EUR74.3 MILLION PROFIT IN 2018

Spain 2020 | GREEN ECONOMY | VIP INTERVIEW

TBY talks to Jaime Real de Asúa, President of Elecnor, on over half a century of operations, Spain's electricity grid, and Latin American markets.

Elecnor was founded in 1958. How has the company developed since then?

Elecnor has transformed significantly over the years, venturing into sectors such as energy infrastructure, renewable energy, and new technologies. The company has also expanded its international presence over the years and is a listed company in the Spanish stock market. In 2018, Spain made up approximately 45% of our turnover, with the rest coming from international markets. At this time, we have a presence in 55 countries and the order book also shows the relevance of the international business for us. Thus, in the first half year, 78% of the orders came from non-domestic markets. It means that the backlog amount of this international portfolio was above 1.700 million euro in this period.

In 2018, you reported almost EUR74.3 million in net profits. What is your strategy to grow further?

We have two areas that complement and strengthen each other. Firstly, Elecnor has evolved into a world leader with the capacity and determination to develop, create and operate energy infrastructures, as well as becoming a leading provider of specialised engineering services for industry. We have a strong culture of service that serves to build strong, trusting relationships with our long-term customers. The second part is the concession business in the renewable and transmission lines sectors. Our first subsidiary was launched in Venezuela, back in the 60s. We lead international expansion and we have decades of experience in America and Africa. As a result, we have a deep knowledge and experience of the countries we work in. Elecnor will keep opening new markets, always driven by criterion of prudence. In this sense, we strongly believe that it is crucial to analyze all the details of a potential new market, as well as studying the competitive environment and evaluating our strengths over competitors. In keeping with this strategy, profits have registered increases for the last three years around 4% per year. Thus, in 2016 net benefit was EUR68.5million, in 2017 EUR71.2 million and last year EUR74.3 million. In the first six months of 2019, net benefit also has increased by 5% as for the same period of 2018.

Do you work with local partners in countries such as Brazil, Chile, and México?

Indeed, consolidating and positioning the company in these markets has taken many years of work, and involved collaborating with and learning from local private and public sector partners. We enter a country alone or by forming temporary unions. Depending on the potential of the country, and whether there are real possibilities of long-term success, we establish a branch or a subsidiary. The three countries that you mentioned are an example of this. We have been working there consistently for several decades. Thanks to our solid 35-year history in the country, Brazil is the second most important market for Elecnor after Spain. Notable projects include the wind farm in Rio Grande do Sul, one of the largest in the southern hemisphere, and building more than 8,000 kilometres of power transmission lines. Elecnor first began operations in Chile in the 1980s. By 1994 we had already overcome a great challenge: building two hydroelectric power plants on the River Duqueco. Elecnor now plays a crucial role in energy development in the country, in terms of transmitting power, developing non-conventional renewable energy (NCRE) and ensuring efficient energy use in installations. Mexico is also a key market for Elecnor. This is the result of an extensive 25-year history in the country, evidenced by remarkable projects such as the construction of 65 electrical substations with a total of 7,000 MVA of installed power; and the laying of 1,100 kilometres of transmission lines and 255 kilometres of optical fibre, without forgetting our EPC's in combined cycle plants.

You mentioned the importance of Brazil, Chile, and México. Is the company focusing on Latin America?

The Latin American market was our first international market, but Elecnor is a global company and we are present on all five continents. In America, we are also working in countries as competitive as the US and Canada. We have a stable presence in Africa, particularly in key markets such as Cameroon, Angola and Ghana. In Asia, we work in Middle Eastern countries such as Oman and Jordan. Australia is as a very interesting market and indeed we have undertaken some ambitious wind and solar projects. But in particular, I would like to highlight the international expansion that we have achieved in Europe in recent years. We are able to be competitive and win unique projects over large local companies in countries such as the United Kingdom, Italy, Portugal and Norway. For example, we have been deploying fiber optics in Italy for two years.

How much do you invest in R&D and what importance does that hold?

We are committed with R&D and in fact, we are increasing our budget in this field. We work in a global market increasingly challenging and in this context, it is needed to make a difference with our competitors. I am convinced that in the coming years, those companies with no added value to offer will not survive. Given our activity, we pay very close attention to Occupational Health and Safety. Our preventive culture has been firmly implanted in all areas of the company to continuously improve safety levels, with a target of zero accidents and zero tolerance of non-compliance. A few years ago we launched an ambitious initiative: our Excellence in Safety project. This was launched in collaboration with Dupont, which continuously evaluates all of our preventive actions and implements a steady stream of improvements to reduce accidents. We must continue improving each day to prevent all workplace accidents within our company.

What strategy do you follow to find and retain human talent?

Elecnor is a large group that works in many countries and according to 2018 data, the company employs 13,800 employees. We transmit and develop the Elecnor culture to encourage people to feel a special bond with the group. The level of permanence of the personnel in the company is long, and the workforce of the company is young; 53% of the workforce is made up of people that are less than 40 years old. We have employees of 55 different nationalities and 36% of those work outside of Spain. The most remarkable aspect of working for Elecnor is the Elecnor culture, and we improve and encourage it at all times.

What is the role of the public sector in the sector?

Infrastructures are on the base of the economic growth in any country or region and if this investment is made in the correct way it can have a relevant impact on GPD growth. Elecnor is aware of this point and has a leading role in the energy development of the countries where we manage projects, both in the generation and transmission of energy, as well as in the development of NCRE and in the application of energy saving installations. Our relationship with the public sector has always been close; we get along well with the public sector as well as the private sector. The regulatory frameworks and political stability are what makes a country attractive for investment, so when these bases are covered, there is no doubt that economy will thrive.

The technology is not yet modern enough to deal with the volume and geography that energy transportation requires. What are the biggest challenges in this context?

We are all aware about the recent blackouts in New York, Argentina, Uruguay, and the rest of the world; these incidents show how vital the issue of interconnections is. In a globalized world, the transport of energy also has to be global. For example, regardless of whether the UK leaves the EU or not, interconnections between the UK and the EU must be developed.

What are some of the recent innovative projects that the company has undertaken?

After 20 years in operation, the Malpica wind farm in Galicia, northwest region in Spain, has been fully upgraded, a process which involved the replacement of its 69 wind turbines featuring now obsolete technology with 7 modern turbines with an annual output of 66 GWh. This is twice that of the replaced turbines. The new wind farm also has a far smaller environmental and landscape impact, with a reduced footprint and a reduction in the number of turbines. Notably, the modern wind and solar technologies are completely different than the technology of 10 years ago. We are very proud of the renewable projects that we are building, operating and maintaining in such an interesting market as Australia. Bungala Solar, located north of Port Augusta in the state of South Australia, is the largest PV project developed to date in Australia. The complex will boast a capacity of 374 MWp and will be rolled out in three phases. The first two, Bungala One and Bungala Two, have an installed capacity of 137 MWp each. The remaining 100 MWp are in development.

What are the company's objectives for 2020?

Elecnor's objective is to grow solidly, together with its clients and shareholders. In addition to that, we will try to increase the remuneration for our shareholders. On the client side, our primary goal is to provide the best service at both the national and international levels. Internationally, we aim to form new partnerships. In 2018, Elecnor has been awarded UNE-ISO 37001 certification. Elecnor is the first company in its sector in Spain to achieve certification under this standard. The award of this certification is simply a further illustration of Elecnor's longstanding and ongoing commitment to strengthening and consolidating the ethical commitment of its employees and stakeholders in all areas of our activity. The Group carries out its activity with a clear commitment to sustainability and the environment as well as the objective of creating value in the environments in which it operates.