Enel looks far ahead and presents the 2021-23 Strategic Plan. This time the update of the plan fits into the overall vision of the group for the next ten years, in the horizon of 2030. And it happens just the day after the letter with which the government asked the leaders of the group ofcspeed decisions on Open Fiber and to consider the strategic value of the single network with Tim.
OPEN FIBER
“We will not become a telecommunications operator, we have always said so, we will manage the infrastructure. Consequently we want monetize as soon as we see an opportunity in line with our interest” was the answer to an analyst who asked the CEO Francesco Starace for news. As for the letter from ministers Gualtieri and Patuanelli "it strengthens us in the belief that we were right to launch Open Fiber: the creation of the digital network has finally started, a network that is open to all and not with vertically integrated control. Without OF, which has brought fiber to 10 million homes, Italy would still be at the bottom of the European ranking. Go out? Open Fiber has generated enormous value and without Open Fiber Italy would be in last place in the European ranking for digital, it is now in the middle of the ranking and is moving to the top thanks to Open Fiber which has brought fiber to 10 million homes. If it's a good thing for us to go out perhaps: if the price is right and the conditions are right, why not". Finally, how to guarantee public control in the event of Enel's exit? "Cdp will have to assume operational control of the asset" was the response during the final press conference which thus excluded Enel's partial involvement in the affair. The last queue took place in the evening when Starace told Bloomberg TV that the agreement for the sale "is a matter of weeks, but there is no deadline at this point". And he added: “The negotiation is not about the price, we are talking about small details”.
CAPITAL MARKETS DAY AND NEW STRATEGY
The Open Fiber sale thus ended up hovering over and partially obscuring the Capital Markets Day well dedicated to the group's strategic objectives. All plan targets are growing and all above expectations. The vision is about one strong acceleration of the energy transition, in digitization of networks and enablement of operational management on platforms, higher remuneration for shareholders, stable rates for customers due to the improvements in efficiency acquired with digital technology. Enel intends to mobilize a mountain of investment : 190 billion by 2030, 40 billion will be spent by 2023. Where will this record volume of spending be allocated and to achieve what objectives? Here is what the CEO and general manager of the Enel group Francesco Starace and the Chief Financial Officer (CFO) Alberto De Paoli said during the Capital Markets Day strictly by videoconference. This year, batteries (5 billion investment) and green hydrogen are also entering development strategies.
"It will be a decade full of opportunities" said Francesco Starace who is nominating Enel for a position of "Super Major" in the field of renewables worldwide. The CEO explained that “thanks to the commitment of all employees around the world, we were able to maintain the objectives announced last year, when the Covid-19 pandemic was still far away. We will continue to be the absolute leader and protagonist: the objective of reaching 70 billion Rab (Regulated asset base) is very ambitious – he acknowledged – but associated with the objectives of greater flexibility and efficiency in the networks, it is achievable. Our customers will thus be able to increase their electricity consumption with a reduction in the final bill. This digital component will remain in the company's genome and will allow us to pursue an attractive policy towards our shareholders". The vision is therefore extremely ambitious and was greeted by the Stock Exchange with a shares jumped by 2,7% against +1,2% in the general FtseMib index, on a day boosted positively by the relief of the markets for the unblocking of the US presidency.
RENEWABLES and NETWORKS
Green sources will absorb almost half of the 190 billion in investments of the decade while 46% will go to the digitization of networks. 70 billion will arrive on green projects to triple the installed capacity, bringing it to 120 GW compared to the current 45 GW. Enel's ambition, Starace said, is world leadership, the expected increase in Ebitda is 11% by 2030, equally divided between solar (53%) and wind (47%). At the end of the decade, the group's energy mix will be 80% fueled by renewable sources and the remainder by gas. From 2027 - 3 years ahead of the previous target - Starace has announced the exit from coal.
La Renewable Super Major – as Enel defines itself – has the close objective of increasing its green capacity from 49 to 68 GW (+39%) in 2023, with 21 billion of direct Capex and 3,8 billion from third parties. The additional capacity will favor solar (58%) over wind (42%).
90 percent of Enel's objectives are aligned – the top management underlined – with i sustainable development goals and the entire development strategy fits within the goal of limit global warming to 1,5 degrees (lower than the two degrees hypothesized by the Paris Agreement). Direct CO2 emissions at the end of the decade are estimated to decrease by 80% compared to 2017.
A novelty of the plan concerns the involvement of third parties, in the form of partnerships. This will make it possible to mobilize another 10 billion for Enel and 30 for third parties for an additional 40 billion to be invested in total over the ten years.
In the three-year period 2021-23, out of the 40 billion in total investments, 38 will be borne by Enel and about 2 in partnership (stewardship model) in order to mobilize 8 billion in investments from third parties. 17 billion investments will go to renewables to raise installed capacity to 60 GW (+33%) compared to 2020.
The networks chapter aims to reach and manage 90 million customers 100% remotely worldwide in 2030, a goal that is only possible today in Italy and Spain. Starace recalled that the entire group has now moved onto its own digital platform. Hence the greater flexibility and lower costs promised. The networks will account for 43% of investments between 2021 and 2023, with a 14% increase in the group's Rab to 48 billion at the end of the period. 60% of the investments will be spent in Europe and 40% in the rest of the world.
GUIDANCE AND DIVIDENDS
THEEbitda of the Enel group is expected to grow compound annual growth (CAGR) of 5-6 per cent over the decade with growth ofordinary profit of 8-10%.
For 2020, the estimate is 18 billion Ebitda which will become 20,7-21,3 billion in 2023. The estimated net ordinary income for this year is 5-5,2 billion compared to 6,5- 6,7 expected at the end of the next three years.
Even on the dividend, Enel is launching an innovative message to shareholders. Indeed, it is foreseen in the plan a guaranteed and growing dividend: starting from 35 cents in 2020 and reaching 43 cents in 2023 (30 in 2021 and 40 in 2022) with a Cagr of 7% and a total return of 13% for shareholders.
Finally debt: the 57-58 billion euros will arrive at the end of 2023, driven by the acceleration of investments. The Group's net debt/Ebitda ratio is expected to be 2023 times in 2,7, a level below the average of its main European competitors.
Last updated at 14.33pm on 25 November 2020
