The board of directors of the Hera group, chaired by Cristian Fabbri, reviewed the preliminary results for 2023 and gave the green light to the industrial plan until 2027. The plan provides significant investments for the period 2023-2027, aimed at supporting projects that will accelerate the group's activities, increasing resilience and generating shared value and sustainable development.
The multi-utility thus confirms its role as a reliable partner for the territories served, addressing external challenges and facilitating the ecological, energy and digital transition, the circular economy and the protection of resources.
Hera's 2027 industrial plan
The new industrial plan until 2027 provides for a gross operating margin (EBITDA) of 1.650 million euros within this period, an improvement of 355 million compared to 2022. Considering the lack of some business opportunities which contributed approximately 120 million to the 2022 result, the overall growth reaches 475 million euros , with an average annual rate of 7%. The organic development, driven by investments, expansion on liberalized markets, efficiencies and innovation, represents the main growth engine with a contribution of 375 million euros. The mergers and acquisitions are estimated to make a significant contribution of 100 million euro, in line with the group's track record.
The industrial plan envisages an increase in the return on invested capital (ROI) up to 9,5% by 2027, a marked improvement compared to 7,9% in 2022, thanks to the growth objectives of the economic indicators.
“At a business level over the next five years, the important contribution to the growth of the group results of all the activities and in particular of the environmental sector will be highlighted, thanks to a strategy that leverages a portfolio of services global waste which will further strengthen our leadership in the market, and of the networks supply chain, which will see an important investment plan to accompany the territories towards the green transition" commented the CEO of Hera, Horace Iacono.
Hera: positive performance of industrial margins
The group recorded a positive performance in industrial margins for the year just ended, with a gross operating margin (EBITDA) expected to exceed 1.480 million euros. This represents a increase of 185 million compared to 1.295 million euros in 2022 e exceeds three years the target set by the previous industrial plan for 2026 (1.470 million euros).
After the extraordinary conditions of the energy market in 2022, the focus on cash generation and efficient working capital management has led to a reduction in the net debt/EBITDA ratio, forecast below 2,6x, a notable improvement over 3,3's 2022x.
2024 dividend rises to 14 cents
Considering the positive preliminary results for 2023, it was revised upwards the whole dividend policy. The distribution of a is assumed coupon of 14 cents euros per share as early as June 2024, representing a 12% increase compared to the last dividend paid and exceeding the forecast of previous industrial plan (12,5 cents).
The projection foresees a constant annual increase in dividends up to reach a coupon of 16 euro cents in 2027, with an increase of 28% compared to the last dividend, and net earnings per share growing by an average of 7% per year.
At current Hera stock prices, this new policy ensures an average return of 5%.
Focus on circular economy and decarbonisation
The Hera group maintains its position commitment to the circular economy , decarbonization, promoting the ecological transition in the territories served through initiatives aimed at citizens, public administrations and industrial customers. Using its extensive infrastructure and know-how, the group plans initiatives in the industrial plan to 2027 which are in line with the industrial objectives for 2030 in terms of circular economy and decarbonisation.
As regards the circular economy, the plan includes objectives for 2030, such as150% increase in recycled plastics compared to 2017 and the reuse of waste water up to 18% of the total by 2030.
On the reduction of carbon dioxide emissions, the group remains ambitious target of 37% reduction by 2030, already approved by the prestigious international network Science based target initiative (SBTI) for both the group's emissions and those of its customers. The forecast is to achieve a reduction of 29% by 2027. Furthermore, the multiutility will bring forward by 3 years the objective to 2030 of increasing the share of renewable electricity on the total sold to over 50%.
Balanced growth and better resilience
The industrial plan includes a balanced growth of the three main ones activity chains of the Hera group (networks, energy and environment), maintaining a balance between them. This development model has guaranteed strong resilience in the group's results over the last twenty years, allowing continuous growth both in sustainability targets and in economic-financial and service performance.
Il 40% of operational investments will be destined to further improve resilience of the group's plants and networks from exogenous effects, including climate change through infrastructural strengthening, the implementation of predictive, remote monitoring and management processes.
Investments of 4,4 billion are expected
Il investment plan amounts to 4,4 billion euros, of which 48% will be dedicated to development and merger-acquisition (M&A) initiatives. 55% of these investments will be allocated to regulated businesses, while the remaining 45% will be used to support the growth of market businesses.
Considering the new dimensions of the European Taxonomy, the group estimates that operational investments of 2,5 billion euros (equal to 98% of eligible investments) will be aligned with the dictates of European regulations, allowing them to access subsidized sustainable finance instruments with benefits also in terms of financial costs.
Hera also plays an active role in digital transformation of the communities served. Over 30% of the Plan's investments will be dedicated to digitalization and innovation of infrastructures, activities and solutions for customers. In addition to direct investments, the group will contribute to the social and economic value of the works in the territories served thanks to the almost 400 million in contributions received from the National Recovery and Resilience Plan (Pnrr) and other institutions.
“These 4,4 billion investments for industrial development, sustainable growth and resilience will allow us to target a gross operating margin of 2027 billion euros by 1,65, with an increase of 28% compared to 2022 and a increase in dividends of the same size. 40% of the investments will contribute to making our infrastructures even more resilient to guarantee the quality and continuity of our services, even in adverse climatic conditions such as those experienced in recent years" declared Fabbri.
