It will allocate 25% of its investments, some 8,950 million euros, to Endesa, but will be more selective in renewables and looks more at networks
Enel foresees gross investments of 35.8 billion euros for the period 2024 and 2026, focusing on the network business, where there are “fair and stable” regulatory frameworks, and being less intensive in capital and risk in renewable energies, according to the update of its strategic plan announced by the company.
This figure thus represents a slight containment with respect to the previous plan, in which it estimated investments of about 37,000 million euros for the period 2023-2025.
Enel, the main shareholder of the Spanish Endesa with a 70% stake, will concentrate its investments in six main countries in which it can take advantage of its integrated position: Italy, Spain, Brazil, Chile, Colombia and the United States.
In this way, 49% of the group’s gross investments in the period will go to Italy, 25% to Iberia -Endesa-, 19% to Latin America and 7% to North America.
In his debut as CEO at a Capital Markets Day of the Enel group, Flavio Cattaneo, indicated that this new strategy “aims to transform the Enel Group into a more efficient, more flexible and resilient organization, ready to face challenges and take advantage of opportunities.” opportunities that may arise in the future.
Specifically, of this investment effort for the next three years of the Italian energy company, more than half – some 18.6 billion euros – will be allocated to Networks, focused on improving quality, resilience and digitalization, along with new connections, confirming “the centrality of regulated businesses” in the group’s strategy.
Meanwhile, just over a third of the investment – some 12.1 billion euros – will focus on growing in renewable energy, “with more selective investment decisions, investing in onshore wind, solar and battery storage, while taking advantage of repowering,” the company stated on the occasion of its Capital Markets Day. Some 3,000 million euros of investment will be for the Clients business.
Cattaneo added in this regard that in the next three years the company will adopt “a more selective approach” in investments, “to maximize profitability and minimize risks”, focusing on its main countries.
To continue promoting its growth in renewables, Enel will assume three business models, one in which it will be 100% owner (Ownership) of the projects, which will be applied especially in Italy and Iberia, geographies with higher profitability and covered by risk. ; another association (Partnership) in which it will have a participation greater than 50% (and less than 100%); and a third in which it will have a participation equal to or less than 50% (Stewardship).
Between 2024 and 2026, Enel is confident that this model will allow it to develop some 13.4 gigawatts (GW) of new ‘green’ capacity in all the geographies in which it is present thanks to a solid portfolio of approximately 450 GW, of which approximately 160 GW are in an advanced stage.
In Europe, the group plans to invest around 7.2 billion euros of gross capex; a total of 2.6 billion euros in Latin America and 2.3 billion euros in North America.
Enel expects the investments to require fewer cash needs for the group, with expected net investments of approximately €26.2 billion, thanks also to access to European financing and a new business model based on partnerships.
NET PROFIT OF UP TO 7,300 MILLION AND MAINTAINS MINIMUM DIVIDEND.
With this plan, the Italian company expects that in 2026 its ordinary gross operating result (Ebitda) will rise to between 23,600 and 24,300 million euros and reach an ordinary net profit of between 7,100 and 7,300 million euros.
Regarding shareholder remuneration, the group’s objective is also a “simple and attractive” dividend policy, he indicated, with a minimum fixed dividend per share of 0.43 euros for the period 2024-2026 – in line with the previous period -, with a potential increase of up to 70% of the payout on ordinary net profit if cash flow neutrality is achieved.
Likewise, with its new strategy Enel expects to increase its cash generation, with total cash flows generated from operational management (FFO) that will amount to approximately 43.8 billion euros.
COST REDUCTION PLAN FOR ABOUT 1,200 MILLION.
In addition, the Italian energy company expects to achieve global cost reductions of approximately €1.2 billion in 2026, of which approximately €1 billion will come from efficiencies achieved by redefining business processes.
It also expects that the implementation of the divestment plan will produce a positive impact on its estimated net financial debt of around 11.5 billion euros between 2023 and 2024 with revenues of around 8 billion euros that it expects to be realized in 2024.
SALE OF GENERATION ASSETS IN PERU FOR 1,282 MILLION.
On the other hand, the group also announced the sale of its generation assets in Peru to Niagara Energy for about 1,400 million dollars (about 1,282 million euros).
The transaction, which estimates a global enterprise value for the Peruvian companies of around $2.1 billion (about €1.923 million), is expected to reduce the group’s consolidated net debt by around €1.6 billion between 2023 and 2024.
