(Adds details, CEO remarks)
LISBON, July 26 (Reuters) - Portugal’s EDP-Energias de Portugal, which is the target of a takeover bid by China Three Gorges, posted a 16 percent drop in first-half net profit on Thursday, mainly due to tax and regulatory pressures in Portugal as well as foreign exchange.
The company, Portugal’s largest by assets, netted 380 million euros ($443 million) in the period. Earnings before interest, taxes, depreciation and amortization (EBITDA) fell 10 percent to 1.72 billion euros, while revenues dropped 7 percent even as power output rose by as much.
Regulatory measures had a 140 million euro impact on the accounts, EDP said, adding that when adjusted to exclude one-offs, recurring net profit rose 5 percent, helped by growth in Brazil and market improvement in Iberia after last year’s drought.
It has incurred losses from a government-imposed cut in the final compensation paid to the former monopoly for giving up some long-term power-purchase deals, an increase in clawback tax in August 2017, and higher costs of the so-called social tariff for low-income households.
CEO Antonio Mexia said the Brazilian operation had a very strong 17 percent rise in local currency earnings, but that this had been offset by an unfavourable exchange rate. The renewable energy division’s capacity rose by 6 percent.
He said the improvements in dam water levels, by 85 percent from a year ago, after abundant rains this year were yet to produce full effect this quarter as storage levels were now above the historic average.
Revenues from electricity sales fell 9 percent to 1.39 billion euros despite a rise in electricity output of 7 percent in the first quarter, when rains finally refilled most of its hydroelectric dams after a severe drought in 2016-17. The utility’s installed capacity rose 3 percent from a year earlier.
$1 = 0.8576 euros Reporting By Andrei Khalip and Sergio Goncalves, editing by Axel Bugge and Jan Harvey