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Grid, efficiency, resilience. Enel charts its course with €36 billion plan

The energy titan’s multi-year strategy focuses heavily on distribution networks, earmarks half of the investments to Italy and looks to maximise cash flow. Simpler corporate structure, higher operating margin, over €7 billion in profits and added value for investors: all the details

Enel unveils 2024-2026 plan. Wednesday was the Italian energy titan’s Capital Markets Day, offering a framework for CEO Flavio Cattaneo to present the company’s strategic operative outlook – its first since he took the helm – to the tune of €36 billion in investments. As he put it, the strategy is all about “transforming the Enel Group into a leaner, more flexible and resilient organisation, ready to face the challenges and seize the opportunities that may arise in the future.”

Grids and green energy. Mr Cattaneo stressed that the three-year plan will entail “a more selective approach to investments to maximise profitability and minimise risk.” The redefinition of Enel’s commitment includes more prudence in selecting energy projects and rebalancing investments from renewables to infrastructure – the electricity grid on which the energy transition is taking place.

  • Nearly half of the total investments are earmarked for Italy: just under €18 billion, of which €12 billion will go to the grid.
  • Meanwhile, Enel will consolidate its global leadership in renewables with the installation of 13.4 gigawatts of new generation capacity, bringing the total to 73 gigawatts by 2026.
  • At the same time, it plans to close all its coal-fired power stations by 2027 – and “evaluate if opportunities arise” from Italy’s possible return to nuclear power (including via its partnership with fourth-generation nuclear startup Newcleo).

The global strategy. Mr Cattaneo explained that the group intends to concentrate its firepower on the other core countries, with 25% of the over 18 billion going to Spain, 19% to South America (Brazil, Chile, Colombia) and 7% to the United States. 12 billion are earmarked for renewables, 3 for the infrastructure and 3 for the customer segment, where Enel intends to generate value by integrating services in bundled offers.

  • In terms of partnerships, the company has elected to focus on 50% joint ventures instead of stewardships (i.e. building assets independently and then selling shares).

Sustainability, applied to finance. Enel’s CEO drew a line between the company’s historic commitment to renewables and its renewed intention to focus on economic sustainability. “Financial discipline will be the foundation of our strategy to improve cash generation and efficiency, while sustainability will continue to guide our business decisions,” he said.

  • Financial targets are upward-looking: an EBITDA increase (from around €22 billion in 2023 to an expected €23.6-24.3 billion in 2026), with a jump in net income from €6.4-6.7 to €7.1-7.3 billion.
  • The promise contained in this “frugal” plan is to use operative margins to cover expenses, including investments and dividends, keeping reserves on the side in the name of resilience.
    • Enel intends to distribute up to 70% of profits to shareholders, depending on results, and in the meantime, is putting a guaranteed minimum coupon of €0.43 per share on the table.
  • On top of already-closed international divestments, Enel will generate around €11.5 billion between 2023 and 2024 from further ones and plans to reduce costs by €1.2 billion.

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