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Octopus Renewables Infrastructure Trust PLC (LSE:ORIT) Full Year 2024 Earnings Call Highlights:

GuruFocus News

31 March 2025 

In this article:

Positive Points

  • Octopus Renewables Infrastructure Trust PLC (LSE:ORIT) delivered a positive NAV total return of around 2.5% for the calendar year 2024.
  • The company paid an on-target fully covered dividend of 6.02p per share, marking the third consecutive year of dividend increase in line with inflation.
  • A successful share buyback program was implemented, initially set at 10 million pounds and later increased to 30 million pounds, contributing to NAV per share accretion.
  • The acquisition of the Ballymacarni solar complex and the Harliton project expanded their portfolio, adding significant megawatt capacity.
  • The company achieved a 7% increase in generation from its portfolio, with new projects receiving higher electricity prices and reduced operating costs, leading to increased EBITDA margins.

Negative Points

  • Despite a positive NAV return, the net asset value declined due to capital returned to shareholders and running costs.
  • The company faces challenges in reducing leverage, with a goal to bring it below 40% of gross asset value.
  • There is uncertainty in the market due to policy and government rhetoric that sometimes suggests a move away from renewables.
  • The company is reliant on capital recycling, with significant asset sales required to maintain financial health.
  • The UK market is undergoing changes in grid access reform, which could impact project timelines and costs. Warning ! GuruFocus has detected 3 Warning Sign with LSE:ORIT.

Q & A Highlights

Q: Can you provide an overview of Octopus Renewables Infrastructure Trust’s performance in 2024? 

A: During 2024, we delivered a positive NAV total return of around 2.5%, primarily driven by dividends in line with our target. Despite a decline in net asset value due to capital returns to shareholders and running costs, we paid a fully covered dividend of 6.02p per share, marking a 4% increase from the previous year. We also announced a further inflation-linked increase in the dividend target for 2025. (Unidentified_2)

Q: What strategic acquisitions and sales did the company complete in 2024? 

A: We completed the purchase of the Ballymacarni solar complex and the Harliton project, totaling 241 megawatts. Additionally, we sold the Lung Bon wind farm for EUR 70.4 million, achieving an 11.3% return. Our asset sales have realized GBP 161 million, a 12% uplift to holding value, surpassing our listed peers in the renewable space.

Q: How has the company’s generation capacity and revenue evolved over the past year? 

A: Our generation capacity increased by 7% year-on-year due to new projects and acquisitions, despite some asset sales. Revenue and EBITDA grew even more, thanks to higher electricity prices from new projects and reduced operating costs, leading to an increased EBITDA margin.

Q: What are the company’s goals for 2025? 

A: We have set three clear goals for 2025: extending our share buyback program by an additional GBP 20 million, reducing leverage to below 40% of gross asset value, and selling up to GBP 80 million of assets.

Q: What is the company’s approach to recent acquisitions and developer partnerships? 

A: Our recent acquisitions focus on the developer side, aiming for higher returns with limited capital deployment. We are supporting Nordic Renewables in Finland and BLC in the UK, providing additional capital to advance their projects, particularly in solar and battery storage.

Timing then Time In.