Terna gave the green light to the 2019-23 Strategic Planwhich provides investments of 6,2 billion euros to be allocated to the Italian electricity grid. This is Terna's highest economic commitment ever, with a almost 20% increase compared to the 5,3 billion euros of the previous strategic plan. The priority focus, explains Terna, is on the development of the National Transmission Grid and interconnections with foreign countries, asset renewal activities and improvement of service quality and efficiency. The objectives are sustainability, decarbonisation, innovation and dialogue with the territories.
THE INVESTMENT PLAN
In detail, between the 2019 and the 2023 Terna will invest overall 6,8 billion, of which 6,2 billion euros on the national electricity grid, "an amount that represents for society the highest value ever as an economic commitment for the development of the country". The value of regulated assets (RAB) will reach 18,5 billion euros in 2023, with a CAGR over the course of the Plan exceeding 4% compared to the 15,7 billion euros forecast for 2019. At the end of 2018, the RAB was equal to 15,2 billion euros.
With reference to the 6,8 billion euros of total investments expected over the next 5 years, around 2019 billion euros are planned for 1,2. The main electricity infrastructures under construction include the interconnections with Montenegro and France, which are expected to come on stream in 2019 and 2020 respectively, and the start of work on the new Sacoi3 project (strengthening the connection between Sardinia , Corsica and the Italian peninsula).
As regards the 6,2 billion planned for Italy, over three billion euros relate to investments in the development of the national electricity grid with interventions to strengthen the connections between market areas, rationalize the networks in the main metropolitan areas of the country and increase interconnections.
Others two billion euros are dedicated to renewal and efficiency activities, mainly for the improvement of the quality of the service and for the digitization of the electricity grid. About one billion euros will be allocated to the Defense Plan for the creation and installation of devices to increase the security and stability of the network.
THE FINANCIAL TARGETS OF THE PLAN
On the target side, Terna estimates revenues to grow to around 2,7 billion of euros and Ebitda to around 2 billion euros in 2023, with an average annual growth of over 4% for both indicators starting from 2018.
Also improving the net profit which will lead to earnings per share (Eps) of approximately 42 euro cents in 2023, equal to an average annual growth over the period of the plan of more than 3%. Also as a result of the optimization of financial efficiency, the cost of net debt is expected to average 2019% in the 2023-1,6 Strategic Plan.
From 2019 to 2021, Terna expects a compound annual growth rate of dividend per share equal to 7%, compared to the dividend for the year 2018 (equal to 23,32 cents). For the years 2022 and 2023, Terna expects a payout of 75%, with a guaranteed minimum dividend equal to the dividend for the 2021 financial year.
"With these results, an Operating Cash Flow will be guaranteed which will contribute to the flexibility necessary to make the planned investments, while at the same time supporting an attractive dividend policy", explains the group, specifying that the Net Debt/Rab ratio will remain below 60 % in the five-year period.
THE RESULTS OF 2018
For the accounts of the last financial year, Terna closes 2018 with a Net income of 706,6 million euros (+2,7%). The dividend proposed is 23,32 euro cents per share (of which 7,87 euro cents already paid as an advance and 15,45 euro cents as the balance in June 2019). The investments they amounted to 1.091,1 million euros (+5,5%).
I revenues of 2018, equal to 2.197 million euros, recorded an increase of 34,2 million euros (+1,6%) on the year, thanks above all to the increase in tariff revenues from the domestic Regulated, to the contribution of the Non-regulated domestic, in particular thanks to the growth in turnover of the Tamini Group, and to the results achieved by the implementation of projects in Brazil.
THEEbitda of the group reached 1.650,6 million euros, up by 46,7 million euros (+2,9%) compared to the 1.603,9 million euros of 2017, mainly due to the better result of the domestic regulated sector.
THEEBIT, after amortization and depreciation of 554,1 million euros, stood at 1.096,5 million euros, compared to 1.077,4 million euros in 2017 (+1,8%).
THE COMMENT OF THE CEO OF FERRARIS
"I am very satisfied with the results achieved in 2018: the figures are growing and all the set economic-financial objectives have been achieved - commented the CEO of Terna, Luigi Ferraris – These results form the basis of our 2019-2023 Strategic Plan, which presents itself with robust cash generation in support of a strong acceleration in investments for the country's infrastructural development".
Ferraris underlined that “over 6 billion euros for the Italian electricity grid represent Terna's highest economic commitment ever, they accompany the electricity system towards complete decarbonisation and favor the full integration of energy from renewable sources into the grid. The expected growth in investments, together with the enhancement of our skills, both in Italy and abroad, are the basis of increasing operating results that will allow us to generate value for our shareholders".
THE REACTION OF THE MARKETS
After the presentation of the Plan and the 2018 financial statements, half an hour after the opening, Terna's share on the Stock Exchange gains 1%, to 5,582 euros, while the Ftse Mib travels at +0,2%.
