Enel Green Power closes a quarter on the upswing and puts almost 9 billion in investments on the table for growth between now and 2019. The renewable energy company controlled by Enel confirms that it is focusing on the markets of the Americas, North and South, and on Africa in the medium term to carry out its development over the next five years, keeping an eye on Asia where it expects to be able to enter through three doors: Thailand, Malaysia and especially India where the government plans to build 60 million kilowatts of solar and the same amount of wind.
QUARTERLY
All the quarterly data and EGP's strategic plan were presented yesterday to the financial community by Francesco Venturini and Giulio Carone, respectively managing director and financial director of the green group. The first quarter closed with revenues up by 11,6%, Ebitda improved by 11,4% to 536 million euros, the group net result closed at 175 million with a growth of 2,9 percent. Net generation rose to 9,8 Gigawatts (+3,6%) and is attributable mainly to the entry into operation of wind farms in Latin America (472 MW) and North America (400 MW) and solar plants in Latin America (154 MW), while the decrease recorded in the Europe area is mainly due to the sale of the wind capacity in France (178 MW), finalized at the end of 2014.
STRATEGY 2015-19
But the focus of the day was above all on the strategies for 2019. Egp confirms and accelerates the expansion drivers set up to now with a growth concentrated, both in terms of capex and production, for at least half of the potential in Latin America; a flexible approach in Europe where the reduction of exposure to market risk will continue but the possibility of new acquisitions is not excluded, and a strong focus on North America and Africa. The world scenario, explained Venturini, indicates a strong increase in the demand for energy in those areas and renewables will represent, in global estimates, 50% of the incremental electricity required by the planet.
With this premise, EGP will invest 9,6 billion over the course of the plan and, of these, 8,8 billion are earmarked for growth with an increase of 60% on the previous plan. Latam (above all Chile Mexico and Brazil) will absorb 53% of this sum. The increase in production capacity is expected to amount to 7,1 Gigawatts at the end of 2019 (+50% compared to previous estimates). The objective is already covered by 60% of the projects in the pipeline. Egp offers a diversified approach for individual markets. “In Europe – explained Venturini – the worst seems to be over but we need to restore confidence in investors, we will move tactically on the various pipelines, open to investment opportunities that have a market sense”. Green field projects are instead possible in North America and Africa where expansion will extend from South Africa to Morocco and Egypt, then Algeria and Tunisia where evaluations are underway. “ In Asia there is a strong demand for electricity and a need for infrastructure. We studied the potential of the market and its attractiveness: Thailand, Malaysia and India are the most interesting countries”, Venturini specified.
Finally, Ebitda and savings. EGP estimates 120 million in overall cost savings with one 8% reduction in unit Opex and bet on a increase in Ebitda from 1,8 billion to 2,5 billion at the end of the period guaranteed by the fact that 70% of the planned growth is already ensured with won tenders and defined projects. In addition to the additional 200 Mwatts already secured in Mexico and Chile, the 3 new wind projects already won in South Africa, the recent entry into Turkey, there will also be the sale of assets in Portugal (640 Megawatts). The management will select the investments, favoring those capable of ensuring a profitability of 200-300 basis points on the WACC (weighted average cost of capital). Finally, he counts on being able to sustain a debt/Ebitda ratio equal to a multiple of three. It was precisely this aspect that aroused the greatest questions from analysts, but Venturini and Carone's response was without appeal: “It is a very conservative and prudential value. We preferred caution rather than launching numbers that we would not be able to maintain”: Le EGP shares are up 0,75% to 1,75 euros in contrast with a Ftse Mib marked by losses and laboriously recovering parity at 15,35.
