Investor Day 2015

19th March 2015, London


Go to the Webcast ON DEMAND

Enel Today

Global diversified player1

1. Data as of 31th December 2014

Russia

Capacity: 9.1 GW

Europe

Capacity: 66.5 GW

End users: 45.8 mn

North America

Capacity: 2.1 GW

Mexico &
Central America

Capacity: 0.8 GW

Latin America

Capacity: 17.4 GW

End users: 14.4 mn

Africa

Capacity: 0.1 GW

Best positioned to capture opportunities

 

Leading
Network
Operator

 

Leading
Retail
Business

 

Leading
Renewable
Operator

 

Balanced Conventional Generation Portfolio

61 mn end users

37 mn smart meters

40 €bn RAB

56 mn power customers

5 mn gas customers

9.6 GW installed

86 GW installed


Macro-economic
and energy market trends

Key global themes in the utility sector

Enel well positioned in this context

Demand growth in emerging countries

 

Capex driven towards infrastructure expansion and upgrade

Technology evolution in mature countries

 

Grid digital transformation and new business models in customer interaction

Technology evolution in renewables

 

Increased penetration in world’s energy mix

The strategic plan has been developed
on the basis of an analysis of the following trends:

Latin America
& Africa

Increase in power demand in Latin America and Africa mostly due to demographics: accelerating urbanization as well as wealth creation is offering opportunities to drive organic growth across the value chain in those markets.

Mature
Markets

Transformation of the energy systems in mature power markets towards full digitization is opening up new revenue opportunities in areas of Enel Group’s natural competitive strengths. Digital meters, historically an area in which Enel has been the undisputed pioneer and industry leader, are the building block of the digital network challenge. Mature markets will remain a vibrant area of value creation for those players able to innovate and capture the opportunities offered by technological evolution.

Key Pillars

Operational efficiency (€bn)

1

/

2

Opex1

Leverage on new organizational structure: integration and technology sharing

Maintenance capex2

Distribution and Generation: best practice sharing and capital allocation optimization

Cash costs

 

1. Total fixed costs in nominal terms (net of capitalizations). Reclassified as per new strategic plan criteria

2. Gross capex. Reclassified as per new strategic plan criteria

3. Net of perimeter effect

 

Reti

 

Rinnovabili

 

Generazione
convenzionale

 

Staff

  • Network digitalization
  • Centralized planning
  • Workforce management using mobile devices
  • Leverage global procurement

  • Economies of scale
  • O&M best practice standardization
  • Maintenance contract optimization

  • Capacity shut down for ca. 13 GW2
  • Profitability assessment of each power plant
  • Workforce redeployment to increase efficiency
  • Leverage global procurement

2. Cumulative 2014-19

  • Cost Reduction for Holding and Country Services via in-sourcing and headcount reduction

Industrial growth

1

/

2

 

18.3 €bn of
growth capex

 

Accelerating high quality growth and value creation

 

Solid and
reliable
growth

The capex plan envisages Gross Capex for the period of 34.0 billion euros.

The shift of capital expenditure towards growth initiatives will bring about additional Growth Capex of around 6 billion euros versus previous plan.

Spread over WACC min 200 bps // Average time to EBITDA <2 years

Growth capex by Business1

~90% regulated and quasi-regulated2

Growth capex by Geography1

1. Gross Capex

2. Networks, generation with long term PPA (power purchase agreement),
renewables with PPA and generation in the Iberian islands

3. Mainly Egypt, South Africa, Morocco, Turkey

Growth EBITDA

Additional growth EBITDA by business (cumulative 2015-19)

 

Networks

 

Retail

 

Renewables

 

Conventional Generation

+3.6 mn end users // +11 mn smart meters

+4.5 mn new customers in power & gas free market

Renewables: +7.1 GW // Total 2019 Capacity: 16 GW3

Conventional generation: +720 MW in Latam // 0.7 GW under
construction at 2019 // Total 2019 Capacity: 71 GW

2014

2019

1. Net of assets held for sale

2. Including EGP Hydro operations

3. Net of disposals

Active portfolio management

1

/

2

Shareholder remuneration

Dividend policy

Accelerating returns

For 2015, the payout ratio will be increased to 50%, and it will increase by 5 percentage points every year to reach a payout ratio of 65% in 2018.

Transition phase

Short-term certainly

If the net ordinary income for either of 2015 or 2016 is below Group guidance, then a minimum DPS of 0.16 and 0.18 euro per share will be paid, respectively for 2015 and 2016.


Key financial figures

EBITDA and Net income evolution

 

EBITDA
evolution
(€bn)

 

Decreasing
business risk
profile

 

net income
evolution
(€bn)

2014

~70% regulated and quasi-regulated

2019

~75% regulated and quasi-regulated

1. Including Holding and Services

2. Including retail in Iberia

EBITDA will growth by about 10% while net income will increase by over 35%.

Financial plan and strategy

Gross and Net Debt (€bn)

Net Financial expenses on Debt (€bn)

Growth plan funding (€bn)

Additional growth fully funded by efficiencies and cash flow

1. Self financing on additional investments (EBITDA net of taxes)

2. Post tax

Cash flow generation (€bn)

Positive Net Free Cash Flow of ca. 1.5 €bn

1. Accruals, releases, utilizations of provisions in EBITDA (i.e. personnel related and risks and charges)
It includes bad debt provision accruals equal to 2.6 €bn

2. Gross Capex (contributions 2.6 €bn)

3. Including dividends paid to minorities


Financial targets

Overall financial targets (€bn)

  2015 2016 2017 CAGR (%)
2015-19
Recurring EBITDA ~15.0 ~15.0 ~15.6 ~+3%
Net ordinary income ~3.0 ~3.1 ~3.4 ~+10%
Minimum DPS 0.16 €/sh 0.18 €/sh 0.00 €/sh ~+17%
Pay-out 50% 55% 60% +7%
FFO/Net Debt 21% 24% 27% ~+9%

Contact

INVESTOR RELATIONS

Tel: + 39 0683051 // Fax: +39 0683057940

email: investor.relations@enel.com