Italy's Enel Plans to Boost Investments, Cut Costs as Part of 2024-26 Strategy -- Update

By Giulia Petroni

Enel plans to boost investments in grids and refocus its renewables strategy while boosting cash generation and cutting costs as part of its plan for the 2024-26 period.

The Rome-based energy company said it aims to focus on its regulated businesses, improving grids' resiliency and digitalization, and on higher-margin renewables investments, specifically in onshore wind, solar and battery storage.

The company targets around 35.8 billion euros ($39.07 billion) in total gross capital expenditure, with approximately EUR18.6 billion allocated toward grids and EUR12.1 billion toward renewables. Italy will get around 49% of the overall gross capex.

"The group plans to allocate its investments efficiently," Enel said on Wednesday at its capital markets day. "Regulated businesses will be at the center of group strategy to improve quality and resiliency. Likewise, renewable investment decisions will be more selective."

Net capex is expected to amount to around EUR26.2 billion.

Enel also plans to boost its cash generation, with around EUR43.8 billion of funds from operations expected to fully cover net investments and dividends.

It aims to achieve a total cost reduction of around EUR1.2 billion in 2026, and implement a disposal plan with an estimated positive impact of around EUR11.5 billion on net debt between 2023 and 2024. Deals in an advanced negotiation stage are expected to have an impact of around EUR3.3 billion on net debt.

"In the next three years, we will adopt a more selective approach towards investments in order to maximize profitability while minimizing risks," said Chief Executive Flavio Cattaneo, who succeeded long-serving CEO Francesco Starace in May. "Financial discipline will be the cornerstone of our strategy, boosting cash generation and efficiencies, with sustainability continuing to guide our business decisions."

The company sees its ordinary earnings before interest, taxes, depreciation and amortization at between EUR23.6 billion and EUR24.3 billion in 2026, while net ordinary income is expected between EUR7.1 billion and EUR7.3 billion.

Enel confirmed a EUR0.43 fixed minimum dividend per share for the 2024-26 period, and said it would increase it up to a 70% payout on net ordinary income if cash flow neutrality is achieved.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

November 22, 2023 03:07 ET (08:07 GMT)

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