Solaria sees higher energy prices later this year, shares rise

By Matteo Allievi

(Reuters) - (This May 27, 2024 story has been corrected to change the company description to a renewable energy company, and not a solar panel maker, in paragraph 1 and to renewable energy firms, not solar panel manufacturers, in paragraph 4)

Spanish renewable energy company Solaria said on Monday it expected energy prices to recover over the year, which would help the firm reach its 2024 profitability target.

The company expects earnings before interest, taxes, depreciation and amortisation between 232 million and 251 million euros ($252 million-$272 million) this year compared to 200 million euros posted in 2023.

Solaria shares rose as much as 6% before paring gains to trade around 5.2% higher at closing.

Lower energy prices and higher interest rates are weighing on renewable energy firms' profits after they benefited from higher power prices in the last two years.

Solaria, however, said it expected wind and hydro energy production to decrease, driving electricity prices higher in the course of the year.

Victor Peiro, Head Of Equity Research at GVC Gaesco, however predicted more softness in the near-term after weak demand and high production of cheaper hydro power depressed prices in March.

"April was the same, so the second quarter will also be weak," Peiro said.

Despite lower prices, the solar panel maker reported a smaller than expected drop in first-quarter net profit thanks to higher revenues and the sale of some of its assets.

Solaria's net profit fell 5% to 23.6 million euros in the quarter compared with a year ago, well ahead of analysts' average forecast of 10.7 million euros, according to LSEG data.

Solaria booked 13 million euros from the sale of non-strategic assets in Spain and Portugal in the quarter.

Renta 4 analysts said asset disposals had not been expected.

Solaria sales rose 6% to 40 million euros in January-March as a 22% increase in electricity production to 406 gigawatt-hour helped offset weaker prices.

The company said it will update its strategic plan in September.

Alongside drugmaker Grifols, Solaria has been the worst performing stock on the Spanish blue chip index this year, down around 37%.

($1 = 0.9212 euros)

(Reporting by Matteo Allievi; Editing by Milla Nissi, Mark Potter and Tomasz Janowski)