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February 5, 2013 6:10 pm
Enel, Italy’s largest utility and Europe’s most indebted, said it expected the “particularly unfavourable macroeconomic and regulatory environment” experienced in 2012 to continue throughout this year, mainly in Italy and Spain where recession continues to bite.
Despite the adverse conditions, Fulvio Conti, chief executive, noted on Tuesday that Enel had met its earnings and debt targets for 2012 in announcing its preliminary results in line with analysts’ expectations. Enel’s shares closed up 1.2 per cent at €3.03.
Earnings before interest, tax, depreciation and amortisation fell 5.1 per cent to €16.7bn from €17.6bn in 2011, in part due to lower margins on domestic electricity production. Net debt was reduced by 3.8 per cent to €42.9bn from €44.6bn. Revenues rose 6.8 per cent to €84.9bn.
A breakdown of Enel’s figures revealed a steep drop in electricity output in Italy. Enel produced 74.5 TWh in 2012, down from 79.0 TWh in 2011, reflecting falls in industrial production and domestic consumption. Outside Italy the group generated 221.3 TWh of electricity, up from 214.9 TWh in 2011.
Analysts noted lower power-generation margins after Italy increased a profit tax on electricity generators as part of austerity measures passed by Mario Monti’s technocrat government.
Last month Italy’s electricity grid operator Terna reported a 2.8 per cent drop in electricity demand in 2012, the second largest decrease in demand since 2000.
Enel said its net debt reduction mainly reflected the impact of ordinary business activities and divestments that more than offset capex spending, dividends, interests and taxes.
“Mr Conti has done an incredible job keeping earnings and debt targets despite Enel’s heavy presence in Italy and Spain which are the hardest hit markets economically,” Alessandro Frigerio, a fund manager at RMJ Sgr in Milan, said, quoted by Bloomberg News agency. “What we need to know now is how he will keep things steady in the continuing downturn.”
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