ENDESA ANNOUNCES 1998 YEAR-END RESULTS

Business Editors 
NEW YORK--(BUSINESS WIRE)--Feb. 25, 1999-- 
Net Income of Pta.182,56 billion ($1,284.00 million), 
9.5 % up on 1997 Earnings per share of Pta.183 ($1.34) up 14.2 % 
--   Cash Flow amounted to Pta. 489.00 billion ($3,440.01 billion), on 
a homogeneous basis with 1997, the increase has been 5.9%. 
--   Operating expenses, without including electricity purchases, were 
Pta.87.16 billion ($613.17 million) lower than in 1997, 
representing 11.3% of those items' total. 
--   Capital expenditures main highlight were Pta.62.39 billion 
($438.87 million) in electricity distribution, mainly related to 
improvements in customer service quality. 
--   Disposals of non-core assets in 1998 had a positive impact on net 
earning of Pta.36.36 billion ($255.79 million) 
--   Electricity sales to final consumers in 1998 amounted to 74,073 
GWh, 6,6% higher than in 1997. Sales represent 43% market share, 
similar than in 1997. 
Endesa (NYSE:ELE) released today its consolidated results for
year-end 1998. 
Net income of the Group during 1998 was Pta.182,56 billion
($1,284.00 million), 9.5% higher than the precedent year. 
This improvement in net income was achieved within a new
regulatory framework that opened the market to competition and brought
along a 3.6% tariff reduction, and was made possible to a great extent
thanks to the strategy of costs reduction. These measures has allowed
to reduce operating expenses, without including electricity purchases,
by Pta.87.16 billion ($613.17 million), representing 11.3% of those
items' total. 
Additionally, disposals of non-core assets along 1998 (RWE, Union
Fenosa and Red Electrica) had a positive impact on net earning of
Pta.36.36 billion ($255.79 million). 
International business and domestic diversification have had a
net earnings contribution of 8.8% and 4.6% respectively. International
activities' contribution was achieved within a significant
international financial crisis, and was made possible thanks to the
strong operative results of our international affiliates and to the
capital gains arising from the divestment of RWE. 
Cash Flow and Investments 
Cash flow generated amounted to Pta.489.00 billion ($3,440.0
million), 2.3% higher than in 1997. However, on a homogeneous basis,
the increase would have been 5.9% due to new rules in the accounting
criteria of nuclear fuel consumption, that amounted to Pta.17.04
billion ($119.90 million), and it is considered now operating expenses
instead of asset depreciation. 
Total investments amounted to Pta.389.04 billion ($2,736.8
million), of which Pta.136.20 billion ($958.16 million) were capital
expenditures, Pta.5.99 million ($42.15 million) were intangible assets
and Pta.246.85 billion ($1,736.5 million) were financial investments. 
Capital expenditures main highlight were Pta.62.39 billion
($438.87 million) in electricity distribution, mainly related to
improvements in customer service quality. Among the rest of capital
expenditures were Pta.37.00 billion ($260.24 million) investments in
electricity generation, Pta.17.20 billion ($120.98 million) in Spain,
and Pta.19.62 billion ($138.04 million) to acquire a building site in
Madrid that will centralized all group activities in this city
allowing additional cost savings. 
Financial investments include Pta.82.26 billion ($578.71 million)
in the acquisition in December of a 3.64% stake in REPSOL. 
--   International financial investments amounted to Pta.99.23 billion 
($698.09 million), of which main highlights were: Pta.51.46 
billion ($362.02 million) in the acquisition of COELCE (Brazil) 
and Pta.16.64 billion ($117.09 million) in the acquisition of an 
additional 2.7% stake in ENERSIS (Chile) which increases total 
interest in this company to 31.9%. 
Among the rest of financial investments, Pta.26.63 billion
($187.30 million), were related to domestic diversification in
telecommunications, water, gas and co-generation and renewable
energies. 
Therefore, Pta.489.00 billion ($3,440.01 million) funds generated
in the period have allowed financing all Pta.389.04 billion ($2,736.81
million) investments, and dividend payment amounting to Pta.94.54
billion ($665.04 million). 
Production and Demand 
Electricity sales to final consumers in 1998 amounted to 74,073
GWh, 6,6% higher than in 1997. Sales represent 43% market share,
similar than in 1997. 
Total electricity generation was 89,440 GWh, up 0.6 % from 1997.
The lower growth in generation was due to a 21.1% increase in energy
sold by self-producers and to a net electricity importing balance
which amounted to 2% of total production in the mainland system
against a exporting balance of 1.9% in the previous year. 
This electricity generation represents a market share of 53.2%
among the electric utilities in Spain, similar to 1997. 
The following table sets forth a breakdown of generation by
source both for Endesa and the whole industry during the period: 



%                       Endesa                          TOTAL
                1998              1997           1998            1997

Nuclear         30.9              28.6           35.1            33.3

Coal            46.6              46.0           37.7            38.7

Hydro           12.6              13.4           20.2            20.0

Oil-Gas          9.9              12.0            7.0             8.0

               100.0             100.0          100.0           100.0

Operating Margin

     The operating margin was 5.7% lower than in 1997. This reduction
was mainly caused by a 10% drop in revenues, net from energy
purchases, due new electricity regulation impact as follows:

--   Starting new wholesale electricity market.

--   3.6% drop in tariffs in 1998.

--   New revenues allocation scheme between generation and
     distribution, benefiting the later.

     The negative effects on net sales have result in a 5.7% drop in
operating income as it have been partially offset by costs reduction
broken down as follows:

                                              % of reduction 98/97

Purchases                                           27.4%

Power Transmission and others                       15.2%

Personnel Expenses                                   8.2%

Other Operating Expenses                             5.3%

(1)  on a homogeneous basis with 1998 accounting criteria of nuclear
     fuel consumption as a operating expenses instead of asset
     depreciation.

     It is worth mentioning that in spite of the drop of 5.7% in
operating income for the full year, during the fourth quarter the
operating income went down by only 1%.

     The main factors which have led to this improvement in the
operating margin in the last quarter were the following:


-    An 8.7% rise in production which reduced the fall in sales to
     4.2% for the period

-    A 13.4% reduction in labour expenses Since most of the workforce
     reduction took place in the third quarter fourth quarter figures
     better reflect the impact.

Cost Reduction Plan

     Out of the total Pta. 114.00 billion ($ 801.96 million)
controllable cost reduction plan set for the 1997-2002 period, the
achievements two years after its inception are reflected by total
savings of Pta. 47.00 billion ($ 330.63 million), 41.2% of the
targeted amount.
     Workforce as of 31 December 1998 was 19,479 employees, with a
reduction of 3,898 during the year. As previously mentioned, most of
this reduction was achieved in the third quarter.
     This makes it likely for labour expenses - which represent
approximately half of the cost reduction plan - to experience an
important drop in 1999.

Financial Results

     Negative financial results for Pta. 49.72 billion ($ 349.77
million) correspond to a net financial income of Pta. 49.42 billion ($
347.66 million) and to financial expenses of Pta. 99.14 billion ($
697.43 million).
     Financial income included the gains on disposals of RWE and Union
Fenosa which added up to Pta. 38.19 billion ($ 273.72 million). Not
accounting for the above there is no significant difference vis-a-vis
the previous quarter.
     On the other hand, financial expenses fell 6.2% from 1997 levels
by Pta. 6.52 billion ($ 45.86 million) and include Pta. 79.42 billion
($ 558.70 million) corresponding to financial debt and Pta. 19.72
billion ($ 138.73 million) to the financial accrual of pension fund
liabilities and early retirement plans.
     Financial expenses derived from the Group's indebtedness
decreased 12.4% with respect to the previous year despite a Pta.
305.35 billion ($ 2,148.08 million) rise in the total Group's debt to
Pta. 1,721.28 billion ($ 12,108.90million) as of 31 December 1998.
     The drop in financial expenses de spite an increase in total debt
is owed to a fall in the average cost of debt for the Group from 5.82%
in 1997 to 4.96% in 1998, being 4.48% at year end.
     This reduction in the average cost of debt has been made possible
by means of a flexible debt structure which allows to take advantage
of reductions in interest rates, with a large proportion of the
current debt being hedged against possible rises in interest rates.
     The Group's capacity to take advantage of the drop in interest
rates has made it possible to carry out last year's capital reduction
without an increase in financial expenses.

Extraordinary Results

     Extraordinary results reflect a net loss of Pta. 15.55 billion ($
109.39 million), Pta. 1.99 billion ($ 13.99 million) higher than 1997.

     The main items have been the following:

-    A Pta. 19.99 billion ($ 13.99 million) capital gain from the
     disposal of Red Electrica

-    Total provisions for Pta. 53.02 billion ($ 372.98 million)
     against Pta. 24.85 billion ($ 174.82 million) the previous year.
     This includes an extraordinary allocation of Pta. 21.06 billion
     ($ 148.15 million) to the pension funds to cover the shortfall
     arising from a reduction in the actuarial rate from 6 to 4.5% and
     from using GRMF 80-2 tables.

Information by activities

     The main magnitudes in the profit and loss account broken down by
activity are the following:

                   Total sales          Operating         Net income
                                          Income

                 Pta bn       %      Pta bn      %     Pta bn       %
Generation       624.05     45.4     201.30    63.6    100.67     55.1
Distribution     892.54     64.9     108.39    34.3     38.26     21.0
International     0.335        -      0.096       -     16.13      8.8
Diversification   30.16      2.2       6.76     2.1      8.46      4.6
Disposals Red
 Electrica Union
 Fenosa                                                 18.53     10.1
Consolidation
 and other
 adjustments    (171.82)   -12.5                          496      0.3

                   Total sales          Operating         Net income
                                          Income
                $ Mn          %       $ Mn        %     $ Mn        %
Generation     4,390.08     45.4    1,416.11    63.6   708.19     55.1
Distribution   6,278.86     64.9      762.50    34.3   269.15     21.0
International      2.35        -        .675       -   113.47      8.8
Diversification  212.17      2.2       47.55     2.1    59.51      4.6
Disposals Red
 Electrica Union
 Fenosa                                                130.35     10.1
Consolidation
 and other
 adjustments  (1,208.72)   -12.5                     3,489.27      0.3

     Consolidated statements are unaudited and prepared in accordance
with Spanish GAAP. Conversion of pesetas (Pta) into dollars ($) has
been made at the Federal Reserve Bank noon-buying rate on December 31,
1998, of $1.00 = Pta 142.15 
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