Enel reveals the strategic plan 2024-2026 weblog Flavio Cattaneo which foresees a slowdown in the race in renewables, a greater concentration on networks and on Italy and from the divestment plan a debt cut of 11,5 billion. The first Capital Market Day for the top manager at the helm of Enel since last May presents several signs of discontinuity compared to his predecessor Francesco Starace, such as the new, more selective approach to investments: approximately 2024 billion in investments are expected in 26-35,8 (down from 37 billion in previous plan), with a focus on distribution networks and Italy "to maximize profitability and minimize risks", explained Enel's number one.
Cattaneo's strategy "aims to transform Enel into a leaner, more flexible and resilient organisation, ready to face the challenges and seize the opportunities that may arise in the future", continued the CEO. As? Focusing on selective capital allocation, financial and environmental sustainability with the aim of enhancing cash generation and profitability “with solid returns for shareholders”. In this regard, a "simple and attractive" dividend policy is confirmed with a minimum fixed dividend per share equal to 0,43 euro and with a potential payout of 70%, "provided the results allow it".
At Piazza Affari, the title he danced around parity until halfway through the session. “The market plays during the days of the Plan, the title will give satisfaction” and then what “is important is that it has grown since we started”, Cattaneo said in the press conference. But let's take a look at Enel's new 2024-26 strategic plan point by point.
More selective approach to investments
Are approximately 35,8 billion of euros investments gross totals planned for the three-year period 2024-26 by Enel: those in the networks (18,6 billion euros) and those towardsItaly (49%) “in areas characterized by visible returns, a profitable regulatory framework as well as stable macroeconomic and political contexts”, explains the group. In addition to our country, investments will be oriented for 25% in Spain, 19% in South America, 7% in Usa. In renewable, the group has planned gross investments of approximately 12,1 billion of euros in the three-year period, "focusing on onshore wind, solar and storage batteries, also leveraging repowering". Finally, around 3 billion euros will be aimed at customer business.
Notably absent from the plan is the regasification terminal Porto Empedocle. Cattaneo said that it will be included if it is recognized by the Government "as a strategic asset".
More flexible approach to renewables
Enel explains that “investment decisions in renewable they will be more selective, through the diversification of technologies and countries, improving returns and reducing risks, also by leveraging partnerships". In detail, between 2024 and 2026 the construction of approximately 13,4 gigawatts of new capacity. In 2026 the group's renewable capacity is expected to increase to around 73 gigawatts from around 63 gigawatts estimated for 2023, with the share of zero-emission generation reaching around 86% compared to around 74% expected for 2023. Instead, it slips the closure of the remaining coal plants: from 2024 to 2027.
Enel's targets from 2023 to 2026 are higher than expected
The multinational energy company announced financial targets in growth for the next three years: a gross operating margin (ebitda) between 21,5 and 22,5 billion euros in 2023, between 22,1 and 22,8 billion in 2024 and between 23,6 and 24,3 billion euros in 2026.Net income for 2023 it is estimated at around 6,4 and 6,7 billion euros, between 6,6 and 6,8 billion for 2024 and between 7,1 and 7,3 billion euros for 2026.
One of the key principles of the new plan is to cover investment and dividend expenses without affecting the group's reserves. “We will only spend the cash we generate, we will not spend and we will not increase the debt.” As for the Cash Flows generated by operational management should reach 43,8 billion euros by 2026. Furthermore, compared to 2022, the group expects to achieve a large reduction of the Costs, equal to approximately 1,2 billion euros in the three-year period, especially through "making processes more efficient and rationalizing the organization".
The generation of cash flows and the rationalization of costs will result in a strengthening of the company's creditworthiness: Enel expects a financial debt for 2024 between 2,4-2,5 times, for 2026 around 2,3 times (in 2022 it was around 3,1 times).
With regard to the dividend policy, Enel plans to maintain a minimum fixed dividend per share of 0,43 euros (this year's coupon) for the period 2024-2026, with the possibility of increasing up to 70% of the profit in the event of achieving profit neutrality. Cash Flows.
Debt reduction of 11,5 billion from divestments
Under Cattaneo's management, sales continued debt cut, but the plan was partly redefined “to focus on asset value-driven portfolio rotation.” According to the Italian big name, the process of resignations will produce a positive impact on debt net estimated at approx 11,5 billion euros between 2023 and 2024 with a collection of approximately 8 billion euros in 2024. Just this morning the sale of the group's generation assets in Peru which will generate a debt reduction of approximately 1,6 billion euros by 2024. The other divestments currently underway are:
- those that fall within the operations already finalized during 2023: exit from Romania, sale of generation assets in Argentina, sale of 50% of renewable assets in Australia and sale of a solar portfolio in Chile. Impact on net debt of approximately €2,8 billion;
- those signed on hold finalization: sale of generation assets in Peru, divestment of distribution and supply assets in Peru, sale of 50% of Enel Green Power Hellas and sale of a solar and geothermal portfolio in the United States. Impact of approximately 5,4 billion euros;
- finally, those in the negotiation phase advanced for an expected amount of approximately 3,3 billion in terms of impact on net debt.
Cattaneo's plan overturns the strategy followed by Starace in his nine years at the helm of Enel. “A prudent plan. We have been here for six months, give us time, I have already bought 1,5 million shares, now I want to buy another million and I don't intend to lose", concluded the top manager.
