Enel Spa Unsp/Adr

Good evening to all the people connected. Welcome to the full year 2024 result presentation, which will be hosted by an CEO, Flavio Cattaneo and the CFO, Stefano De Angelis. Following the presentation, we will have the usual Q&A session. We ask those connected to the webcast to send questions only via email at investor.relations at nl.com. Before we start, let me remind you that media is listening to both the presentation and the Q&A session. Thank you. And now, let me hand over to the CEO.

Thank you, Omar. Welcome to everybody. We're starting with our focus on rebuilding and constructive dialogue with institutions that is already showing positive and visible outcome. The resulting improvement of regulatory frameworks will support our industrial plan delivery and confirm the value creation of our capital allocation. Group delivery in 024 was visible and based on a solid performance and allowed us to meet all the targets. The result was achieved due to the higher contribution of Iberia, U.S. and Latam at integrated margin level. I will stay for now with detail later on in the presentation. The leverage has been successfully executed and its completion improves our balance sheet flexibility for a more profitable growth. Lastly, in light of the result achieved, we'll propose to the next AGM a dividend per share equal to 47 cents for 2024. implying around 70% payout and 7% dividend yield at the current price. Water and mine floor is confirmed at 46 cents per share over the planned period. As additional shareholder remuneration, the Board of Directors has approved the renewable of the share-by-back program for a maximum 500 million shares and amount up to 3.5 billion. The program will be proposed to the next AGM and the shares acquired will be consequently cancelled. Now, we'll have a look at O24 delivery rates. The next slide, you see last year the group recorded an outstanding financial performance and growth across all businesses. EBITDA reached $22.8 billion, landing at the top of the guidance range, on the back of a less volatile environment, restoring the full growth potential. Net income came in at $7.1 billion, increasing by 10% versus previous year. EBITDA and net income are the outcome of our managerial action implemented in the no domestic market, where the new capital allocation approach is increasing asset base profitability. Net debt-to-BDA ratio lowered to 2.4 versus 2.7 times of last year, on the back of an improved performance and the delivered completion. Now we move and we see the progress of our advocacy action in the next slide. Supported regulatory frameworks are the main driver to attract investment for the energy transition. Therefore, we reinforced our advocacy action and over the past month we started to record notable achievements. In Italy, for example, the first and most relevant outcome was the renewal of the distribution concession. Also, on the renewable side, the new supporting measures have been introduced in the FRICS Decree. In Spain, we are working to ensure the regulatory framework will be supportive of investment into energy transition. On LATAM, discussions have been positive so far, and the renewal of the concession in Brazil is expected by the end of this year. Now I will dive into capital allocation on the next slide. Our capital allocation has been designed to maximize return profile while reducing risk and consequently improve the performance of the group. Investments were deployed in line with our strategy with networks accounting for more than 50%, 5-0, 14-1-4, higher percent, higher than previous year. As a consequence, operating KPIs improved. RAP reached more than 45 billion. Renewable production on total increased by 8% year-on-year, while the share of emission-free stood at 83%. Therefore, our customer side, renewable coverage on fixed sales reached 82% from 65% in 2023. Now we'll see the progress in M&A activities. As announced during the Capital Market Day, we'll leverage different models in order to create value and reach the level of desired returns. In the recent months, we catch two battlefield opportunities. The first one is it has been 600 megawatts of hydro assets in Spain, and the second one over one gig of renewable assets in Australia to our joint ventures in the region, and exploiting the stewardship business model in this case. These two deals prove we are moving to less risky technologies and countries, delivering on what announced. Now it's time to the second pillar of our strategy. Let's talk about our efficiency program in the next slide. So far, we reached around 800 million savings compared to 022, and we're more than halfway through the improved plan target of 1.5 billion. And I remember you, we updated it last November. Actually, this achievement is a clear evidence of our persistent focus on optimization of processes and activities, without compromising our operations, which continue to deliver a strong performance. Now it's time of financial and environmental sustainability. In all 24, our financial performance continues to be solid, and the net debt on ABDA reached 2.4 times what below the peers' average. This level of leverage gave us over $10 billion additional financial flexibility on top of the $43 billion investment announced in CMD, including the buyback, which I will comment in detail later on, to capture all of these, the future and profitable growth opportunities, and to maximize the value for our shareholders. on environmental sustainability, absolute emissions continue to decrease in line with all 30 goals. Finally, travel the remuneration on flight nine. The resiliency of our business model and the efforts of our advocacy actions, as well as the positive operating performance, allowed us to achieve solid economic and financial results. As I mentioned before, we'll propose to the next AGM a dividend per share of 47 cents for all 24, implying a payout of around 70%. And the new share-by-back program aimed at improving shareholder remuneration. A further option on top of the organic and inorganic opportunities and part of the 10 billion additional flexibility mentioned before. This option could be evaluated also at subsidiaries level. I leave the floor to Stefano now for the financial performance details.

Thank you, Flavio, and welcome to everybody. The pragmatic back-to-basic and financially disciplined approach we adopted in the last two years drove to a consistent positive delivery in the core in-cast KPIs and financial performance across all businesses. Emission-free generation is growing, with financial results boosted by a remote energy management already fully enforced in Italy. In our domestic market, the supply business normalized after the chance storm we fall upon in 2023, thanks to a mandatory broad review of our retail customers' offer portfolio. Last but not least, a pragmatic and factual advocacy supported a constructive regulatory framework that allows to increase investments and, in parallel, the value generated in the network business. As a result, 2024 ordinary EBITDA reached 22.8 billion, increasing more than 2 billion versus previous year on a like-for-like basis. This like-for-like comparison is not to give a different and positive perspective to the 2024 report in the BTDAE that was higher compared to the ordinary result, reaching 24.1 billion on the positive returns of the executed disposal plan, generating significant cash capital gains, but recurring long-term growth leverages on the organic performance of the core business. From a geographical perspective, this portfolio rationalization is visible, with EBITDA coming from Europe and US accounting for almost 80% of the total. Finally, in 2024, net debt on EBITDA landed at 2.4 times a sector benchmark, providing ample balance sheet flexibility moving forward. After this broad overview of the 2024 results, I will speak about focusing just on the main topics of the business, starting from the networks. As we commented in the presentation, this EBITDA reached almost 8 billion, halved by 8% year-on-year on a like-for-like basis, confirming the positive growth pathway observed along 2024. On top of the positive and consistent trend in Europe, it is worth mentioning that the Latam EBITDA stabilization was achieved in a tough macroeconomic and political environment where the positive contribution from investments, tariff indexation and energy volumes distributed to our customers has been offset by the local currencies devaluation offset in the period and this account for 0.2 billion euro. And now we move to the evolution of our integrated business and I am on slide 13 Integrated business EBITDA increased by 1.9 billion year-on-year net of perimeter, driven by the normalization of relevant business dynamics that restore a segment performance that is coherent with our asset portfolio mix in terms of value generation also looking forward. As a consequence, renewables recorded a strong performance across both regions, recovering around 2.7 euro billion versus last year. Flexible generation, I would say, are moving to normal. As a fact, minus 21 terawatt hour reduction in coal and gas was mostly driven by the end of mandatory requirements. Finally, Retailer BTDA reflected the mentioned downward price campaign in Italy. Starting from 2025, we expect a more linear evolution of the performance with prices dynamics fully embedded in Group's plan assumptions. I will now provide an update on our energy management and hedging strategy in the domestic market, meaning Italy. Slide 14 describes how the new integrated sourcing sales management model supports ample visibility and resiliency on future evolution of the earnings. Compared to the past, we move from an approach focused on the forefront financial edging of the industrial open position on generation and gas contracts to an end-to-end integrated and flexible approach focused on the value potential of our large and resilient residential and small-medium business customer base. Thanks for this new approach. Renewable generation is said to be naturally matched with retail sales and more resilient customer base, with financial pre-edge as a lever to add incremental value to optionality. This allows us to maintain a predictable fair profitability whilst guaranteeing to our customers a sustainable price despite a persistent volatility on power price scenario. As you can see from the chart, 2025 is Osmo fully edged and for 2026 we already covered 85% of the expected generation. The contracted price of these volumes are in line or above the capital market day market scenario. More in details. For 2025, we forecasted 114 euro megawatt hour, and we edged at 117 euro. While for 2026, the average price as of today of the edged volumes is 114 euro, compared with the scenario at 111. And now we move on slide 15. talking about the earnings evolution. Ordinary Group Debt Income came in at €7.1 billion above the guidance provided on the back of the positive results of our operation and additional contribution also from the assets disposed in 2024, mostly excluded from the guidance provided to the market. Financial expenses reduced by 100 million at profit and loss level, but this is worth highlighting that cash financial expenses declined by around 500 million as no cash effects impacted and other non-monetary items generated a relevant and volatile impact both on P&L and net debt on an accounting measure. While the reduction in charges on debt is mainly driven by the 4 billion reduction in gross debt, I would like to highlight also a higher contribution from associates, mainly due to the positive performance of Grovesche Elettranet, whose stakes will be deconsolidated by 2025 after the exercise of the coal option by EPH at the end of 2024. Finally, reported net income stood at 7 billion, almost in line with the ordinary net income and doubling versus the average results achieved in 2021-2023. Let's now move to the slide related to the FFO. In 2024, we confirmed the strong results achieved in 2023 in terms of cash EBITDA with an FFO once normalized for cash out not organically related to the 2024 operational performance standing at 14.6 euro billion, exceeding 25% of the group's net debt and reflecting a solid monetization of two-thirds of our EBITDA. As highlights, I want to mention, first of all, the Qatar arbitration that was mostly related to 2021-2022 operation was moved in 2023, but financially impacted 2024 working capital change. That wouldn't be neutral, excluding just these items. Another important highlight is the provision where we include 300 million non-cash items related to the 2021-2024 additional regional hydro fees in Italy, which, as you could remind from the Capital Market Day, we have already eventually included in the plan assumption. On this matter, we maintain our solid position that these amounts are not due before concession expiry meaning after 2029. Final remarkable points are the following. The tax payment was impacted by the 2023 tax balance paid in Q3 2024 due to the significant difference between 2022 taxable income versus 2023. Financial expenses, as said before, benefited from debt reduction as cash do not follow the accounting principle. Let's now move to the debt evolution of slide 17. Cash flow generated by the operation was dedicated to fund 11 billion of capex, including 1.1%. billion of grants already cashed in. Additionally, our partnership model contributed for 2 billion with cash inflows from the best project in Italy and solar projects in Spain. Finally, dividends paid stood at 5.4 billion euro. Thanks to the strong focus on cash generation and the completion of the 2022 disposal plan, we have been able to reduce net debt by more than 4 billion versus last year, reaching a remarkable balance sheet solidity with net debt on a BTDA ratio at around 2.4 times. Now, having already started the new fiscal year, before our CEO closing remarks, I share the year-on-year perimeter reconciliation. And this is the last time having completed, as I already said, the disposal plan set in 2022 on page 18. In order to compare organically Fourier results with the 2025 guidance shown at November Capital Market, we provide the rebased BTDA and that income for 2024, like for like BTDA 2024, is €22.4 billion, adjusted for Peru and Lombardy asset disposal. This year, as you may see, the differences are not the same as in the past, let's say that are minimal. Net income baseline is 6.6 euro billion, where on top of the Peru and Lombardy assets, we adjusted 20-24 net income for the contribution of Slovesk Elettrarnet that amounts 0.3 euro billion positive. On this last item, Slovesk, it's worth to remind that on that side, we recorded the repayment of more than 1 billion intercompany loans at the end of January. This will have a positive impact on rating agencies' adjusted net debt. As a result of the normalization I've mentioned, in 2025, we expect a 3% growth versus the 90% BTDA secured in the last planned scenario presented last November in the Capital Market Day. On top of this, I want to highlight that there is a clear potential upside to be considered on the back of the balance sheet flexibility we have achieved. But on this topic, I hand over to the CEO for his closing remarks.