Enel focuses on digital and renewables, therefore on technological progress and the energy transition, to increase margins and profits. With what new ideas? Italy entirely wired in optical fiber by Open Fiber in 2022. Charging stations for electric cars equal to 320.000 points in Italy alone, the vast majority of which in private areas (from houses to supermarkets, offices, gyms, etc.). Push on second generation counters. Divestments and acquisitions "at a trot" on small assets. Potential buyout before the May meeting. Growing dividend. The Enel strategic plan 2018-20 hinges on these pillars and goes ahead with the strategy launched in 2015, raises all targets and convinces the Stock Exchange which rewards the stock with a 2,3% increase to 5,35 euros, close to the highs of the year.
It is a world – that which Enel sees for the next thirty years – which evolves in a green direction and which will triple the renewable potential with 60% of the world population concentrated in large cities, the consequent strong growth in electricity demand which in 2040 will exceed that of coal and gas. What emerges clearly here in London – where the entire staff of the energy multinational is lined up for the presentation of the 2018-20 plan to the financial community – is the choice of strengthen digital leadership, already embarked on last year, especially in mature markets to hook up to new business opportunities even where generation revenues are decreasing.
Jump on innovation to anticipate the times in which domestic applications will be connected to the Internet (the so-called Internet of Things, Iot ) and clean energy will put fossil energy out of the market: the mandate is entrusted to Enel X, new name and brand for the e-Solutions division which "will become our engine for future growth", said CEO Francesco Starace. Responsibility is entrusted to Francesco Venturini, former CEO of Enel green power.
STRATEGY, DIVIDEND AND INVESTMENTS
It is a strategy that has so far borne fruit and is pushing the group's objectives upwards: the payout has gone from 50% of ordinary profit in 2015 to the expected 70% in 2018. In concrete terms, this means 28 cents of guaranteed minimum dividend next year against 23 for 2017, the year in which, the group anticipates, ordinary Ebitda will reach 15,6 billion (15,2 billion in 2016) e ordinary net income is forecast at 3,6 billion. With the margin steadily above 15 billion and projected towards i 18,2 billion at the end of the period, and with a ordinary profit expected to jump from 3,6 to 5,4 billion, even net debt could rise from 37,8 billion at the end of 2017 to 39,8 billion next year and then fall back to 30,3 (2,1x on Ebitda against 2.4x today) and remain sustainable in the management's vision.
The other financial objectives are a total investment plan of 24,6 billion over the three years (+500 million compared to the previous plan). To this record figure must be added 3 billion of Open Fiber, outside the scope of consolidation. Of the 17 billion earmarked for growth 80% will pour, as we said, on mature markets to the detriment of South America considered more at risk. In particular, Enel will spend 10 billion in Italy. Growth also in the Iberian peninsula and in North and Central America.
THE FIBER OPTIC PLAN TAKES OFF, MORE SMART METERS
Enel's spotlights are focused on the networks, with a growing space reserved for digital. Which means two things: smart meters and ultra-fast internet. The game between Open Fiber, which enters the new Enel X division, and Tim is being played on the fiber optic Internet network. “We are completely against a merger with Tim on the network, there is no advantage” confirmed Francesco Starace. Rather, Enel is thinking of exporting the joint venture model created in Italy with Open Fiber to other countries where the group operates.
"It is more likely - he added - to export the model to South America than to Iberia where the diffusion of broadband is already widespread". Enel expects to generate 500 million Ebitda from optical fiber in 2022 with a target of 4 million customers. In total, 18,8 million homes are expected to be connected in both competitive and market failure areas. In Italy, the group will invest a total of 10 billion, 3 of which concern Open Fiber by 2020 and will rise to 5,1 billion when fully operational. For Tommaso Pompei, former CEO of OF, a role in Enel X is expected but “we will talk about it towards the end of the year. Now the handover with the new CEO, Elisabetta Ripa, is a priority".
The other strong point are the smart meters, digital counters second generation: 16 million will be installed in Italy in the three-year period, just over half of the current floor will be replaced by 2020 with an investment of 1,3 billion.
DISMISSING, BUY OUT AND REORGANIZATION CHILE
Disposals fall under the active portfolio management chapter. Strategy confirmed buy, sell, trade (Bso) especially in the field of renewables. Enel has already made 6,3 billion in sales, Russia remains a target while the target for acquisitions, especially minorities, rises to 2,8 billion. The buyout of up to 2 billion remains an option in the field but there is time until November 2018. In Chile the restructuring of shareholdings continues which has already led to the reduction from 69 to 53 companies.
