Romania's Hidroelectrica expects its profit to further shrink by 13% y/y in 2025

State-controlled hydropower group Hidroelectrica (BVB: H2O), the largest electricity producer in Romania, expects its net profit to decrease by 13% y/y to RON 3.55 billion (EUR 700 million) in 2025 despite the expected 2% y/y increase in revenues to RON 10.3 billion, according to the company's budget sent o shareholders for endorsement. Of this profit, RON 3.1 billion would be distributed as dividends.

The price of Hidroelectrica's shares dropped by 1.2% on March 12, after the company's note to investors, and by 5.2% y/y amid the company's modest financial performance (compared to past years) driven by less favorable hydrological conditions.

"Hidroelectrica forecasts decreasing operational and financial results for 2025 compared to 2024, mainly influenced by less favorable hydrological conditions, which lead to an increase in the purchase of electricity in order to compensate for the hydrological deficit; recent regulations, which imply an increase in tax and fee expenses; an increase in salary expenses, according to the provisions of the collective labor agreement; an increase in estimates regarding provisions and depreciation adjustments," according to the document published in the AGA section on the Hidroelectrica website.

The net profit reported by Hidroelectrica (BVB: H2O) contracted by 35% y/y to RON 4.12 billion (EUR 800 million) in 2024, influenced by less favorable hydrological conditions – but in line with the company's expectations and the analysts' projections. The company will speed up investments.

The company's CEO Karoly Borbely announced that Hidroelectrica will distribute at least 90% of the profit as dividends, as all the state-controlled companies are likely to do in the coming years unless this interferes with key investment projects.

(Photo source: Inquam Photos/Octav Ganea)