(Updates with closing shares from first paragraph.)
Feb. 27 (Bloomberg) -- Endesa SA suspended its annual dividend for the first time after the Spanish government raised taxes on utilities during a recession. The shares rose the most in six months.
The electricity supplier majority-owned by Italy’s Enel SpA announced the halt today after saying net income dropped 8 percent to 2.03 billion ($2.66 billion) last year. Keeping the 60.6 euro-cent a share dividend paid last year would have cost Madrid-based Endesa 641 million euros.
The 68 year-old utility joins a group of Spain’s biggest companies including Telefonica SA that canceled dividends or paid them in stock, which dilutes earnings per share, as the economy heads into a second year of recession that’s curbing consumer spending and power use.
The government decreed new taxes on utilities in the past year, including a new 7 percent levy on income from generating electricity, as it struggles to curb a swelling budget deficit that’s compounded by the recession. Power demand fell about 1.2 percent last year.
Endesa’s gained 4.8 percent to close at 17.18 euros in Madrid, erasing an earlier 3.3 percent loss. That beat the 2 percent gain in Spain’s benchmark IBEX 35 and the 1.4 percent increase in the Bloomberg EMEA Electric Index.
The company reported operating cash flow slid 10 percent to 5.25 billion euros in 2012, noting that some of the new government measures didn’t take effect until 2013. Enel, which owns about 92 percent of Endesa, carried out “synergies” that saved 1.05 billion euros, Endesa said in a statement today.
Even with the tougher business environment, Endesa shares have gained 10 percent in the last three months, beating the 3.1 percent decline of the Bloomberg EMEA Electric Index.
--Editors: Will Kennedy, Reed Landberg
Todd White in Madrid at firstname.lastname@example.org