to price volatility and the system needs.

And you can see natural gas capture prices obviously rising in 2024 and '25. Hydro with reservoir also trending upwards and more intermittent and less flexible technologies, particularly solar, you see obviously a decline in capture rates in 2025.

The takeaway here is that flexibility is being structurally priced in and that we expect that to remain a long-term feature of the market. And you can see that in the figures for EDP for 2025.

The hydro net generation was almost 10 terawatt hours. It's down 2% year-on-year, but still a very strong year for them.

Hydro premium versus baseload increased to 21%, so reinforcing the value of the flexible output. And on pumped hydro, the pumping volumes increased to 2.3 terawatt hours on the year, so up 24% year-on-year, with the pumping spread versus baseload reaching 75%.

If you look at the right-hand side of the slide, and we give there an update on the reservoir levels in 2026. So given the heavy rainfall, reservoir levels are at historically all-time highs.

They've reached around 96% in February 2026, up from roughly 76% in January. And that's consistent also with the hydro production index in Portugal, which has doubled its historical average year-to-date.

So obviously, that's following the heavy storms, which I just talked about in Portugal in January and February. One important thing to note is that the market consequence of these extreme weather conditions is that we also had abnormally depressed pool prices, which together with higher ancillary services costs in February.

It's shown by the Portuguese pool prices going from around EUR 71 per megawatt hour in January to roughly EUR 8 per megawatt hour until mid-February. So more depressed pool prices in February and higher ancillary service costs.

If we move forward to the next slide and just in a little bit more detail on the storms here in Portugal in the first half of 1st February essentially. First, as I mentioned, just highlighting the efforts made by the team.

So a huge effort done to restore power and to make sure that the dams and that the flooding was limited. The storms impacted around 6,000 kilometers of grid, damaged around 5,800 towers.

We had more than 2,000 people mobilized on the ground, around 2,400 people. And as I said, we were able to restore 100% of the customers already by this week.

On hydro, we continuously monitor the rainfall. And I think here it was great to see using advanced hydrological model, so we were able to proactively sort of anticipate what was coming down the road and to be able to also anticipate some of the discharges and coordinate that with the environmental authorities.

So I think there was a meaningful role in flood control. Then on the practical side with customers and communities, we have put in place schemes to ensure that payments and invoicing support for the customers impacted as well as the assistance with the solar DG reinstallations.

On a more social level, we also delivered over 90 tons of essential materials, including fans, roofing tiles, parklands basically to help people protect their homes. And we also helped people in more isolated areas get access to communications, including Starlink devices and power banks.

In terms of financial impact, we're expecting that this will result in around EUR 80 million in CapEx with infrastructure to rebuild, will be partially supported by insurance. We're still evaluating additional cost and impact, and we'll update that in the first quarter results, but clearly shows increasing vulnerability that climate change is causing and the importance above all of resilient flexible systems and long-term investment in networks.

And that takes me to the next slide, where I wanted to just stress that already before these events as of last year, we're already significantly ramped up the investment to respond to the growing needs of the system. The electrification, the renewables integration, the grid resilience, gross investments for the period '26 to 2030 will reach EUR 4.1 billion compared to the EUR 2.6 billion in the '21 to '25 period.

So that's a 58% increase overall in Iberia, slightly more in Portugal than in Spain, although both geographies are contributing significantly to Portugal around 66%, so almost 70% increase. The big part of this is strengthening grid resilience.

We're assuming around -- or more than EUR 500 million for grid resilience to ensure that the network is prepared for higher loads, more distributed generation and greater system complexity. And fortunately, this greater investment is underpinned by much stronger regulatory visibility, as we showed here on the right-hand side.

So as you know, the new regulatory framework sets up the 6.7% nominal pretax return for this period until 2029 in Portugal. And in Spain, the framework establishes a 6.58% return for the period out to 2031.

So importantly, both framings closed as of the end of last year, giving us clarity and stability for the upcoming investment cycle. I think it's also important to note that in Portugal, the 2026 state budget clarifies and -- the conditions under which new investments in the networks are exempted from the extraordinary tax.

So that supports really this incremental investment that we're doing in the networks. Still on networks.

If we move forward to the next slide, you can see that the new regulatory terms and approval plans will allow an EBITDA growth in Iberia for networks. So it grows to around over EUR 1 billion over this period.

We have to consider that in this period in Portugal, there are legacy revenues that end in 2026 worth around EUR 40 million, removing that means that we'd have a normalized 2025 EBITDA of around EUR 0.89 billion and that then reaches the EUR 1.05 billion in 2028. So that's an 18% EBITDA growth for '25 to '28 with -- updated already with the new terms.

So this isn't just a one-off to 2028. This then continues to grow beyond 2028, and that's supported by the approved returns and also the investment plans that we discussed on the previous slide.

So all of this gives us confidence in the continued momentum well beyond 2028 to 2030 and beyond that. If we move on to the next slide and just talking quickly about Iberia.

I think what I'd say here is that Iberia is entering a period of much stronger electricity demand growth, driven by electrification. On the left, you can see the power demand growth in 2025 versus '24.

Portugal leads at 3.6%, Spain at 2.8%, which means Iberia clearly outperforming several of the European markets. And it's not just a 1-year effect.

I mean obviously, we're seeing strong momentum into 2026. So just in January, the demand was 7.9% in Portugal and 4.8% in Spain already adjusted for temperature.

And going forward, we see our estimated 2% CAGR in the Iberian electricity demand over the period leading up to 2030. So demand growth should be supported overall, not just by the economy is doing well, but by more than 18 gigawatts of data center projects pipeline that have been announced or that are publicly available.

I'd have to highlight here that EDP is obviously engaging with a lot of these projects, 2 of the more advanced ones that's certainly here in Portugal are the Merlin Data Center, North of Lisbon at 180 megawatt. We had an MOU signed with them back in July of 2025.

And also the Start Campus project in Sines with an MOU that we signed yesterday. And the Sines project, as you know, is expected to reach 1.2 gigawatt over the next couple of years.

And I can detail a little bit more what that means in the Q&A if you think that's appropriate. If we move forward to still to talking about Iberia.

And this is a slide, which I think is also extremely important because it's not just about demand growth. It's also that Iberia combines this demand growth with structurally affordable power prices.

And that's supported by improving system fundamentals. And that's really an important advantage for customers, for electrification, for the broader competitiveness of the economy.

So when there's so much talk in Europe and elsewhere about affordability and about competitiveness, Iberia has a really distinctive advantage in Europe, and I think we will benefit from that sort of on the electrification front. On the left-hand side, you can see the evolution of the B2C electricity prices.

And the key takeaway is that Portugal and Spain fit among the most affordable markets in Europe, around 17% below the European average. Going forward, at the European level, Northern Europe faces higher expected network investments that typically puts upward pressure and then user prices over time.

But by contrast, in Portugal and Spain, we have several structural elements that we think will support the affordability. One is that the historical electricity system that is expected to be fully paid by 2028.

That means that there will be significant cost reductions in the tariff structure going forward. Second, there's a gradual phase out of legacy support schemes like the Feed in Tariffs in Portugal and the Recore scheme in Spain that also reduces access tariff costs.

And so in Portugal, specifically, the regulator has simulated annualized reductions in the B2C reference end user tariffs from 2026 to 2030. So that helps create room to accommodate new system needs like ancillary services, capacity mechanisms, additional investments in networks without compromising competitiveness.

So I think it's -- we are able to get the best of both worlds, which is more investment, more ancillary services, more capacity mechanisms to make sure that we have a stronger, more resilient system and still have sort of annualized reductions in the end user tariffs. Moving on to EDPR.

Again, you have more detail on that yesterday. So just a quick note here.

We are seeing really strong execution momentum and better visibility on the business and plan delivery. Over the last 6 months, EDPR secured 1.3 gigawatts of capacity.

And on the left-hand side, you can see the main projects secured during this period. It's a combination of PPAs with utilities, global tech companies.

We also have Build and Transfer agreements in the U.S. So it's really a diversified set of offtakers and structures.

And across the '26 to '28 period, we already have 2.8 gigawatts secured, and we expect to continue on securing more projects over the coming weeks and months. If we break it down year-by-year, 2026 is already 100% secured.

So almost all of that under construction, a couple of projects coming under -- into construction in the very short term. So that gives us very good confidence on the 2026.

'27 is already 65% secured and 2028 is at 10% secured. So that gives us roughly already 55% secured for '26 to '28.

As I say, we have good visibility on additional projects that are coming down the pipeline to help us meet the rest of this project. And with that, I'd stop here, I pass it over to Rui to go through the '25 results in more detail, and I'll come back for closing remarks.

Thank you.

Thank you, Miguel, and good morning to all. So let me start with the EDP's results.

Recurring EBITDA reached EUR 5.03 billion in 2025. It's up 1%, but if we exclude asset rotation gains and FX, the underlying growth was 7% year-on-year driven by strong EDPR performance in resilient network space.

So looking at the recurring figures by segment, Renewables, Clients and Energy management increased by EUR 65 million year-on-year, reaching EUR 3.4 billion and all represent 69% of group EBITDA. Within this segment, the Hydro Clients and Energy Management declined EUR 216 million year-on-year, mainly reflecting the normalization of gas sourcing conditions in Iberia versus the external environment that we have in 2024.

This was more than offset by strong EDPR performance up to EUR 190 million year-on-year, reflecting 2024 record additions translating into higher generation. On the network side, recurring EBITDA stood at EUR 1.54 billion, now representing 31% of group EBITDA.

While EBITDA decreased EUR 68 million year-on-year, this is mainly explained by Brazil FX impact and the assets of capital gains, again, excluding FX and asset rotation, the underlying networks EBITDA increased 3%, supported by a positive performance in Iberia, both from a regulatory framework and reinforce operating discipline. So finally, recurring OpEx decreased 2% year-on-year or 5% in real terms, reinforcing also the operational discipline, which I will detail in the next slide.

So if you look to the OpEx, this slide highlights an important enabler of our EBITDA performance, which is sustained cost discipline. Recurring OpEx decreased EUR 1.88 billion, trending down year-by-year, a total reduction of around EUR 160 million in '25 versus '23.

Over the last 12 months, inflation was around 3%, and yet we still delivered a 2% nominal reduction in recurring OpEx. Excluding FX, OpEx is slightly below, which means that we are effectively absorbing inflation through efficiency and productivity gains.

This is translating into improved efficiency ratios. OpEx as a share of gross profit improved from 28% in '23, down to 26% in '25.

Key drivers for these, EDPR is delivering efficient growth. We're reducing adjusted OpEx per megawatt by 12% year-on-year to EUR 40,000 per megawatt, this while scaling capacity, a leaner more focused workforce aligned with the company's growth priorities, digital and AI-driven initiatives to improve O&M efficiency, decision-making, customer experience.

So I think the message is very clear. We are growing and investing while structurally improving the cost base.

And obviously, this supports cash generation as we deliver the plan. So now let me move to FlexGen and Clients segment.

EBITDA for '25 stood at EUR 1.46 million. This is down 13% year-on-year, and this reflects the normalization versus an extraordinary 2024, but also flexibility revenues structurally increasing.

In Iberia, 2024, as you know, was impacted by extraordinary gas sourcing costs. 2025 baseload hedging price normalized from EUR 90 per megawatt hour to EUR 70 per megawatt hour.

However, this was partially offset by stronger flexible generation revenues. Pumping generation increasing by 24%, pumping spreads reaching 75% over baseload prices.

Hydro premium improving to 21% and CCGT generation increasing by approximately 3 terawatt hours, reflecting the system operator needs. In Brazil, EBITDA declined from EUR 184 million to EUR 156 million, mainly due to ForEx impact.

So overall, while the headline EBITDA reflects normalization, the structural uplift in flexibility was very solid with EUR 0.3 billion contribution to overall group. So now we move to Slide 15, turning to EDPR, which we also commented on yesterday's call, recurring underlying EBITDA ex ForEx grew by 27% year-on-year.

This growth, very robust growth reflect a significant step-up in the generation following the record capacity additions in '24, offsetting worse renewable sources and also normalization of selling prices primarily in Europe. Overall, EDPR continues to deliver strong operational momentum and translate to capacity growth into earnings growth.

Now looking at the Networks EBITDA on Slide 16. Recurring EBITDA reached EUR 1.54 billion in 2025, representing a 4% decrease year-on-year, but this is primarily explained by devaluation of the Brazilian real.

The absence of asset rotation gains in Brazil, which amounted to EUR 71 million in '24, combination of deconsolidation of transmission assets, the decrease on the distribution company's residual value update and transmission inflation update. But this is compensated overall by improving operating performance.

Again, excluding FX and asset rotation, underlying EBITDA increased 3%. It has an important contribution of EUR 56 million in EBITDA from Iberia, the following inflation update in Portugal and RAB growth overall.

So all in all, the network segment is showing a resilient operational performance with a very supportive regulatory farmwork as Miguel just described going into the future. On financial costs, following slide.

Net financial costs increased from EUR 865 million to EUR 989 million. There are 2 mains drivers to this.

The first one is that net interest costs, which add about EUR 54 million. They reflect higher average debt and a higher cost of debt in Brazilian reals, where the average cost rose from 11.7% to 14.1%, reflecting the macro conditions in the country.

Excluding Brazil, the average cost of debt reduced to 3.3%. Second, lower capitalizations and other effects contributing with an addition EUR 69 million.

This is largely explained by the EUR 1.2 billion reduction in work in progress as projects enter the operation, and therefore, reducing capitalizing interest. If you look to the right-hand side, average nominal debt by currency remains broadly stable year-on-year.

The portfolio continues to be predominantly euro-denominated with 64%, followed by U.S. dollar, 16%; and Brazilian real at 15%.

Finally, in terms of recent financing activity, we issued a 6-year senior bond EUR 650 million in January with a 3.25% coupon. So this confirms the competitive access of EDP to funding in the debt markets.

Now let's move to the cash flow on the following slide. Organic cash flow reached EUR 3.3 billion, up EUR 0.5 billion year-on-year, driven by EBITDA improvement in working capital management.

Net interest paid amounts to EUR 0.8 billion, partially offsetting the operating improvement. And on investments, gross investments totaled EUR 3.9 billion, mainly EUR 2.4 EDPR and EUR 1.1 billion in Electricity Networks, plus EUR 0.4 billion in FlexGen and Clients.

These gross investments were funded through EUR 1.6 billion of asset rotation and EUR 0.8 billion of Tax Equity proceeds. There are also EUR 0.5 billion of other impacts, mainly related with payments to fixed asset suppliers.

So as a result, a total of EUR 1.7 billion of net cash investments, of which close to 50% in electricity networks and around 40% in EDPR. Now on Slide 19, net debt stood at EUR 15.4 billion, down from EUR 15.6 billion at the end of 2024 and outperforming EUR 16 billion guidance that we gave to the market.

The key drivers for the change in net debt includes EUR 3.3 billion of organic cash flow. Obviously, the EUR 0.8 billion of dividend annual payment and the EUR 100 million share buyback throughout '25.

The EUR 1.7 billion of net cash investments that I just explained, also EUR 0.8 billion of regulatory receivables and about EUR 0.3 billion from FX and other, mostly related to U.S. denominated debt.

So as a result of cash flow management, balance sheet discipline and obviously, very strong operational cash flow, we do have solid credit metrics with 20.9% FFO net debt and 3.3x net debt EBITDA. Now on the net profit.

Net profit reached EUR 1.28 billion. That's a reduction of 8% year-on-year.

And this is mostly reflected or driven by the higher EBITDA, EUR 74 million, higher D&A and provisions, increasing EUR 60 million year-on-year, reflecting the investment path, higher net financial costs due to higher cost of debt and lower capitalizations, slightly higher income taxes and noncontrolling interests. Excluding asset rotation gains and the ForEx, the underlying net profit increased 3%, confirming a very solid operational performance, as we just described.

Reported terms, net profit reached EUR 1.15 billion, including the negative impact of EUR 130 million, mostly related with some nonrecurring items in EDPR. Year-on-year reported net profit, therefore, increased 44% also driven by EDPR performance rebound compared to a negative 2024.

This improvement in net profit supports our proposal to increase the dividend to EUR 0.205 per share, up 2.5% versus the guidance to be paid in 2026, obviously subject to the approval at the shareholders' meeting. And now let me just address a topic, which I think is relevant regarding the net income sensitivity to power prices versus what we presented at the CMD.

So on this slide our -- just again to remind everybody. So our exposure to energy market is well diversified.

And as you know, we have a very active energy management. The portfolio is predominantly long-term contracted.

This provides strong cash flow visibility and obviously reduces short-term impact from price volatility. In Iberia and Brazil, we have a structural short position in generation, which hedged through our supply business, so partially offsetting wholesale price movements.

At the CMD, we disclosed that the simultaneous 5 years per megawatt hour movement in all markets, would imply approximately EUR 60 million impact on 2028 net income. Since then, Iberia 2028 forwards have declined around EUR 10 per mega hour.

But on the other hand, U.S. and Brazil forward curves are moving upwards.

So this portfolio diversification plus an active energy management have actually reduced the sensitivity. So today, the same 5 years per megawatt hour movement across all markets in the same direction would imply approximately EUR 45 million impact on net income 2028 again versus the EUR 60 million that we presented at the CMD, so a reduction on the sensitivity.

The merchant exposure split is about 65% Europe, 20% Brazil and 15% North America. So with this, I would hand over to Miguel for final remarks.

Thank you.

Thank you, Rui. As you say, I think to push on the sensitivity to power price is an important point to note because I know there are questions on that.

Anyway, if we move forward to the final slide, just before we open it up for Q&A. So summarizing the 2025 results and how we're seeing 2026 and beyond.

First in relation to '25, I think it's undeniable that it was very strong execution and delivery of what we had promised. Across the group, we delivered ahead of guidance, and we're seeing a clear structural change in FlexGen and Clients with the value flexibility coming through very strongly.

At the same time, EDPR also improved its performance, has its continued focus on A-rated markets. It's got better visibility on the business plan execution.

In networks, we have significantly improved visibility with the regulatory periods closed in Portugal and Spain, and we also advanced in Brazil with the extension of the concessions. And importantly, all of this was delivered with financial discipline and increased efficiency in Sweden.

Spoke about, particularly on the cost side, but also on the debt side, supporting the maintenance of sound credit ratios. Second, looking at the 2026 guidance.

We expect to recurring EBITDA of around EUR 4.9 billion to EUR 5 billion, and this is supported by the balanced contribution across the portfolio. We have the networks around EUR 1.5 billion to EUR 1.6 billion.

And EBITDA at around EUR 2.1 billion as mentioned yesterday. FlexGen and Clients is around EUR 1.3 billion to EUR 1.4 billion, and we reaffirm our recurring net profit of EUR 1.2 billion to EUR 1.3 billion.

On the 2028 targets. And over the course of the next couple of years, we continue to expect around EUR 12 billion of gross investments.

And I say this will be funded with discipline and supported by around EUR 6 billion of asset rotations and disposals. We'll keep our balance sheet targets unchanged.

So we're targeting FFO over net debt of around 22%. And in terms of earnings delivery, we remain committed to the EUR 5.2 billion of recurring EBITDA and the EUR 1.3 billion of recurring net profit by 2028.

So overall, this is consistent. We executed strongly in 2025.

We have very clear visibility for '26, and we are reiterating our 2028 guidance. With that, happy to turn it over to Q&A and back to you, Miguel.

Thanks.

We will begin by addressing the questions submitted in writing. After that, we will move on to the live questions by phone.

[Operator Instructions] So we'll start with the written questions. And we have for first question from analyst at RBC and the other analysts GB Capital, Deutsche Bank, CaixaBank regarding the guidance for 2026 that we provide.

So we are guiding stable EBITDA versus what we present at CMD, while at EDPR, there was a slight revision. So if we can explain this in detail, this better guidance.

Sure. So as I mentioned, I think 2026 we're very comfortable with it.

I mean a couple of points that have improved since the Capital Markets Day last November. The regulated rate of return for the distribution in Portugal was better than the initial proposal.

So that was an upside. The callback was suspended as of December.

And previously, we're assuming that we will have that over the next couple of years. So that's also positive.

January and February saw obviously very strong hydro inflows. And I showed you the numbers in terms of how the reservoirs are, they're sort of all-time highs.

So full capacity there. So good visibility also in the next couple of months in terms of hydro.

On slightly negative low wholesale prices in February and higher than normal ancillary services in terms of supply, also some transmission grid restrictions due to the storms, still be fixed. So that's on the negative side.

But we are expecting these to decline over the next couple of months and also the wholesale prices in Iberia to normalize again, also over the next couple of months. On ForEx and FX, we have a slightly lower dollar versus the euro, as we commented yesterday on the EDPR level.

But on the other hand, we're seeing a positive rebound of the Brazilian real. So we're now seeing BRL 6 per euro versus our business plan assumptions of BRL 6.6 per euro for 2026.

So quite a few positives, a couple of negatives, but all in, quite frankly, we feel very confident with the 2026 guidance.

Yes. We have then a second question about net debt.

So what contributed to the positive deviation of our net debt figure in 2025, so the EUR 15.4 billion versus the EUR 16 billion guidance that we have provided. And also a question around update for net debt expected evolution over 2026.

Thank you, Miguel. So first of all, Q4 was very good in terms of operational call, strong contribution from the integrated segment in Iberia.

So that's the first one. Obviously, there is some impact from working capital that we will see then reverting in the -- now in 2026.

So what I would say is that, first of all, 2026 we are looking at around EUR 16 billion of net debt towards the year-end. Typically, as you know, we have, during the first half rise in net debt coming either from this working capital.

Also, bear in mind that we have the Greek transaction, but also dividend payments in the second quarter. And then as we start having the -- also the cash in from asset rotation tax equity proceeds towards the end of the year, it tends to go down again.

So that's why we are looking at around EUR 16 billion by the 2026.

We have then a question around the news of yesterday regarding memorandum of understanding with Start Campus. What does it mean for EDP and this engagement?

So questions from Alex from Bank of America, Fernando, CRBC.

So it's an interesting step. I think it's one of many we've been taking.

It's -- essentially the MOU just an interest of both parties to explore the synergies between their activities. I mean, obviously, we as experts on the energy side and them on the infrastructure side.

I'd say there's actually 3 parts to the MOU. I think the first is for EDP to be considered the strategic energy partner to the Start Campus projects, whether it's through power supply as is or through additionality of projects, sort of the Start Campus infrastructure to be built out.

The second is just synergy between the data campus center or project and the infrastructure that we already manage, for example, in the Sines power plant. So for example, like on the water side in terms of cooling.

And the third is really potential collaboration for other data centers in Portugal that campus might want to develop, leveraging on EDP's assets and capabilities of land and generation assets that we own in Portugal and so explore potential collaborations. I think above all, it's opening up the possibility for creating additional value from our existing assets and operations as well as getting additional visibility on future demand volumes, which could support the development of a sizable pipeline of renewable energy projects as we've discussed in the past.

So overall, it's just, I think, a step, one of many that we expect to take in this area.

Then also a question from Pedro Alves, Caixa Bank regarding the effective tax rate evolution. So from the 28% in 2025 and also explaining where do we see -- so explaining the 28% and how we see the evolution for '26.

So 2025, 28% tax rate was primarily driven by the fact that we had lower asset rotation gains and some costs that are not deductible -- tax deductible and that was basically impacted the rate. But if you think about 2026, you could consider as sort of low 20s.

And this is because we expect again to increase the capital, the asset rotation gains from the transactions and also the declining tax rate in Portugal, which as you know will be dropping by 1 percentage point every year until 2028. So '26 around the low 20s.

We have then a question from Pedro from CaixaBank regarding, if we can explain a little bit better the inflation update in terms of real, in terms of the impact in our EBITDA in Brazilian networks in 2025? And how do we see it evolving for '26, '28?

So in '25, we had the extension of the concession in Espirito Santo for another 30 years. And we expect to have that extension as well for Sao Paulo and that's been sort of approved by the regulator.

We're just pending the final signature in the next couple of weeks. So there's a positive impact from the inflation update of this residual value, which existed in '25, which becomes immaterial from 2026 onwards.

To be specific, in '25 in the Electricity Networks in Brazil, we had around EUR 70 million of EBITDA from inflation updates in both the distribution companies and the transmission companies. And we had around EUR 20 million from EBITDA from the 2 transmission lines that we then sold in the fourth quarter of 2025.

So the impact of this inflation update in the networks has declined in 2025 already versus '24, but in '23 -- in '26, it will be immaterial. I think it's important to note the following.

We are under discussion with ANEEL and which is the regulator in Brazil. We and the other distributors, but we are more advanced in this process because we're the first ones to have our concessions renewed, but to change the recognition of investments in the company's asset base.

As I mentioned, I think, at the Capital Markets Day, and I'll just reiterate, they're currently only recognized every 5 years with tariff provisions. So there's still no conclusion, but we see a positive sign that at least the regulator is willing to consider this and that would allow us to have this intra-cycle recognition of investments rather than having to wait for the end of the regulatory period.

So that's work in progress. We're certainly very committed to it, and we think others will be as well as soon as they start seeing our concessions being renewed as well.

We have a question from Jorge Alonso from Bernstein. Also, regarding the current power price environment, how confident are we to maintain our 2028 guidance.

And regarding the assumptions that we provided at CMD and the current forwards as we see the guidance for '28?

So as I also briefly explained with that slide on sensitivity, I mean, effectively, we do have, as you know, short positions in both -- structurally short positions in generation in both Iberia and Brazil. This we hedge primarily through our clients' business, but we also have a very active energy management.

And then on the rest of the other markets, as you know, we have from an EDPR standpoint, 85% is actually long-term contracted. On this, basically, what we have done since the CMD is obviously to increase the hedging.

So we have been working actively on the hedging on the energy management. So for 2026, 85% of the volumes are hedged at a price which is north of EUR 64 per megawatt hour.

For '27, '28, we have about 50% of baseload volumes hedged above the current forward prices. So obviously, this gives us stability and predictability versus the changes in the forward curves.

But also on the other markets, U.S., the exposure is mostly concentrated in PJM and MISO. We have -- we are seeing forward prices going up by around $5 per megawatt hour.

Also in Brazil, where we have lower exposure, but still relevant, the PLD has been rising significantly since the CMD. So that's why, all in all, again, this portfolio diversification, the very active energy management is giving us confidence towards the 2028 guidance.

So more importantly, as I said, we actually reduced the portfolio exposure to these price movements. So at the CMD in November, we were estimating around EUR 60 million.

And now we are looking at a substantially lower number.

We have now question Manuel Palomo, BNP. What is your take about increasing concerns about affordability and the approval of the energy decree to reduce price by the Italian government and if we could expect any contagion effect?

Well, I think this is an important point just to take a step back. I think we are all focused on competitiveness of the economy.

And what's good for the overall economy is good for the companies. As I mentioned, most of our exposure is in Iberia, and we specifically put up a slide, which shows that in Iberia, Portugal and Spain, we already have some of the lowest prices in Europe.

And they are expected to even trend lower as some of the existing costs in the system come to an end, like the tariff deficit payments, which are being amortized and like the feed-in tariffs, for example. So the trend is -- it's already much lower than the rest of Europe and trending lower.

So the affordability and competitiveness, I think, in Iberia is actually a positive. And it means they can take additional investment, they can take sort of some of the ancillary services without impacting the affordability.

On the Italian case, I think it still has to go through the, let's say, finally prolongated, and I'm sure you have a lot of discussion at the European level. Conceptually, sort of understands, but disagree with what it's doing.

There's been a lot of discussion already 2 years ago about market design, about how to make things -- make the wholesale market work differently. And ultimately, it always comes back to the marginal pricing system is the system that works best.

CO2 has to be internalized and that continues to be a key priority for Europe. And so this is something to watch, but we don't expect it to have any material impact in Iberia.

So we move now to the questions on the phone, and we start for the first question that comes from the line of Fernando from Royal Bank of Canada. Fernando, please go ahead.

I'm curious because I am seeing a significant increase in CCGT's output in Portugal and this despite the strong hydro and wind output so far in the year, particularly in February. So my question here is this is explained by the elimination of the Portuguese clawback?

And if this could be a potential upside to your estimated positive impact, I think you mentioned EUR 25 million for 2026.

Excellent. So you're right, CCGT output has increased.

It's more related to -- so the ancillary services means the system operators wanted to keep these working sort of as backup as the system. So it's already this trend, as you know, following the blackout of last year.

It then started to decrease. Now it's increased significantly because of some specific issues here in Portugal relating to all the storms that happened and sort of the disruption to the network.

I wouldn't say it's an upside, probably it's a downside in the sense that higher ancillary costs would have a knock-on impact if they're not passed on to the suppliers. So it's something to watch.

We expect this to normalize over the next couple of weeks, but it's basically the CCGTs working over time basically over the month of February.

And we have a final question from the line of Alberto Gandolfi from Goldman Sachs. Alberto, please go ahead.

So my first question is, I wanted to ask you about Brazil. Is it a region where you think you might be growing exposure?

There are potentially assets for sale. You're happy with the status quo?

Or is it something that given the better returns in Portugal and the clarity in Spanish networks, you might think about deemphasizing a little bit. The second question is a clarification on Slide 21.

Am I right in saying that the EUR 45 million impact on net income is therefore adjusted for 50% hedging. So in other words, without hedging, do we just double the EUR 45 million?

Or is it -- so can you maybe help us on that a little bit? And last one, on this data center opportunity, it seems you're very active in this booming Portuguese market.

Can I ask you if you are planning to build potentially incremental capacity if you were to sign a PPA there? Or would it be from existing?

And would it be done at EDP or EDPR level if it were to happen?

So good questions. I think in relation to Brazil, listen, we have a long track record in Brazil over 30 years.

I think we have a great business there. We continue to look at opportunities for growth there to the extent that it makes sense within the overall Brazilian exposure that cap that we've always talked about.

Obviously, we continue to see how best to allocate capital. And so we've sold assets in Brazil in the past.

I mean, even recently, we did the asset rotation of the transmission lines. We sold the hydro.

So we will continue to adjust and fine-tune our exposure to Brazil and obviously, reallocate capital to where we think is best at any particular time, whether it's Europe or the U.S. at the moment.

But I'd say that we like having this diversification of geographies because it does allow us to allocate capital quite well, depending on the different cycles in the different geographies. On the third question, and then I'll let take the second question.

On the third question, so essentially, what we're seeing is that there's a certain amount of power that can probably be supplied just as is because there's sufficient reserve margin in the system to be able to supply these data centers without necessarily having to go and build new power plants. And so that's a positive, I think, for the system.

We just need to make sure the networks are there, but that's essentially the key issue because as long as there's reserve margin, you can feed it. If the demand then starts getting above a certain level and if you start having to Start Campus and Merlin and others, then yes, then we need to think about incremental capacity of different technologies.

And then depending on what that incremental technology is, if it's renewables, it will definitely be done through EDP Renewables, which as you know has the exclusivity for renewable development, well, certainly in Nigeria, but elsewhere in the world as well. If it's, for example, if it was to be like a thermal technology, then obviously it would be, for example, with EDP or if it was hydro, for example, would be through EDP.

But -- so there's a certain amount that can be done with existing capacity -- supplied with existing capacity and then above that level, then you start getting into having to build incremental capacity, and we're obviously looking at that and thinking about when that would come down the pipeline. But it will depend on also how the demand is evolving.

Alberto, so on the second one, I mean, this is also the result of different diversification effects. So looking at the portfolio as a whole, through the different trends, again, the active management that we run on every single market.

This is how we are bringing down the sensitivity from the EUR 60 million to the EUR 45 million. And again, just bearing in mind, this is -- if all the markets would move in the same direction to preserve the plan.

So no, you cannot sort of double the sensitivity if the hedging was coming down to 0. It's a bit more complex than that.

So I'll pass now back to our CFO for final remarks.

So final remarks. I just reiterate, again, 2025 was a great year for EDP.

I think we delivered and delivered solidly on all of the different metrics, whether it was on EBITDA, net income, net debt, the credit ratios, improving the dividend. So a really solid, solid year for '25.

And I think we come into 2026 also on a good footing with record high hydro levels and reserves with improved regulation, improved perspectives in both Spain and the other geographies we're in like the U.S. So really, I think we are very confident also on the guidance for 2026.

And I think that's one of the messages that I really wanted to reiterate. And going forward, we continue to see great projects coming down the pipeline, certainly on the EDPR side, which makes us feel confident in relation to 2028.

I mean, obviously, we'll go on monitoring this issues around the power prices. But as Rui has mentioned, we are relatively protected in relation to that.

And we think that is a discussion that will play out over the next couple of months in Europe. But at the end of the day, we're all aligned that competitiveness is important, but it's also important to keep the stability of the rules and make sure that there's space to invest or for investors to the capital allocation and feel safe about their investments, whether it's on the network side or on the generation side.

So listen, good '25, good prospects for 2026 and reiterating the guidance with confidence and looking forward also to the next couple of years, reiterating also our 2028 guidance. With that, thank you very much.

Look forward to seeing you soon and keep in touch.