Endesa to Safeguard LNG-Focused Dividend Despite $570 Million Court Order

(Reuters) — Spanish power utility Endesa said on Monday it plans to shield its dividend payment from the impact of a court order to pay $570 million following a price review of a long-term LNG supply contract.

Endesa, owned by Italian energy giant Enel, said in a statement that its board of directors would meet in two days to tweak the dividend policy and keep unchanged the shareholder remuneration for this year.

The move kicks off a key week for the energy firm, which will present its strategic update to the market on Thursday, a day after parent Enel presents it own plan.

The Spanish firm said on Monday that it will have to pay $570 million to an undisclosed LNG producer following a ruling by the International Court of Arbitration of the International Chamber of Commerce in a dispute over a retroactive price adjustment. Endesa said it will post a charge for this amount in its results.

The court decision concerns the larger of two LNG cases the company has previously disclosed. The opposing party was seeking around $1.28 billion, a company spokesperson said.

Endesa, which still faces another claim of almost $600 million, has promised shareholders a dividend of 1 euro ($1.09) a share this year, pledging to raise it to 1.2 euros next year and 1.4 euros in 2025. This corresponds to 70% of its adjusted profit.

Endesa shares were 1.17% lower in early afternoon trading in Madrid, while the broader bluechip index was up 0.7%.

"This news shows 2023 isn't the best year for gas of Endesa," RBC analysts said in a research note on Monday.

"Even if this doesn't have an impact on 2023 dividends, it will have an impact on P&L (profit and loss statement) and cash flows of the company."

($1 = 0.9168 euros) 

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