Enel 2018-2020 strategic plan: full speed ahead on digitalisation and customers

Digitalisation is turning Enel into an increasingly efficient and proactive operator in the context of the major transformation the entire industry is experiencing. The energy market evolution is opening up opportunities to enhance the Group’s customer proposition through new services. The combination of these two enablers will support the Group in delivering attractive shareholder remuneration and sustainable long-term value creation for all stakeholders.

•      Digitalisation: 5.3 billion euros investment (a 600 million euro increase vs. the previous plan) to digitalise Enel Group’s asset base, operations and processes and enhance connectivity; targeting 1.9 billion euros cumulative incremental EBITDA contribution between 2018 and 2020 (increasing by 300 million euros vs. the previous plan)

•      Customer focus: targeting 3.3 billion euros of EBITDA contribution in 2020, of which 2.9 billion euros relates to power and gas retail and 400 million euros to e-Solutions, leveraging on 67 million end users and almost 35 million power and gas free customers expected in 2020

•      Operational efficiency: targeting 1.2 billion euros of savings in real terms in 2020 vs. 2017, of which 500 million euros driven by the investments in digitalisation

•      Industrial growth: shifting capital allocation towards mature economies mainly in Networks and Renewables; around 80% of growth capex dedicated to Italy, Iberia, North and Central America

•      Group simplification & Active portfolio management: continuing the simplification of the ownership structure of the subsidiaries as well as the rationalisation of operating companies in South America.  Increased focus on minorities buy-out reaching 2.8 billion euros cumulatively between 2017-2020. Share buy-back option still available for up to 2 billion euros until November 2018

•      Shareholder remuneration: dividend pay-out confirmed at 70% on Group net ordinary income from 2018 onwards. Minimum dividend of 0.28 euro per share on 2018 results, a 33% increase vs. the minimum dividend guaranteed for 2017.

Francesco Starace, CEO and General Manager of Enel, said: “Since 2015, we have made remarkable progress in all areas of our strategy. Enel is now a much more efficient business with a clearly defined path to industrial growth which, combined with capital discipline and the faster-than-planned execution of asset rotation, has materially increased the Group’s cash generation and profitability. As a consequence, we have been able to raise our 2017 dividend by 44% versus the 2015 pay-out. All these results have been achieved despite significantly more challenging macro scenario conditions than were expected.

This performance has positioned our Group at the forefront of the global energy transition. We are leading in key macro areas for sustainable growth such as renewables and digitalised distribution networks. We can leverage the trends of urbanisation and electrification of demand as well as the resulting profound decarbonisation, to capture the opportunities presented by the major disruption of the entire energy sector. The Group is therefore a more profitable, efficient and sustainable organisation today.

Looking ahead to 2020, digitalisation – introduced last year – has become a concrete and tangible dimension of our business, with increased investment of more than 5 billion euros over the plan. A major focus on customers, including in the new global business line e-Solutions, will provide opportunities for additional value creation.

Our improved financial targets – including the introduction of a minimum dividend per share of 0.28 euro for 2018, a 33% increase on the minimum target for 2017 we presented last year – underpin our confidence in the prospects and role of Enel today and for the years to come.”

London, November 21^st, 2017 – Enel Group (hereinafter the “Group”) is today presenting its 2018–2020 Strategic Plan to the financial markets and global media.

The successful execution of the previous 2017-2019 strategic plan has allowed the Group to deliver on each of its key pillars ahead of schedule:

•            Operational efficiency – maintenance capex has been reduced by 10% and opex by 1 billion euros in real terms since 2015, mainly through digitalisation;

•            Industrial growth – 2017 growth EBITDA target of 800 million euros has already been achieved, including connections, and almost fully addressed 2018 growth EBITDA target;

•            Group simplification – the number of companies in South America has been reduced to 53 (from 69 in 2015) and minority economic interest on Group net ordinary income has also been cut back to 27%, from 36% in 2015;

•            Active portfolio management – 6.3 billion euros of disposals have been finalised since 2015, ahead of scheduled target to achieve 7.5 billion euros of capital recycling by 2019. Acceleration in the use of funds in 2017: 1.6 billion euros in acquisitions and 500 million euros in minorities buy-out have been finalised;

•            Shareholder remuneration – committed to an attractive and growing dividend. Pay-out ratio has increased to 65% in 2017 from 50% in 2015, and dividend per share increased by 44% vs.  2015, reaching 0.23 euro per share in 2017.

This progress against the strategic plan has allowed the Group to maintain all financial guidance for 2017 and exceed the minimum dividend per share guaranteed for the year, despite a more challenging environment than that envisaged in the previous plan.

The sustainability of the strategy is also substantiated by the rapid progress made in terms of the Group’s contribution to the 17 United Nations Sustainable Development Goals (SDGs).

In 2017 the Group delivered on its four public commitments as follows:

‐          exceeded the goal set for 2020 in terms of beneficiaries to enjoy high quality, inclusive and fair education, reaching around 500,000 people (SDG 4);

‐          made considerable progress in delivering access to affordable and clean energy, reaching 1.7 million people (SDG 7);

‐          achieved the goal set for 2020 in terms of employment, and sustainable and inclusive economic growth, set at 1.5 million people (SDG 8);

‐          progressed on the pathway to a zero-emission generation portfolio despite a year characterised by very poor hydro conditions across all the Group’s geographies, reaching 399 gCO₂/KWheq (SDG 13).